Chapter 4Chapter 4

Behavioral Processes in the Marketing Channel

Marketing Channel as Social Marketing Channel as Social

SystemSystem

44Objective 1:

• Social System– Generated by any process of interaction on the

sociocultural level– Occurs between 2 or more actors– “Actor” can be an individual or a collective

• Marketing Channels are Social Systems in addition to Economic Systems

Behavioral ProcessesBehavioral Processes44Objective 2:

• While cooperation is the goal…

• Channels are constrained by 4 factors– Conflict– Power– Roles– Communication

How Conflict EmergesHow Conflict Emerges44Objective 3:

• Conflict occurs when one actor perceives another actor’s actions as impeding the attainment of one’s goals.

• Conflict ≠ Competition– Conflict is direct, personal, and opponent-

oriented– Competition is indirect, impersonal, and object-

oriented

Causes of Channel ConflictCauses of Channel Conflict44Objective 4:

• 7 General Causes for Conflict:– Role incongruities– Resource scarcities– Perceptual differences– Expectational differences– Domain disagreements– Goal incompatibilities– Communication difficulties

Can conflict increase efficiency?

Does conflictdecrease

efficiency?

Does conflict have any affect?

How does conflict affect channel

efficiency?

Conflict and Channel EfficiencyConflict and Channel Efficiency44Objective 5:

Effects of Channel ConflictEffects of Channel Conflict44

• 3 Possible Efficiency Outcomes1. Negative Effect

– Diminished efficiency as quarrel continues

2. Positive Effect– Increased efficiency as actors look inward

3. No Effect– Conflict is seen as superficial and

dependency/commitment as more important

Detectingconflict

Appraising theeffect ofconflict

ResolvingconflictManaging

Conflict

Managing Channel ConflictManaging Channel Conflict44Objective 6:

Detecting Channel ConflictDetecting Channel Conflict44

• No precise principles or guidelines, but…

1. Regular surveys of other members’ perceptions of firm’s performance

2. Perform routine channel audits

3. Form an advisory council or member committee

OR

OR

Appraising the Effect of ConflictAppraising the Effect of Conflict44

Subjective process that relies on the manager’s judgment from past experience

Resolving ConflictResolving Conflict44

• Often relies on creativity, but some suggestions include…– Channel-wide committee– Joint goal setting– Establishment of a Distribution Executive (e.g.,

CLO or CSCO)

• Applicability is often a function of size…

Power in the Marketing ChannelPower in the Marketing Channel44Objective 7:

• Power– The capacity of an actor

to control or influence the behavior and actions of another

• Keys to understanding Power…– Dependency

– 5 Bases of Power

– Uses of Power

Source of Power in ChannelsSource of Power in Channels**44

• Power is a function of Dependency

Pab = Dba

Reward Power

Coercive Power

Legitimate Power

Referent Power

Expert Power

The 5 Bases of Power and The 5 Bases of Power and ControlControl

44

*Outside Material*

Graph Provided in Class(i.e., Bucklin’s Theory of Channel Control)

The Use of PowerThe Use of Power**44Objective 8:

• Payoff Function– The amount of benefits (or profits) that accrue as a result of giving up control

Theory of Channel ControlBenefit(eg, $)

Control Given Up

• Tolerance Function– The amount of pain/burden felt as a result of giving up control to another.

Theory of Channel ControlBenefit(eg, $)

Control Given Up

• Zone of Indifference– Corresponds to the indifference of keeping/ending the relationship due to the costs associated with

“breaking-up” an arrangement• Zone is the area between the Tolerance Function and the red line denoting the outside edge of the zone

Theory of Channel ControlBenefit(eg, $)

Control Given Up

• Area “A”– The only area where the Payoff Function is above the Tolerance Function, and it’s increasing– As one gives up more control initially, they experience greater benefit (e.g., why consultants exist)

Theory of Channel Control

A

Benefit(eg, $)

Control Given Up

• Area “B”– The only area where the Payoff Function is above the Tolerance Function, but it’s decreasing

– As one continues to give up control, the benefits begin to fall. Burden simultaneously begins to rise substantially as benefits continue to fall (i.e., steep rise in the Tolerance function).

Theory of Channel Control

A

Benefit(eg, $)

Control Given Up

B

• Area “C”– The area where the Payoff Function is below the Tolerance Function, and still in the zone of indifference– Here the burden felt outstrips the benefit gained, but there’s a cost assoc. w/ breaking up

Theory of Channel Control

A

Benefit(eg, $)

Control Given Up

B C

• What bases of power should be used in “A”? And why should the others not?

Theory of Channel Control

A

Benefit(eg, $)

Control Given Up

• What bases of power should be used in “B”? And why should the remaining not?

Theory of Channel Control

A

Benefit(eg, $)

Control Given Up

B

• Why should the remaining bases of power be used in “C”? What do they do?

Theory of Channel Control

A

Benefit(eg, $)

Control Given Up

B C

Roles in the Marketing ChannelRoles in the Marketing Channel44Objective 9:

• Roles– A prescription defining what the behavior and

actions of a position should be

• Roles change over time• Straying far from one’s role may create conflict.• Roles provide insights into the constraints one

might experience

Roles in Marketing ChannelsRoles in Marketing Channels44

• Questions to help the channel manager…1. What role does the channel manager expect a

particular channel member to play in the channel?

2. What role is this member expected to play by his or her peers?

3. Do the manager’s expectations for this member conflict with those of the member’s peers?

4. What role does this member expect the manager to play?

Communication ProcessesCommunication Processes44Objective 10:

• Common behavioral problems in Channel Communications…– Differences in goals between members– Differences in the kinds of language used– Perceptual differences– Secretive behavior*– Inadequate frequency