Behavioral Processes in Marketing Channels - DM

BEHAVIORAL
PROCESSES IN
MARKETING CHANNELS
 The system generated by any process of interaction on
The the sociocultural level between two or more actors.
The actor is either a concrete human individual (a
Marketing person) or a collectivity.
Channel as a
Social System
MONNA NARVAEZ
Conflict in the Marketing Channel
Conflict exists when a member of the marketing
channel perceives that another member’s actions
impeded the attainment of his or her goals.
A)Conflict versus Competition
B)Causes of Channel Conflict
i. Misunderstood communications
ii. Divergent functional specializations and goals
of channel members
iii.Failings in joint decision-making MONNA NARVAEZ
iv. Differing economic objectives

v. Ideological differences of channel members
vi. Inappropriate channel structure
Although there are many causes of channel conflict
most can be placed into one or more of the following
seven categories:
1. Role incongruities
2. Resource scarcities
3. Perceptual differences
4. Expectational differences
5. Decision domain disagreements
6. Goal incompatibilities
7. Communication difficulties
MONNA NARVAEZ
C) Channel Negative Effect – Reduced Efficiency
Conflict No Effect – Efficiency Remains
Constant
and Positive Effect – Efficiency Increased
Conflict and Channel Efficiency –
Channel General Curve
Efficiency
ANIE ROSE D. RODRIGUEZ

There are four generalizations regarding channel
conflict:
1. Conflict is an inherent behavioral dimension in
the marketing channel.
D) Managing 2. Given the numerous causes from which conflict
Channel may stem, it is a pervasive phenomenon in
marketing channels.
Conflict 3.Conflict can affect channel efficiency.
4.Various levels of conflict may have both negative
and positive effects on channel efficiency, or
possibly no effect.
ANJIE LOU A. BAJE

Channel managers must:
1. Detect conflicts or potential conflicts

 Channel managers can detect potential conflict areas by surveying other channel members’
perceptions of his or her performance. Such surveys can be conducted by outside research
firms, or trade associations.
2. Appraise the possible effects of conflicts
 A growing body of literature has been emerging to assist the channel manager in developing
methods for measuring conflict and its effect on channel efficiency.
3. Resolve channel conflict
 When conflict exists in the channel, the channel manager should take action to resolve the
conflict if it appears to be adversely affecting channel efficiency. ANJIE LOU A. BAJE
Three techniques are suggested:
Another approach to resolving channel conflict is by arbitration

1. A channel wide committee, a sort of “crisis management team”
2. Joint goal setting by committee
3. A distribution executive position created for each major firm in
the channel. The individual(s) filling this position would be
responsible for exploring the firm’s distribution-related problems.
ANJIE LOU A. BAJE
Power in the Marketing Channel
 When we use this term in a marketing

channel context, we are referring to “the
capacity of a particular channel member to
control or influence the behavior of another
channel member(s)”.
GERRYMAE CAIDET
1. Bases of Power for Channel Control
a) Reward
b) Coercive
c) Legitimate
d) Referent
e) Expert
GERRYMAE CAIDET
A) Reward Power
This source of power refers to the capacity of
one channel member to reward another if the
latter conforms to the influence of the former.
This power base is present in virtually all
channel systems.
B) COERCIVE POWER
Coercive power is essentially the opposite of
reward power. In this case, a channel member’s
power over another is based on the expectation that
the former will be able to punish the latter upon
failure to conform to the former’s influence
attempts.
GERRYMAE CAIDET
C) Legitimate Power
This power base stems from internalized norms in one channel
member which dictate that another channel member has a legitimate
right to influence the first, and that an obligation exists to accept
that influence.
D) Referent Power
• When one channel member perceives his or her goals to be
closely allied to, or congruent with, those of another
member, a referent power base is likely to exist.
E) Expert Power
• This base of power is derived from the knowledge
(or perception) that one channel member attributes
to another in some given area. In other words, one
channel member’s attempt to influence the other’s
behavior is based upon superior expertise.
GERRYMAE CAIDET
 From the standpoint of the channel manager in the
producing or manufacturing firm, power must be
used to influence the behavior of channel members
toward helping the firm to achieve its distribution
2. Using objectives.
Power in the A) Identifying the Available Power Bases
Marketing  This issue is usually straightforward because they
can be readily identified. Generally, they are a
Channel function of the size of the producer or manufacturer
relative to channel members, the organization of the
channel or a particular set of circumstances
surrounding the channel relationship.
ELLA FE J. ORRICA
B) Selecting and Using Appropriate Power
Bases •Although no exact channel management implications on
the use of power in the marketing channel are available,
several general inferences can be derived:
• Which bases should be used to
 Some form of power must be exercised.
exercise power in the marketing
 The effectiveness of the various power bases in
channel is a more difficult and influencing channel member behavior is probably
complex issue for the channel situation-specific.
manager to deal with than the  The exercise of power as well as how it is used
previous issue. can affect the degree of cooperation, conflict and
satisfaction within channel relationships.
 The use of coercive power appears to foster
conflict and promote dissatisfaction to a greater degree
than other power bases.
 The use of coercive power can reduce the stability
and viability of the channel and is likely to increase the
probability that the coerced channel members will seek
outside assistance.
ELLA FE J. ORRICA
Role in the Marketing Channel
A set of prescriptions defining what the behavior
of a position member should be.
Roles in the marketing channel do not
necessarily stay the same.
Channel managers can use the concept of role to formulate
such questions as:
• What role do I expect a particular channel member to play in
the channel?
Jennifer P. Adalin
• What role is the member (potential or existing) expected to
play by his/her peers (other firms of a similar type)?
• Do my expectations for this member conflict with those of
his/her peers?
• What role does this member expect me to play?
Communication Processes in the Marketing Channel
 Communication has been described as “the glue that holds

together a channel of distribution”.
 Communication activities undertaken by channel members
create a flow of information within the channel, which is
necessary for an efficient flow of products or services
throughout the channel Jennifer P. Adalin
1.Behavioral Problems in Channel Communications
a.Differences in goals between channel members
Channel Differing Goals Corporate management in large
manager must manufacturing firms is characterized by a growth
work to create psychology, which translates into aggressive effort to
build sales volume. This growth goal may not be
and foster an shared by small to medium size retailers and/or
effective flow wholesalers who might be more static orientated in
their approach to sales volume.
of information
b.Differences in the kinds of language used to convey
within the information
channel The other basic communication problem between the
manufacturer and channel members stems from the
REGENE BENDANILLO
terminology or jargon used by professional corporate
management
2. Other Behavioral Problems in Channel
Communications
Three other behavioral problems that can inhibit effective channel

communications are:
A. Perceptual differences among channel members
 Perceptual differences may occur among channel members on a wide
variety of issues. It is therefore important that channel managers spell out
such issues as delivery time, margin and discounts, return privilege,
warranty provisions and so forth, so that channel members have the same
understanding as the channel manager.
B. Secretive behavior
 By not divulging information, such as an upcoming promotional plan,
manufacturers fail to get potentially valuable feedback from channel
members (middlemen) on whether or not the plan will be effective.
GANIEL B. BAT-IT
C. Inadequate frequency of communication

The association of infrequent
communication with lower quality
communications applies. A channel
manager must ensure that they
communicate as frequently as
necessary with all channel members to
ensure that quality of communication GANIEL B. BAIT-IT
is not compromised.
•GROUP MEMBERS: •DISTRIBUTION
• MONNA R. NARVAEZ MANAGMEMENT
•1:00 - 4:00 PM F
• ELLA FE J. ORRICA
Thank • ANJIE LOU A. BAJE

• ANIE ROSE D.
You!!!
RODRIGUEZ
• JENNIFER P. ADALIN
• REGENE
BENDANILLO
• GERRYMAE CAIDET
• GANIEL B. BAIT-IT

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BEHAVIORAL

iv. Differing economic objectives

ANIE ROSE D. RODRIGUEZ

ANJIE LOU A. BAJE

1. Detect conflicts or potential conflicts

Another approach to resolving channel conflict is by arbitration

 When we use this term in a marketing

 Communication has been described as “the glue that holds

Three other behavioral problems that can inhibit effective channel

Thank • ANJIE LOU A. BAJE

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