Marketing Channel Systems - Assignment Example

Name: xxxxxxxxxx Course: xxxxxxxxxx Institution: xxxxxxxxxx Title: Marketing Channel Systems Date: xxxxxxxxxxxxx Question 1: Coercion is just a negative reward. It’s all reward power. Power all comes down to one question: where is the money? Debate this statement. Coercion is one of the bases or sources of power that depends on threat or fear. Coercive power stems from the ability of A to exert influence on B or make them do what they would otherwise not have done or effect changes in behaviour dependent on the application or the threat of application of some sort of physical sanction or punishment (Gaski 1984, Coughlan 2006). Therefore, the influence exerted by A over B is primarily out of the fear of the consequences of punishment or sanctions such as infliction of pain, restriction of movement which frustrates B’s ambitions or control through force of basic needs. Coercion may refer to an organization or an individual’s ability or potential to use leverage to issue threats against another organization or individual. Therefore, coercive power interferes with the affected party’s autonomy or willingness to act voluntarily. For example, a long standing client of a firm may coerce the salesperson to offer them a discount by threatening that should they not conform, they would take their business elsewhere. In this case, the threat to take business elsewhere gives the client power over the salesperson. Some of the other instruments of coercion used in marketing to effect behaviour change include reducing margins, blocking access to certain markets, slowing down shipments or the threat to withdraw rewards (Coughlan 2006). However, coercion can also be considered as simply a negative reward. Reward power rests on conformity or altering behaviour motivated by the belief of some benefits expected from another party. The reward is usually a benefit or return promised and/or given conditional on altering behaviour. Reward is usually based on passing some criteria, such as a producer offering a product or service that meets the needs of the end user and at a price that the end user is willing to pay for it, offering favourable terms of trade, backing the product or service with minimally acceptable producer reputation and ensuring reliable and timely delivery (Coughlan 2006). Therefore, reward power is positive in nature, prompting alteration of behaviour in anticipation of benefits. On the other hand, coercive power prompts alteration of behaviour based on a fear of punishment or a threat in the form of withdrawal of rewards which is essentially the direct opposite of benefits- negative reward. The motivation for reward power is positive, offering the channel member incentives for meeting certain criteria. However, coercive power operates on disincentives by threatening punishment, sanctions or the withdrawal of rewards for not meeting demanded criteria (Gaski 1984). The coercive measures described, such as blocking access to certain markets or slowing down shipments, are essentially negative rewards promised in the event that a member of a marketing channel does not meet certain criteria or fails to alter their behaviour with respect to the “coercing” agent. Threats are also potent in marketing channels since they have the potential to raise conflict due to negative reactions (Coughlan 2006). It can therefore be plausibly argued in marketing that power all comes down to the question “where is the money?” Both sources of power, coercive power and reward power can only be operationalized or exercised by the agent or channel member who controls the resources needed or desired by the other party. In the example where the long standing client exercises control over the salesperson, the salesperson’s behaviour would change primarily due to the awareness that the firm’s success is dependent on acquiring and maintaining such clients who bring money to the firm (Gaski 1984). Therefore, the client has the money and he leverages it to threaten the salesperson to alter their behaviour by issuing a negative reward, the withdrawal of rewards from making a sale or taking of his business elsewhere. Even in the case of reward power, the benefits expected or anticipated by any channel member are primarily financial in marketing. The producer is willing to meet their criteria or change their behaviour not necessarily out of their own volition but due to the fact that the money they need is with the end user. Therefore, the end user wields power by promising the producer benefits with the view of ensuring conformity to certain criteria (Rosenbloom 2011). It can therefore be conclusively argued that power is all about where the money is. Question 2: As markets mature, it is essential to set up multiple channels (different types), and to let them compete head on. Debate this statement. What responsibility, if any, do suppliers have to manage conflict between multiple channels? How can they go about doing so? As markets mature, it becomes increasingly important for members of marketing channels (suppliers) to set up different types of multiple marketing channels and to allow them to compete head on. This is due to some of the mutual benefits of head on intertype competition among multiple channels expected by suppliers. The intertype competition between marketing channels is the major reason suppliers prefer the establishment and existence of multiple marketing channels (Coughlan 2006, Rosenbloom 2011). While such competition may be the result of conflict between multiple channels, such conflict can collectively have positive functional consequences for the members of the channel. One of the positive consequences of this head on competition is that competing parties in marketing channels collectively struggle against the obstacles in their environment and as a result may realize the positive consequences of competition. In this regard, competition can be regarded as a functional form of conflict that is beneficial to all members of the marketing channel (Keillor 2007). For example, as intertype competition intensifies, each member of the channel would endeavour to outperform the others. This creates barriers of entry into the market as the intense intertype competition would typically motivate downstream members to try and outperform their competitors by improving their performance. Intertype competition may also lead to the creation of new markets as the suppliers exploit these multiple channels o increase market penetration (Rosenbloom 2011, Keillor 2007). In conditions of competition, the supplier is faced with several options such as selling their products through different brand names in the different channels or selling their main product through one marketing channel and using other channels to sell their accessories. For example, a computer manufacturer may choose to incur the cost of selling computers cheaply but then hope to capitalize on the profitability of another marketing channel by selling software, accessories and peripherals to the same customers. In competitive environments, the supplier survives by creating a niche market by increasingly differentiating their product, selling their product under different names or even with different pricing strategies (Coughlan 2006). Suppliers have a central responsibility to manage conflict in marketing channels. Even though they are removed from the end users of the products and services, they play an instrumental role in mitigating the impact of conflict between marketing channels- between themselves and resellers of the products and services. There are three major sources of conflicts in marketing channels- conflict due to competing goals, due to perceptions of reality and over clashes of domains. With regard to suppliers, the most potent source of conflict is the clash over domains and the competition that results from it (Coughlan 2006). Suppliers have a key responsibility and play a central part in effecting the conflict resolution strategies aimed at preventing conflict from spilling over from functional into dysfunctional. As illustrated above, they can manage competition between marketing channels to realize the positive consequences of competition. By using any of the discussed strategies or options such as selling products through different brand names, selling the main product through one channel and its accessories through another, suppliers can effectively manage competition between multiple channels and effectively mitigate any negative effects of conflict (Rosenbloom 2011). Furthermore, their participation and cooperation in strategies of conflict resolution such as arbitration and mediation is a necessary condition in preventing the escalation or deterioration of the conflicts. For example, since it is the suppliers who control the flow of goods and services to resellers in marketing channels, they can prevent the proliferation of gray markets which would progressively compound the situation or worsen the problems (conflict begetting conflicts) (Coughlan 2006). Their restraint is also critical in avoiding fuelling of conflict due to competition. Therefore, in relation to other members such as dealers and resellers, suppliers may have determining influence in managing conflict between multiple channels. References Coughlan, A.T 2006, Marketing Channels, Sydney: Pearson/Prentice Hall. Gaski, J.F 1984, ‘The Theory of Power and Conflict in Channels of Distribution’, Journal of Marketing Vol. 48, No. 3, pp. 9-29. Keillor B.D 2007, Marketing in the 21st Century: Interactive and multi-channel marketing, Volume 2, New York: Greenwood Publishing Group. Rosenbloom, B 2011, Marketing Channels, New York: Cengage Learning. Read More