Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 10

CHANNEL CONCEPTS: DISTRIBUTING THE PRODUCT

Conflict

Anytime individuals or organizations must work together and rely on each other for

sonal success , conflict is inevitable. Conflict, unlike friendly competition , is personal and direct and often suggests a confrontation. Because it is so pervasive in distribution, a great

deal of research

been conducted m attempts to identify its causes, outcomes, and solutions.

is also a need to manage conflict in the channel. This

of (1) estab ,

lishing a mechani.sm for detecting

(2) appraising the effects of the conflict, and

(3) resolving the conflict. This last consideration is most difficult to implement. Techniques

such as a channel committee, jomt goal setting, and bringing in an arbitrator have all been

used. There are even cases when conflict is necessary. Such is the case in the

place. For example, Anne Mulcahy, President of Xerox General Markets Operation, notes,

"Those that don' t aggressively embrace multiple channels for multiple products will get left behind. The inherent conflict in this business modei is not only a reality of business ;

it's a sign of a healthy company."

Power

Power is our willingness to use force in a relationship. It is often the means by which we are able to control or influence the behavior of

party. In the channel mechanism,

power refers to the capacity of a particular channel member to control or influence the behav-another channel member. For instance, a large retailer may want the manufacturel' to

modify the design of the product or perhaps be required to carry less inventory. Both par-

ties may attempt to exert their power in an attempt to influence the other's behavior. T;le

ability of

of the parties to achieve this outcome will depend upon the amount of power

that each can bring to bear.

MARKETING CAPSULE

•

1. Three general alternatives exist in organizing the channel:

Channels may exhibit several human traits:

conventional, vertical, and horizontal.

a. Role

2. The steps in channel design include the following:

b. 2 ommunication

a. Analyze the consumer

c. Conflict

b. Establish channel objectives

Power

Specify the channel tasks

Select the appropriate channel from avai lable

alternatives

e. Evaluate the results

THE WALL STREETJOURNAL.

IN PRACTICE

pliers of goods and services to the

Marketing channels connect pro-

retail industry.

ducers and consumers by moving

Marketing channels can make

finished goods that are available

or break Internet companies. Many

for consumption. Channel manage-

Internet companies attempt to dif-

ment is a process involving careful

ferentiate themselves by providing

planning and monitoring. As with

fast delivery of customer orders

other marketing functions, market-

anywhere in the world. To achieve

ing channels have objectives that

this, these companies must success-

guide their activities.

fully manage their marketing chan-

To successfully manage distri-

nels. The Interactive Journal's Tech

bution channels, marketers must

Center is an excellent source for all

analyze end consumers, establish

issues related to technology.

channel objectives, specify channel

Keep apprised of emerging

tasks, select the appropriate chan-

technologies, developments in spe-

nel, and evaluate results of the

cific companies, and industry trends

process. If these steps are executed

by reading articles in Tech Center

successfully, marketers can help

and Marketplace.

their organizations save costs.

Several professional and trade

DELIVERABLE

associations exist for channel man-

Use th e Interactive Journal to

agers and those involved in the

search for articles about one organ-

process. The American Society of

ization that successfully manages

Transportation and Logistics

channels and one organization that

(www.astl.org) is a professional

does not. Compare the strategies of

organization founded in 1946 by a

both companies and discuss what

group of industry leaders to ensure

works and what does not work for

a high level of professionalism and

each organization. Support your

promote continuing education in

conclusions with concepts fTOm the

the field of transportation and

chapter.

logistics.

The National Association of

DISCUSSION QUESTIONS

V\'holesalers-Distributors

1. Why do organizations need to

(www.naw.org) comprises over 100

effectively manage their chan-

national line-of-trade associations,

nels of distribution? What hap-

representing virtually all products

pens when they do not?

that move to market via whole-

2. How does ineffective channel

saler-distributors.

management affect con-

The National Retail Federa-

sumers? An organization 's rev-

tion (www.nrf.com) conducts pro-

enue stream?

grams and services in research,

3. What role does technology

education, training, information

play in channel management?

technology, and government affairs

What types of technology can

to protect and advance the interests

organizations use to improve

of the retail industry. NRF also

channel management?

includes in its membership key sup-

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