PRESENTED BYPRESENTED BY:-:- RAMESHWERI SLATHIA(25)RAMESHWERI SLATHIA(25) PALLAVI ABROL(43)PALLAVI ABROL(43)

CONTROLLING THE CHANNELSCONTROLLING THE CHANNELS

CHANNEL MANAGEMENTCHANNEL MANAGEMENT CHANNEL ENVIRONMENTCHANNEL ENVIRONMENT

CHANNEL MANAGEMENTCHANNEL MANAGEMENT (CHANNEL LEADERSHIP AND (CHANNEL LEADERSHIP AND CONTROL)CONTROL)

CHANNECHANNELL

STRATEGSTRATEGYY&&

PLANNINPLANNINGG

CHANNELCHANNEL SYSTEMSYSTEM

PERFORMANPERFORMANCECE

CHANNEL CHANNEL ORGANISATIONORGANISATION TECHNICAL TECHNICAL DIMENSIONSDIMENSIONS

ROLE ROLE DELINEATION,POWER-DELINEATION,POWER-DEPENDENCE,CONFLICT,DEPENDENCE,CONFLICT,COOPER- -COOPER- -TION,COMMUNICATIONTION,COMMUNICATION

FUNCTIONS,FLOWS,FUNCTIONS,FLOWS, INSTITUTIONS,POLICIEINSTITUTIONS,POLICIESS BEHAVIOURAL BEHAVIOURAL DIMENSIONSDIMENSIONS

A FRAMEWORK FOR CHANNEL LEADERSHIP A FRAMEWORK FOR CHANNEL LEADERSHIP AND CONTROLAND CONTROL

ENVOIRNMENENVOIRNMEN-TAL -TAL FACTORSFACTORSA.DEMANDA.DEMANDB.COMPETITIB.COMPETITIONONC.TECHNOLOC.TECHNOLOGYGYD.LEGALD.LEGALCONSTRAINTCONSTRAINTSS

POWER POWER SOURCES OF SOURCES OF THE THE CHANNEL CHANNEL LEADER:LEADER:A.REWARDSA.REWARDSB.PENALTIESB.PENALTIESC.EXPERTISEC.EXPERTISED.REFERENCD.REFERENCEEE.LEGITIMACE.LEGITIMACYY

POWER POWER OVEROVERISSUES ISSUES ANDANDDECISIONS DECISIONS IN THE IN THE CHANNELCHANNEL

LEADERSHLEADERSHIP OR THE IP OR THE EXERCISE EXERCISE OF OF POWERPOWER

LEVEL LEVEL OF OF CHANNCHANNEL EL CONTRCONTROLOL

LEVEL LEVEL OF OF INTRACINTRACH-H--ANNEL -ANNEL CONFLICONFLICTCT

LEVEL LEVEL OF OF CHANNCHANNEL EL MEMBEMEMBER R SATISFSATISFACT-ACT-IONION

LEVEL LEVEL OF OF CAHNNCAHNNEL EL MEMBMEMBER ER PERFOPERFOR-R---MANCEMANCE

MEMBER-MEMBER-SPECIF-SPECIF--IC FACTORS:-IC FACTORS:A.CHANNEL A.CHANNEL POSITIONPOSITIONB.CHANNEL B.CHANNEL EXPERTISEEXPERTISEC.SIZEC.SIZED.ECONOMIC D.ECONOMIC SUCCESSSUCCESSF.KNOW-HOWF.KNOW-HOW

POWER-POWER-DEPENDEDEPENDENCE NCE RELATIONRELATIONSHI--PSSHI--PS

CHANNEL CHANNEL MEMBER’S MEMBER’S DESIRE TO DESIRE TO INFLUENCEINFLUENCE

TOLERANCTOLERANCE OF E OF POWER BY POWER BY OTHER OTHER CHANNEL CHANNEL MEMBERSMEMBERS

LEADERLEADER---SHIP -SHIP STYLESTYLE

CHANNCHANNEL EL CLIMATCLIMATEE

CHANNEL ENVIRONMENT AND CHANNEL ENVIRONMENT AND CHANNEL LEADERSHIPCHANNEL LEADERSHIP

• Four environmental variables are:- - stage in a product’s life cycle - demand uncertainty - extent of use of personal services

in marketing - intensity of inter channel competition

Contd…

• The control of a channel leader is greater:

- under conditions of declining rather than growing demand - if demand is more unstable than stable - in situations where the importance of personal selling and of post sales servicing is high - when inter channel competition is strong

THE USE OF COERCIVE AND NON- THE USE OF COERCIVE AND NON- COERCIVE POWERCOERCIVE POWER

• A channel member has to command sources of power like reward,

coercion, expertise, reference or legitimacy power in order to control other channel members. • Coercive power is directly related to the frequency of intra channel conflict

FINDINGS OF GASKI AND NEVINFINDINGS OF GASKI AND NEVIN

• Relationship between the presence of power sources and their exercise• Effects of power exercise on power• Effects of power exercise on conflict• Effects of power exercise on satisfaction• Effects of power exercise on performance

THE USE OF ECONOMIC AND NON THE USE OF ECONOMIC AND NON ECONOMIC POWERECONOMIC POWER

• The effectiveness of power source is

determined by:- - the extent to which it can be applied to specific channel members - the extent to which it can be related to specific performance by channel members

MEASURES OF POWERMEASURES OF POWER

• Retail pricing• Choice of retail location• Minimum order size• Mix of units ordered• Retail advertising• Salesmen training• Salesmen hiring• Physical layout of the store• Selling policies

MEASURES OF POWER MEASURES OF POWER SOURCESSOURCES

Economic:- Financial assistance Financial assistance on a current basis Help in retail advertising Assistance in store management Provision of market information Provision of sales leads Promptness of delivery Frequency of delivery

Contd…..

Non economic:-• Selection of products• Assistance in training• Rate of development of new products• Backup by advertising• Level of expertise• Team association

LEADERSHIP STYLE AND LEADERSHIP STYLE AND CONTROL OF INTRACHANNEL CONTROL OF INTRACHANNEL

CONFLICTCONFLICT

• Three leadership styles; participative, supportive and directive were hypothesized to lower the level of intra channel conflict.

PARTICIPATIVE LEADER

• A participative leader consults with subordinates, solicits their suggestions and

considers them before making a decision.

SUPPORTIVE LEADER

• Supportive leader considers subordinate’s needs, display concern for their concern and create a friendly and pleasant task environment.

• Provides a more pleasing environment.

DIRECT LEADERSHIP

• Direct leadership is characterized by organizing and defining the task environment, assigning the necessary functions to be performed and evaluating the work group performance.

POWER OVER ISSUES AND POWER OVER ISSUES AND CHANNEL MEMBER CHANNEL MEMBER

SATISFACTIONSATISFACTION

• Four dimensions of channel member

satisfaction:- - Product dimension - Financial dimension - Assistance dimension - Social interaction dimension

CHANNEL CLIMATE AND CHANNEL CHANNEL CLIMATE AND CHANNEL MEMBER PERFORMANCEMEMBER PERFORMANCE

• Channel climate is the set of attributes of the channel organization reflected in the evaluated description channel members make of the policies, practices and conditions which exist in the internal channel environment.

Contd…Contd…

• Four dimensions of channel climate

are:- - Channel leader initiating structure - Channel leader consideration - Autonomy - Reward orientation

CHANNEL MEMBER PERCEPTIONS CHANNEL MEMBER PERCEPTIONS AND CHANNEL CONTROL PROCESSAND CHANNEL CONTROL PROCESS

1. Whether the channel members perceive themselves as a channel of distribution system or are concerned merely with the immediate suppliers and customers .

2. How the members perceive the control process within the channel.

3. Which marketing strategy variables are perceived as controlled by each channel member.

FINDINGS

• Retail personnel do not grasp the concept of a total channel system.

• There are differences in the way managers and sales personnel perceive the pattern of the overall channel control.

• There are differences in the way managers and sales personnel perceive control over different marketing variables.

CHANNEL MANEGEMENT BY CHANNEL MANEGEMENT BY MANUFACTURERSMANUFACTURERS

• Large manufacturers can always be potential leaders of channels as they have amassed a significant amount of reward and coercive power.

• Small manufacturers also serve as potential sources of control and direction in an interorganisational

channel network.

Contd…Contd…

• Manufacturers are not always eager to concern themselves with channel management.

• Manufacturers may not always be powerful

enough to impose their marketing policies on other channel

members.

METHODS OF MANUFACTURER METHODS OF MANUFACTURER DOMINANCEDOMINANCE

• Development of strong end-user attraction or loyalty to his products.

• A manufacturer may use coercive methods such as refusing to deal with particular middlemen or limiting sales to them unless they conform to

their desires.

CHANNEL MANAGEMENT BY CHANNEL MANAGEMENT BY WHOLESALERSWHOLESALERS

• The wholesaler has been able to remain in a dominant channel position only in those industries where the buyers and producers are small in size, large in number, scattered geographically and where manufacturers are financially weak and lack marketing expertise.

METHODS OF WHOLESALE METHODS OF WHOLESALE DOMINANCEDOMINANCE

• Wholesalers have been active in franchising. • Wholesalers also attempt to achieve dominance through development of private brands.

• Wholesalers seek to maintain their present position by selective distribution, reduction of competing product lines ,reduction of some services, development of new and improved services and improved operating procedures.

EXAMPLE:

• Foremost-McKesson , the largest U.S. ethical drugs wholesale distributor, has moved onto

the centre stage of its industry through a strategic combination of harnessing computer

power and redefining the function of wholesaler.

CHANNEL MANAGEMENT BY CHANNEL MANAGEMENT BY RETAILERSRETAILERS

• Large retailers are in multi-level merchandisers .i.e, they have integrated the wholesaling functions

within their channels

• Large retailers have unique overlapping attributes.

Contd…

• Retailers have an opportunity to accumulate expert power by continually assessing the needs of consumers within their communities.

• Retail-directed multi-level merchandisers have ready access to large markets that manufacturers wish to reach.

• Multi-level merchandisers can maintain

alternative sources of supply, manufacturers will tend to be more dependent on them.

METHODS OF RETAIL DOMINANCEMETHODS OF RETAIL DOMINANCE

• Building of a consumer franchise through advertising, sales promotion and branding

• Generated private level programs that reinforce

the establishment of store patronage motives

EXAMPLE:

Shopping at stores like Hudson’s,Filene’s,Bullock’s,Searnin,ans,target,

I.Magnin,and Safeway have been establish as the result of the assembling assortment of merchandise appropriate to each store’s target market, the adequate promotion of that assortment.

SMALL RETAILERS AS SMALL RETAILERS AS CHANNEL LEADERSCHANNEL LEADERS

• Small retailers have been instrumental in gaining legislation on the local, state and national levels.

• Small retailers have attempted to exert positive channel leadership by developing retailer sponsored cooperatives

Range of common carrier Range of common carrier contributions to other channelcontributions to other channel

PRPRODUCER

CARRIERCARRIER

WHOLESAWHOLESALERLER

CARRIERCARRIER

RETAILERRETAILER

Contd…

• Reducing the rates charged to shippers• Reducing the overall cost of transportation• Providing special arrangements such as rent-a-

train services• Providing consulting services to shippers• Providing information about the transportation

and material handling requirements of other channel members

Japanese Distribution Structure

A structure dominated by many small distribution in Japan has long been considered the most effective non-tariff barrier to the Japanese market. The Japanese distribution structure is different enough from its U.S. or European counterparts.

It has four distinguishing features:

1.middlemen dealing with many small retailers—high density of middlemen,

2. channel control by manufacturers,

3. a business philosophy shaped by a unique culture, and

4. laws that protect the foundation of the system—the small retailer

Channel Control in Japanese Distribution Systems

1. Inventory financing with credits extending for several months.

2. Cumulative rebates

3. Merchandise returns that are allowed to the manufacturer.

4. Promotional support to intermediaries in the form of displays ,advertising layouts, and management education programs

WHO SHOULD LEAD THE CHANNEL?WHO SHOULD LEAD THE CHANNEL?