Distribution Management

Distribution Management Marketing 2B Distribution Management

Quiz • Name 2 disadvantages of being a Franchisor • Name 2 disadvantages of being a Franchisee 3. Name 2 advantages of being a Franchisor 4. Name 2 advantages of being a Franchisee 8+2 Marketing 2B Distribution Management

Advantages Acquire funds No direct ownership of Brand Reduction in Distribution cost Motivation is high Co-operative advertising opportunities Disadvantages Regulations limiting power Loss of control: Over brand Over Distribution Expansion programs Financial situation Corporate intellectual property Franchisor Franchisee Advantages • Risk of failure minimized: • Business model proven • Products proven • Continuous service • Economies of scale • High return on investment Disadvantages • No guarantees of success • Little say in expansion programs • Loss of some level of independence • Pricing model might may be a disadvantage to the Franchisee Marketing 2B Distribution Management

Behavioral processes in Distribution channels Marketing 2B Distribution Management

Behavioral processes in Distribution channels DC as part of a Social system • Channel power • Reward Power • Coercive Power • Legitimate power • Referent Power • Expert Power • Exercising Power • Channel conflict • What is Channel conflict • Causes • Conflict resolution • Methods to solve conflict Communication in the DC Marketing 2B Distribution Management

Behavioral processes in Distribution channels Why is the psychological aspect of Distribution channels important? Marketing 2B Distribution Management

DC as part of a Social system Marketing 2B Distribution Management

Customer purchase process • Awareness of a need – Hunger • Information search – Page through the Mr. Delivery menu • Purchase – Select a burger from Nando’s • Post purchase evaluation – Happy so put Number in Cell phone for future reference Marketing 2B Distribution Management

Mr. Delivery Distribution channel Marketing 2B Distribution Management

Positive experience Delivered in your expected time frame Food was freshly prepared and hot Price was not perceived as a Rip off Delivery guy was clean and neat Negative experience Food never delivered Cold and soggy Cost more than what they said Delivery guy was smoking and tipping ash on the package What will make you have a…… Marketing 2B Distribution Management

Customer purchase process • Awareness of a need – Hungry again • Information search –Get in your car and go to MacDonald's • Purchase – Order a Lucky meal • Post purchase evaluation – Happy so think MacD’s are great and go there again next time Marketing 2B Distribution Management

Channel power Marketing 2B Distribution Management

Channel power • The ability of one channel member to control or manipulate the behavior of another channel member • Negative and positive power • Five sources (Rosenbloom) • Reward • Coercive • Legitimate • Referent • Expert • 6 Influencing Strategies • Promise Strategy • Threat strategy • Legal strategy • Request strategy • Info exchange strategy • Recommendation strategy Marketing 2B Distribution Management

Reward power • One or more members of the channel rewards one or more of the others if they conform to the expectations of the former. • Normally a financial reward • Franchise agreements • Bonuses • Kick backs • Incentives Marketing 2B Distribution Management

Coercive power • Opposite of Reward Power • Penalty system if members of the channel don’t comply to others demands and expectations • Found when one or two parties dominate the channel Marketing 2B Distribution Management

Legitimate power • Basis is in a legal contract or agreement • Franchise /Franchisor agreement • Independent suppliers have different power • Discounting • Specials Marketing 2B Distribution Management

Referent power • Objectives of 2 or more channel members are the same • Focused on same target market. Marketing 2B Distribution Management

Expert power • Knowledge and expertise from one Channel member is used to change the behavior of other channel members • Often seen in Monopoly manufacturers. • Info on consumer demo, psych and geographic profile can be used upstream as well. Marketing 2B Distribution Management

6 Influencing strategies • The Power is used in different strategies to influence behavior. • Promise(Power source – Reward) • Do what we ask and we will reward you. • Threat( Power source – Coercion) • Don’t do what we ask and we will punish you • Legal(Power Source - Legitimacy) • Do what we ask cause you signed a contract • Request(Power source – Referent, Reward, Coercion) • Just do what we ask • Info Exchange(Power source - Expertise, Reward) • Lets show you in detail why we are asking you to do this • Recommendation(Power source – Expertise, Reward) • Lets work together to develop the best way in addressing the request Marketing 2B Distribution Management

Channel conflict Marketing 2B Distribution Management

Channel conflict • Definition – a Situation in which one member of a DC perceives another member as an adversary engaged in behavior designed to injure, thwart or gain scarce resources at the expense of the original member • Various causes of conflict in any DC Marketing 2B Distribution Management

Causes of channel conflict Marketing 2B Distribution Management

Conflict resolution Methods to resolve conflict • Problem solving • Super ordinate goals • Communication process • Persuasion • Agreement to change objectives by all parties • Negotiation • All parties compromise on aspects of their goals • Politics • Coalitions • Mediation / Arbitration • Lobbying / Judicial appeal Marketing 2B Distribution Management

Communication in the DC • Free flow of Comms is the best way to avoid and dissolve any conflict in a DC 3 Behavioral problems that inhibit comms • Perceptual differences • Secretive behavior • Infrequent communication Marketing 2B Distribution Management

Distribution Management