Logistics
PPS8
Topic 5
Topic 5
The Behavioural Processes
in Distribution Channels and
Channel Conflict
Distribution channels as part of a social
system
Channel power
Channel conflict
Channel communication
Channel power
sources
Reward
Power
Coercive
Power
Legitimate
Power
Referent
Power
Expert
Power
Reward Power
• Financial incentive to next channel
member
• Ability to be franchisee i.e. @ McD
Coercive Power
• “I kill you!” – Achmat the Dead Terrorist
• Punishing the next channel member if fails
to respond as it should
• Coercive POWER sits with the big boys
Pick n Pay
Shoprite/ Checkers
Woolies
Spar
Legitimate Power
• Adhere to formal agreement
• May be problems between independent
organisations (i.e. M ask R not to discount
…)
• Higher legal recourse/
tighter in franchise
channel
Referent Power
Channel member sees other as having
same objectives and part of same
reference group
Expert Power
= knowledge/ perceived knowledge one channel
member has & influence power to change
behaviour of other members
Exercising power – the influencing strategies
• Promise strategy – if you do what I say I
will reward you
• Threat strategy – if you don’t do what I
say I will punish you
• Legalistic strategy – do what we wish as
we have contractually
agreed to it …
Exercising power – the influencing strategies
• Request strategy – we ask: sweet, short
and sharp with no indication of what may
happen
• Info exchange strategy – “This is how
you could make your business more
profitable …” now draw your own
conclusions …
• Recommendation strategy – “This is
how you could make your business more
profitable …” & conclusions
Using power to exert influence in the
distribution channel
Promise
Legitimacy
Threat
Coercion
Legalistic
Expertise, reward
Request
Referent, reward,
coercion
Info exchange
Expertise, reward
Recommendation
Reward
Using power to exert influence in the
distribution channel
Promise
Reward
Threat
Coercion
Legalistic
Legitimacy
Request
Referent, reward,
coercion
Info exchange
Expertise, reward
Recommendation
Expertise, reward
CHANNEL CONFLICT
CHANNEL CONFLICT
“ … a situation in which one member of a distribution
channel perceives another member as an adversary
engaged in behaviour designed to injure, thwart/ block/
hinder from doing something, or gain scarce resources
at the expense of the original member”
Causes of channel conflict
2-3 causes each
Conflict resolution
Two main reasons for conflict:
• Use of power
• Attempt to gain more power
Decision framework for evaluating channel
conflict
Importance of threatened channel in
terms of current or potential volume of
profitability
Prospect
Act to avert
conflict
Allow threatened channel
to decline
of
destructive
conflict
Look for opportunities to
reassure threatened channel
and allow to leverage power
Do nothing
The four methods to solve channel conflict
•
•
•
•
Problem-solving
Persuasion
Negotiation
Politics
Problem-solving
Persuasion
Negotiation
Politics
• Coalitions
• Mediation and arbitration
• Lobbying and judicial appeal
COMMUNICATION IN THE DISTRIBUTION
CHANNEL
Communication
• Perceptual differences (does “soon”
mean within 24 hours?)
• Secretive behaviour
• Infrequent communication
case study
Page 136 … and answer questions on
page 137