Chapter 4
BEHAVIORAL PROCESSES IN MARKETING CHANNELS
Teaching Notes
This chapter discusses the behavioral processes of conflict, power, role, and
communication in a marketing channel context. The emphasis of the chapter is on
Chapter Objectives
This chapter notes that channel conflict is an inherent behavioral dimension in marketing
channels and is pervasive because it stems from many causes such as role incongruities,
The chapter then goes on to define the five types of “power” and their definitions. The
definition of the various “roles” played by channel members are described and the
chapter delineates each “role” for a channel member in the process. The chapter ends
reviewing the communication process for channel members and how the behavioral
differences within the channel inhibits the communication process.
Learning objectives
1) Understand how the marketing channel can be viewed as a social system as well
as an economic one.
2) Comprehend behavioral processes, such as conflict, power, role, and
communication are inherent behavioral dimensions in marketing channels.
Behavioral Processes in Marketing Channels
communications in the marketing channels.
Chapter Topics
1) The Marketing Channel as a Social System
Chapter Outline
The Marketing Channel as a Social System
Key Term and Definition
▪ Social System: The system generated by any process of interaction on the
Conflict in the Marketing Channel
Conflict exists when a member of the marketing channel perceives that another member’s
actions impeded the attainment of his or her goals.
A) Conflict versus Competition
B) Causes of Channel Conflict
Although there are many causes of channel conflict most can be placed into one or more
of the following seven categories:
1. Role incongruities
2. Resource scarcities
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1. Role incongruities
2. Resource scarcities
Sometimes conflict stems from a disagreement between channel members over the
3. Perceptual differences
4. Expectational differences
Various channel members have expectations about the behavior of other channel
5. Decision domain disagreements
Channel members explicitly or implicitly carve out for themselves an area of decision–
6. Goal incompatibilities
Each member of the marketing channel has his or her own goals. .
A case-in-point of conflict in the channel caused by goal incompatibility can be seen in a
Behavioral Processes in Marketing Channels
7. Communication difficulties
C) Channel Conflict and Channel Efficiency
Key Term and Definition
▪ Channel efficiency: The degree to which the total investment in the various inputs
necessary to achieve a given distribution objective can be optimized in terms of
outputs.
The greater the degree of optimization of inputs in carrying out a distribution objective,
the higher the efficiency and vice versa.
1) Negative Effect – Reduced Efficiency
2) No Effect – Efficiency Remains Constant
Figure 4.2 shows that the existence of channel conflict has had no change in channel
3) Positive Effect – Efficiency Increased
Figure 4.3 shows where conflict causes an increase in channel efficiency where both
4) Conflict and Channel Efficiency – General Curve
Figure 4.4 shows an example of the combination of all three curves and the possible
D) Managing Channel Conflict
There are four generalizations regarding channel conflict:
1. Conflict is an inherent behavioral dimension in the marketing channel.
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2. Given the numerous causes from which conflict may stem, it is a pervasive
Channel managers must:
1. Detect conflicts or potential conflicts
1. Detect channel conflict
Table 4.1 shows an excerpt from Industrial Distribution Magazine.
The marketing channel audit is another possible approach of uncovering potential
conflict between channel members. The term channel audit suggests a periodic and
2. Appraising the effect of conflict
A growing body of literature has been emerging to assist the channel manager in
3. Resolving conflict
When conflict exists in the channel, the channel manager should take action to resolve
the conflict if it appears to be adversely affecting channel efficiency.
Three techniques are suggested:
Behavioral Processes in Marketing Channels
Power in the Marketing Channel
Key Term and Definition
▪ Power: When we use this term in a marketing channel context, we are referring to
“the capacity of a particular channel member to control or influence the behavior of
another channel member(s)”.
A) Bases of Power for Channel Control
o Reward
o Coercive
1) Reward Power
This source of power refers to the capacity of one channel member to reward another if
the latter conforms to the influence of the former. This power base is present in virtually
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2) Coercive Power
Coercive power is essentially the opposite of reward power. In this case, a channel
3) Legitimate Power
This power base stems from internalized norms in one channel member which dictate that
another channel member has a legitimate right to influence the first, and that an
4) Referent Power
When one channel member perceives his or her goals to be closely allied to, or congruent
with, those of another member, a referent power base is likely to exist.
5) Expert Power
This base of power is derived from the knowledge (or perception) that one channel
member attributes to another in some given area. In other words, one channel member’s
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B) Using Power in the Marketing Channel
From the standpoint of the channel manager in the producing or manufacturing firm,
power must be used to influence the behavior of channel members toward helping the
firm to achieve its distribution objectives.
The questions facing the channel manager are: which power bases are available and
which base or bases should be used?
1) Identifying the Available Power Bases
This issue is usually straightforward because they can be readily identified. Generally,
they are a function of the size of the producer or manufacturer relative to channel
2) Selecting and Using Appropriate Power Bases
Which bases should be used to exercise power in the marketing channel is a more
difficult and complex issue for the channel manager to deal with than the previous issue.
So, in order to use power to enhance rather than inhibit channel relationships, the channel
manager needs to know how effective the various power bases are in influencing channel
members to carry out the firm’s distribution objectives, what possible reactions the
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Role in the Marketing Channel
Key Term and Definition
▪ Role: A set of prescriptions defining what the behavior of a position member should
be.
Roles in the marketing channel do not necessarily stay the same.
From the channel manager’s standpoint, the key value of role concept is that it helps to
describe and compare the expected behavior of channel members and provides insight
into the constraints under which they operate.
Channel managers can use the concept of role to formulate such questions as:
▪ What role do I expect a particular channel member to play in the channel?
Communication Processes in the Marketing Channel
Communication has been described as “the glue that holds together a channel of
distribution”.
A) Behavioral Problems in Channel Communications
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1) Differing Goals
Corporate management in large manufacturing firms is characterized by a growth
2) Language Differences
The other basic communication problem between the manufacturer and channel members
3) Other Behavioral Problems in Channel Communications
Three other behavioral problems that can inhibit effective channel communications are:
• Perceptual differences among channel members
• Secretive behavior
• Inadequate frequency of communication
a) Perceptual Differences
Perceptual differences may occur among channel members on a wide variety of
b) Secretive Behavior
By not divulging information, such as an upcoming promotional plan, manufacturers
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c) Inadequate Frequency of Communication
The association of infrequent communication with lower quality communications
Answers to Review Questions
1. Looking at a marketing channel through a purely economic model overlooks the
2. Interactions among channel members are social processes among people. Put simply,
no manufacturer ever has spoken to Walmart; rather, a person at the manufacturer has
3. In both competition and conflict, the channel members involved have goals perceived
to be incompatible. When in competition, each channel member works towards its
4. The most frequently cited underlying causes are: (1) role incongruities, (2) resource
scarcities, (3) perceptual differences, (4) expectation differences, (5) decision domain
disagreements, (6) goal incompatibilities, and (7) communication difficulties.
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5. Yes. In practice, it would be very rare to have only one cause of conflict. More than
likely, several causes would be operating at once. It is possible, however, to view
6. While the most commonly held belief is that the effect of conflict is to diminish
channel efficiency, this negative impact is but one possibility. Conflict also can have
7. Conflict can be a force for change and, of course, change is necessary for growth.
This positive outcome is possible if the channel members involved use the conflict as
8. There are two general approaches to detecting conflict. The first, “after the fact”
detection, is straightforward albeit usually unsatisfactory. By the time the conflict is
detected, damage already may have been done.
The second approach is the “early warning system.” This approach is far more
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9. Having detected conflict, the channel manager must attempt to appraise its effects on
channel efficiency. Though some methods are now being developed to do this more
precisely, managerial judgment must suffice in most cases.
Assuming the effects of the conflict are negative or likely to become negative, the
10. To meet its goals, the producer or manufacturer will want its intermediaries to follow
its direction and cooperate in its efforts. However, an intermediary may not do this
11. The bases of power are: (1) reward, (2) coercion, (3) legitimacy, (4) referent, and (5)
expert.
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12. To determine which power bases are available, the channel manager should analyze
three factors:
▪ The size of the producer or manufacturer relative to the channel members: the
13. The following is what is known about power bases:
a. Some form of power must be exercised in order to influence channel members’
behavior.
b. The effectiveness of the various power bases in influencing channel member
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14. Role refers to the set of prescriptions defining the behavior of a position member.
Role provides the channel manager with a framework for developing expectations
15. Some of the major communication problems are: (1) differing goals, (2) language
differences, (3) perceptual differences, and (4) secretive behavior.
These four behavioral problems cause communication breakdowns for more than just
reasons of position in the channel and business operations. To foster effective
communications flow in the marketing channel, the channel manager must recognize
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Commentaries on Issues for Discussion
1. Students may initially side with supermarkets who were irate because it appeared
food manufacturers were increasing wholesale prices unilaterally, suggesting these
manufacturers were acting only in their own interests without considering interests of
their channel partners. Because wholesale prices charged to supermarkets were rising
when commodity prices and fuel costs to the manufacturers had been decreasing, it
2. Every distributor, every sales rep knows the fury Bill Schwartz is currently feeling.
They perceive that manufacturers are only too anxious to let them handle the
manufacturer’s product line when the product is unknown or the territory fallow, in
short, when the effort will be high and the profits low. After the distributor has
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3. Amoco is unabashedly using coercive power to force the independent dealers to
become “gas only” stations. Although Amoco, because of its strong power position, is
likely to have things its way in the short run, in the longer run such use of coercive
power can lead to substantial problems if the independent franchisees seek to
4. Nike appears to be operating based on its own needs and to maximize its benefits to
its own bottom line by requiring the long six-month order time. Nike appears to have
given little if any thought to the role of the retailer of athletic footwear caught up in
what has become a fast-paced, fashion-oriented business that puts a premium on
5. Walmart is obviously in control and is using coercive power to enforce its directives.
Coercive power is essentially the opposite of reward power and should be used
carefully when dealing with valued channel partners. In this case Walmart’s power
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6. Students should note the power disparity between Chrysler and its individual dealers.
Chrysler was accustomed to operating from a position of superior power. First of all,
as a much larger entity, Chrysler always enjoyed a relatively powerful economic and
Who are the “good guys”? When businesses fail and people lose their jobs, it is hard
to find any. However, it is hoped that what would emerge is a more competitive
Chrysler with a stronger dealer network. Students may wish to weigh in on their take
of this matter.
7. This does not appear to be just a communication problem between UPS and its
franchises. A fundamental channel conflict is evident between the franchisor (UPS)
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realm of the contract it has with its franchisees. This approach is clearly coercive,
relying almost entirely on a legal basis to enforce the requirement. While this may
satisfy UPS objective of attracting new clients in the short term, it may lead to lower
morale, less cooperation, and ultimately, abandonment among some franchisees who
view the franchise arrangement as detrimental to their own best interests.