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Logistics PPS8

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.

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Logistics PPS8

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  1. LogisticsPPS8 Topic 5

  2. Topic 5 The Behavioural Processes in Distribution Channels and Channel Conflict

  3. Distribution channels as part of a social system Channel power Channel conflict Channel communication

  4. Channel power sources Reward Power Coercive Power Legitimate Power Referent Power Expert Power

  5. Reward Power • Financial incentive to next channel member • Ability to be franchisee i.e. @ McD

  6. 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 Spar Pick n Pay Shoprite/ Checkers Woolies

  7. 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

  8. Referent Power Channel member sees other as having same objectives and part of same reference group

  9. Expert Power = knowledge/ perceived knowledge one channel member has & influence power to change behaviour of other members

  10. 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 …

  11. 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

  12. Using power to exert influence in the distribution channel Promise Legitimacy Threat Coercion Legalistic Expertise, reward to communicate effectively Influence strat Power source Request Referent, reward, coercion Info exchange Expertise, reward Recommendation Reward

  13. Using power to exert influence in the distribution channel Promise Reward Threat Coercion Legalistic Legitimacy to communicate effectively Influence strat Power source Request Referent, reward, coercion Info exchange Expertise, reward Recommendation Expertise, reward

  14. CHANNEL CONFLICT

  15. 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”

  16. Causes of channel conflict 2-3 causes each

  17. Conflict resolution Conflict resolution

  18. Two main reasons for conflict: • Use of power • Attempt to gain more power

  19. Decision framework for evaluating channel conflict Importance of threatened channel in terms of current or potential volume of profitability High Low High Fire Act to avert conflict Allow threatened channel to decline Prospect of destructive conflict Look for opportunities to reassure threatened channel and allow to leverage power Do nothing Smoke Low

  20. The four methods to solve channel conflict • Problem-solving • Persuasion • Negotiation • Politics

  21. Problem-solving

  22. Persuasion

  23. Negotiation

  24. Politics • Coalitions • Mediation and arbitration • Lobbying and judicial appeal

  25. COMMUNICATION IN THE DISTRIBUTION CHANNEL

  26. Communication • Perceptual differences (does “soon” mean within 24 hours?) • Secretive behaviour • Infrequent communication

  27. case study Page 136 … and answer questions on page 137

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