Page 105 - Marketing the Basics 2nd

DESIGNING INTERNATIONAL MARKET CHANNELS
The nature of distribution channels is not uniform across borders. In fact, distribution channels are greatly affected by the cultural, economic and social development of a country. Consider North America: usually a manufacturer makes a product, sells it to a wholesaler, who then sells it to retailers, and then to the general public. In Japan, soap passes through three wholesalers before being shelved at a retailer. Even more dramatic is the number of levels rice passes through: 23.
CHANNEL MANAGEMENT DECISIONS
Once the firm selects a partner, or a number of partners, to act as an intermediary between the manufacturer and the consumer, occa- sionally the leader must employ the different forms of channel power to elicit cooperation according to their terms.
coeRcive poWeR
The manufacturer threatens to withdraw a resource or terminate a relationship if intermediaries refuse to cooperate. In the short term, the manufacturer will likely force the intermediary to cooperate. In the long term however, threatening intermediaries builds resent- ment, which could lead the intermediary to pursue strategies to negate that advantage.
ReWaRD poWeR
Reward power is a strategy which involves offering a reward to an intermediary for cooperation. Offering incentives is more effective than coercive power, many firms use money and contests with trips and other awards as a way of enticing channels to sell their prod- ucts, these are often powerful motivators.
LegiTiMaTe poWeR
Employing legitimate power involves requesting intermediaries to respect their contractual obligations. By making such a request, the threat of terminating the contract is implied, not stated. If the
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