Page 106 - Marketing the Basics 2nd

98 Marketing: the Basics
manufacturer is the dominant firm in the relationship, the interme- diary will concede though no one likes it when they are leaned on and legal contracts are the centre of a conversation, the sad truth is that this is often necessary.
expeRT poWeR
Expert power is an option if the manufacturer possesses special knowledge that the intermediaries value. So long as the expertise remains with the manufacturer, the bargaining power is high. To preserve expert power, the manufacturer must continue to develop new products, processes or ideas that the intermediaries value. This is a powerful and generally well-received approach.
RefeRenT poWeR
Finally there is referent power. In this case, the manufacturer is so respected by consumers, the intermediaries would face financial ruin if they did not comply with the requests or demands of the manufacturer. Manufacturers like this because power remains with them and allows them to control the channel.
Power often shifts over time as the economy and the environ- ment changes. An example of a fundamental shift of power is in the supermarket industry. In past years companies like the UK’s United Biscuits, which, to no one’s surprise, makes biscuits, would tell big supermarket chains like Tesco and Sainsbury’s what biscuits customers like, because they had more data, more market research and generally more insight into the British biscuit market. However, as the supermarkets adopted more and more IT, they began to collect more and more data about consumers’ buying habits, including what biscuits they preferred. Over time Sainsbury’s and its competitors began to tell United Biscuits what they wanted, a 180° change from the past; power had not so subtly shifted.
EVALUATING PARTNERS
Producers must evaluate the performance of their marketing channel partners. Inventory turnover, sales quotas, cost of goods sold and cooperation in promotional and training programmes are