Page 409 - Foundations of Marketing

376 Part 5 | Distribution Decisions

manufacturers and suppliers partnered with the Environmental Protection Agency to form the
Suppliers Partnership for the Environment. It is a forum for companies and their supply-chain
partners to share environmental best practices and optimize supply-chain productivity. The
16
result is a more efficient and less polluting supply chain. In this section, we discuss chan-
nel member behavior—including leadership, cooperation, and conflict—that marketers must
understand to make effective channel decisions.

Channel Leadership

Many marketing channel decisions are determined through channel member compromise with
a better marketing channel as the end goal. Some marketing channels, however, are organized
and controlled by a single leader, or channel captain (also called channel leader ). The chan-
nel captain may be a producer, wholesaler, or retailer. Channel captains may establish channel
policies and coordinate development of the marketing mix. To attain desired objectives, the
captain must possess channel power , the ability to influence another channel member’s goal
achievement.
When a manufacturer is a channel captain and it determines that it must increase sales
volume to achieve production effi ciency, it may encourage growth through offering channel
members fi nancing, business advice, ordering assistance, advertising services, sales and ser-
vice training, and support materials. These benefi ts usually come with requirements related to
sales volume, service quality, training, and customer satisfaction.
Retailers may also be channel captains. Walmart, for example, dominates the supply chain
by virtue of its sheer size, the magnitude of its resources, and a strong, nationwide customer
base. To be part of Walmart’s supply chain, other channel members must agree to Walmart’s
rules. Small retailers too may assume leadership roles when they gain strong customer loy-
alty in local or regional markets. Retailers that are channel captains control many brands and
channel captain The dominant
leader of a marketing channel sometimes replace uncooperative producers. Increasingly, leading retailers are concentrating
or a supply channel their buying power among fewer suppliers, which makes it easier to coordinate and maintain
channel power The ability a high level of quality and transparency along the entire supply chain. These more selective
of one channel member to relationships often involve long-term commitments, which enable retailers to place smaller
influence another member’s and more frequent orders as needed, rather than waiting for large-volume discounts, or plac-
goal achievement ing large orders and assuming the risks associated with carrying more inventory than needed.

© iStockphoto.com /dynasoar

Channel Leadership
Nike provides channel
leadership in the distribution of
its products.

Copyright 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.