Page 410 - Foundations of Marketing

Marketing Channels and Supply-Chain Management | Chapter 13 377

Wholesalers can assume channel leadership roles as well. Wholesaler leaders may form
voluntary chains with several retailers, which they supply with bulk buying or management
services, and which may also market their own brands. In return, the retailers shift most of
their purchasing to the wholesaler leader. The Independent Grocers’ Alliance (IGA) is one
17
of the best-known wholesaler leaders in the United States with nearly 5,000 outlets. IGA’s
power is based on its expertise in advertising, pricing, and purchasing knowledge that it makes
available to independent business owners. Wholesaler channel leaders may help retailers with
store layouts, accounting, and inventory control.

Channel Cooperation

Channel cooperation is vital if each member is to gain something from the other members.
Cooperation enables retailers, wholesalers, suppliers, and logistics providers to speed up
inventory replenishment, improve customer service, and cut the costs of bringing products to
18
the consumer. Because the supply chain is an interrelated system, the success of one firm in
the channel depends in part on other member firms. Without cooperation, neither overall chan-
nel goals nor individual member goals will be realized. Thus, marketing channel members
should make a coordinated effort to satisfy market requirements. Channel cooperation leads
to greater trust among channel members and improves the overall functioning of the channel.
Cooperation also leads to more satisfying relationships among channel members.
There are several ways to improve channel cooperation. If a marketing channel is viewed
as a unified supply chain competing with other systems, individual members will be less likely
to take actions that put other members at a disadvantage. Channel members should agree on
common objectives and their tasks should be precisely defined so that roles are structured for
maximum effectiveness in working toward achieving objectives. Starting from a common
basis allows channel members to set benchmarks for reviewing intermediaries’ performance
and helps to reduce conflicts as each channel member knows what is expected of it.

Channel Conflict
Although all channel members work toward the same general goal—distributing products
profitably and efficiently—members sometimes may disagree about the best methods for
attaining this goal. If self-interest creates misunderstanding about role expectations, the end

© 2012 Cengage Learning. www.cengagebrain.com Channel Conflict

Textbook publishers, which
traditionally have marketed
college textbooks through
campus bookstores and
now sell textbooks through
their own websites, may be
experiencing channel conflict.

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.