Changing Channels Case Study

Changing Channels: Indian perspective
Abstract: There are changes happening in the distribution of goods and services in India. This paper looks at some important aspects of a channel, the evolution of thought pertaining to them and their application to the Indian context.
Introduction
Marketing started out as a purely distribution function and has evolved to encompass other activities that an organization undertakes (Wilkie & Moore, 2003). The role of distribution cannot be understated in the company; however the focus has shifted from this function alone to a set of complementing functions resulting in the product/service delivered to the satisfaction of all involved.
Manufacturers transfer goods from their facility to the end consumer
Increases in information-processing capacity throughout the value- added chain are changing the patterns of what buyers and suppliers, respectively, "know" in given situations-often (as information is non-appropriable) in the direction of equalization-thus altering both the dynamics and terms of negotiation. In the short run and in any given situation, depending on the context (and in particular on who "knew more" originally), the balance of power might shift in the direction of buyers or sellers, in either case leading to dislocations in industry structure and influencing relative industry attractiveness (Porter & Millar, 1985).
Opportunism in the channels
There are times when the channel members do not provide the necessary information to carry on with the smooth functioning of the channel. Such situations may be termed as being characterized by opportunistic behavior.
Opportunism is self-interest seeking behavior with guile. Guile is an unobserved state or motive that implies insidious cunning, duplicity, and deceit in an exchange partner's actions. Active opportunism occurs when a firm engages in a particular behavior to its own benefit that violates certain explicit or implicit restrictions in the relationship or engages in forced renegotiation to its own benefit in response to new circumstances (Wathne &
The figure below shows it Figure 2 – The range of marketing relationships (Webster, 1992)
According to Morgan and Hunt (1994) “Relationship marketing refers to all marketing activities directed toward establishing, developing, and maintaining, successful relational exchanges”. This definition recognizes the process aspects of relationship development and maintenance.
Barton Weitz and Sandy Jap (1995) define three control mechanisms used to coordinate activities in corporate and conventional channels – authoritative, contractual and normative. The same is represented in figure 3. Figure 3 – Channel relationship management research (Weitz & Jap, 1995)
Typically multiple control mechanisms are used to coordinate the activities of actual channel relationships. Channel firms may try to enter into multiple relationships with competitive suppliers. Suppliers may not be willing to share sensitive information with these channel firms even if the information is useful in coordinating activities, fearing that the information will be revealed to