Marketing Channels
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Question 3: "Suppliers should not deal with intermediaries who are more powerful than they are". Debate this statement.
If a supplier deals with strong intermediaries, they will probably exercise power over him. As they are able to provide him with more utilities (value, benefits and satisfaction). However, if there are many strong distributors in the market offering similar packages of benefits and utilities. Then there will be no harm for a supplier to deal with a more powerful distributor or intermediary as they will no longer be so special and powerful since they know the supplier can switch to a any other intermediary anytime (they are easily replaced).
Therefore, the level of dependence of the supplier on the intermediaries will be lower. Another way is to excel in logistics when dealing with downstream channel members. Therefore increasing their rewards for doing business with the supplier and becoming difficult to imitate. In turn, channel members make markets and are the faces of their producer to those markets.
Question 4: "We should not deal with powerful suppliers. They are sure to abuse us, after they use us". Debate this statement, often heard in the meeting rooms of distributors and sales agents.
As the usual channel conflict is a zero sum game where the gains of one party are the loss of the other. Many problems may arise between channel members till they actually reach a compromise where each party is satisfied and is able to see where he benefits from the relationship and cooperation.
We can see that many powerful suppliers such as Wal Mart oblige their suppliers to adopt their strategies. For example, Wal Mart obliges many of its suppliers to adopt EDI (Electronic Data Interchange) using Web based systems that are not proprietary to any brand of IT or to any supplier. By exercising coercive power, some positive results may occur at the beginning but channel members may eventually react in a defensive
Question 3: "Suppliers should not deal with intermediaries who are more powerful than they are". Debate this statement.
If a supplier deals with strong intermediaries, they will probably exercise power over him. As they are able to provide him with more utilities (value, benefits and satisfaction). However, if there are many strong distributors in the market offering similar packages of benefits and utilities. Then there will be no harm for a supplier to deal with a more powerful distributor or intermediary as they will no longer be so special and powerful since they know the supplier can switch to a any other intermediary anytime (they are easily replaced).
Therefore, the level of dependence of the supplier on the intermediaries will be lower. Another way is to excel in logistics when dealing with downstream channel members. Therefore increasing their rewards for doing business with the supplier and becoming difficult to imitate. In turn, channel members make markets and are the faces of their producer to those markets.
Question 4: "We should not deal with powerful suppliers. They are sure to abuse us, after they use us". Debate this statement, often heard in the meeting rooms of distributors and sales agents.
As the usual channel conflict is a zero sum game where the gains of one party are the loss of the other. Many problems may arise between channel members till they actually reach a compromise where each party is satisfied and is able to see where he benefits from the relationship and cooperation.
We can see that many powerful suppliers such as Wal Mart oblige their suppliers to adopt their strategies. For example, Wal Mart obliges many of its suppliers to adopt EDI (Electronic Data Interchange) using Web based systems that are not proprietary to any brand of IT or to any supplier. By exercising coercive power, some positive results may occur at the beginning but channel members may eventually react in a defensive