Motivating intermediaries in business
A. A company can use power as a strategy to motivate intermediaries and the identified types of power available to the company includes coercive power, reward power, legitimate power, expert power and referent power ((Stojkovic, Kalinich and Klofas, Page 247 chapter 10 as cited by Rivera, July 26, 2006). Briefly description of each strategy In coercive power, the manufacturer, being in a dominant position can intimidate the intermediary to perform certain tasks which the intermediary could not otherwise do by threatening to terminate the relationship if the intermediary decline to do as directed.
As for reward power, the manufacturer promises to reward the intermediary if the intermediary meets set targets. As for legitimate power the manufacturer, due to contractual relations, will direct the instruct the intermediary, to perform certain functions without questioning. In expert power, the manufacturer is assumed to have all the information regarding the products and the intermediary will look to the manufacturer for the expertise information and believe whatever they are told.
As for referent power, the intermediary has pride in associating with the manufacturer and would do anything possible to maintain the relationship with that manufacturer. Advantages and disadvantages each strategy Coercive power, by threatening to severe the
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The advantage of reward power is that it will motivate the intermediary to employ more resources in order to meet the set targets. The disadvantage is that in the absence of the reward, the intermediary may relocate the resources. The advantage of Legitimate power is that the intermediary will carry out activities as instructed and the manufacturer will have a standardized system of marketing and distributing the products. The disadvantage is that the manufacturer will be responsible for the outcome of the instructions and the consequences therein.
Expert power, the advantage in this particular case is that the intermediary happily act as instructed since they believe in the ability and knowledge of the manufacturer. The disadvantage of this strategy is that if the company gives wrong instructions, the same will be carried out without verification and this can be disastrous. Referent power, the advantage of this strategy is that the intermediary takes pride in the products he is distributing. The disadvantage of this strategy is that the intermediary will do anything to retain the distributorship even if it is not in the long-term interest of both the company and intermediary. Also read Motivational Approach to Work Design
Examples of situations in which each strategy is appropriate Coercive power, this type of strategy is appropriate when the company controls a substantive market share. Reward power, this is appropriate when a company want to increase its market share. Legitimate power, this strategy is appropriate when launching a new product and adhering to instruction is absolutely necessary. Expert power, this is appropriate when the company wants to keep competitors at bay by making intermediaries completely dependent on company knowledge.
Referent power, this strategy is appropriate where the manufacturer is a market leader and intermediary will be seen as a failure if the contract is terminated.
B. Distribution programming The conventional system of distributing products is comprised mainly of an independent producer, wholesaler(s) and retailer(s), however this system is being replaced by a new system known as vertical marketing system and the most advanced system of administering this vertical marketing system is distribution programming (Grashaw 2009).
According to Grashaw, the most important feature of the vertical marketing system is that the producer, wholesaler(s) and retailer(s), who are referred to as the firms going forward, sign an a contract that required them, among other things, to formulate a proactive and productive plan. Grashaw states the as for distribution programming, its most important aspect is the reduction of conflict by prohibiting one channel member from increasing profit at the detriment of another member or any other action that will obstruct profit for the entire channel.
This is achieved through coordination and sharing of necessary records, unit procedures and information which is vital to coordinating resources and efforts, states Grashaw. Distribution programming hence, enables firms to maximize operational efficiencies in addition to formulating coordinated strategies that result in optimal results. In this way firms are motivated to coordinate efforts that culminate in the best use of combined resources of the group thereby leveraging strengths and minimizing weaknesses concludes Grashaw.
(1) Grashaw, Kurt (July 8, 2009). The Components of Distribution Programming. The most advanced supply-distributor arrangements for administering VMSs. Article in KERTGRASHAW Marketing and Communications. Retrieved on May 14, 2010. <http://www. grashaw. com/articles/Distribution_Programming_070809. html >
Rivera, Brandi (July 26, 2006). Types of Power in Management, article in Associated content. Retrieved on May 13, 2010. <http://www. associatedcontent. com/article/45505/types_of_power_in_management. html>