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    The dealer holds more of the power in this relationship assuming the dealer is large player in the market. If the dealer is viewed as the standard in the market due to its prestige, the supplier's best interest includes conforming to the dealers wants and needs. The supplier may result in compensating the dealer for potential losses by sharing important market info, or even rewarding a "window" for dealers to carry product exclusively.

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    The dealer holds more of the power in this relationship assuming the dealer is large player in the market. If the dealer is viewed as the standard in the market due to its prestige, the supplier's best interest includes conforming to the dealers wants and needs. The supplier may result in compensating the dealer for potential losses by sharing important market info, or even rewarding a "window" for dealers to carry product exclusively.

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    10 views2 pages

    426 HW 3

    Uploaded by

    api-317500759
    The dealer holds more of the power in this relationship assuming the dealer is large player in the market. If the dealer is viewed as the standard in the market due to its prestige, the supplier's best interest includes conforming to the dealers wants and needs. The supplier may result in compensating the dealer for potential losses by sharing important market info, or even rewarding a "window" for dealers to carry product exclusively.

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    of 2

    AndrewRossow

    Bus426
    March9th2016
    Assignment#3

    1) Yes,ItispossibletoimagineascenarioinwhichthedealerismorepowerfulthanDuPont.
    ScarcityinthisscenarioisverylowduetothefactthereareSeverallargeanddiversecompetitors
    (Monsanto,DOW,etc.).Thereforethedealerholdsmoreofthepowerinthisrelationship
    assumingthedealerislargeplayerinthemarket.Forthisscenarioweareimaginingthe
    switchingcoststobeloworevennotpresent(Supplierisntcurrentlyinchannel,butlookingto
    enter.)Thesupplierismoredependentonthedealertocarrytheirproductthanthedealeriswith
    supplier.
    a) SourcesofChannelPowerpresent:
    i)
    CoercivePowerisoccurringduetothefactthatifthesupplierdoesntconform
    tothewantsandneedsofthedealer,thananegativesanctioncanbeconducted.
    Suchas,Slottingpreferencesofthesupplierarenotbeingmet,Quotasofthe
    suppliersproductarelow,andcompetitorsarehigh,andareducedlevelof
    serviceflowstakeplacebetweensupplieranddealer.
    ii)
    ReferentPowercantakeplaceifthedealerisviewedasthestandardinthe
    marketduetoitsprestige,Inthiscasethesuppliersbestinterestincludes
    conformingtothedealerswantsandneeds,orbeleftout.
    Thesupplierinthisscenarioimaginedmustchangeitsnormalbehaviortobeincompliancewith
    thedealersdesires.Thisdependenceproducedgivesthedealermorepowerinthisrelationship.

    2)MassMerchandiserChain:
    A)Twomajorconsequencesthatwillresultarethedealersperspectiveofthesupplier,andthe
    diminishingrelationshipthatcan/mayoccur.Trustandcommitmentareimportantfactorsof
    relationshipsinchannels.Onereactiononecanimagineisthatthedealermayengagethesupplierin
    constructivediscussion.Thegoalhereistoworkthingsoutandimprovethesituation.Ifweassume
    thedealerhasapositiverelationshipwiththesupplier,wecanexpectthedealertoremainoneofthe
    suppliersbetterperformers.Thesuppliermayresultincompensatingthedealerforpotentiallossesby
    sharingimportantmarketinfo,changingpoliciestoallowpreviouschannelmemberstocompeteona
    higherlevel,orevenrewardingawindowoftimefordealerstocarryproductexclusively.Suppliers
    mustestimateconsequencesofexistingchannelswhenforecastingthismove.Suppliersmustattempt
    tocommunicateandsoftentheblowtoreducethechanceofwithdrawalorventing.Suppliersmust
    alsoknowtheimportanceofthisdealer,andthevalueobtainedorlostfrommakingthisswitch.

    B)Minordealers,maynothavethesay/powerneededtoconstructivelyworkthingsout.Amore
    passiveapproachwouldbeexpectedbecausetheswitchtoaMassMerchandisercouldbearesultof
    achangingenvironment.Ifthedealersreachdoesntmeettheproduct'sdemandorcapabilitythere
    isntmuchthatcanbedone.Ventingmaytakeplace,butlittletonoactioncanbeexpected.The

    decisionwasbasedonthesuppliersneeds/wantsnotthedealers.Thisdecisionmayserveasawake
    upcallandallowthedealertolookintohowtopreventthisinthefuture.

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