Supplier-retailer relationships

Par. 1.4, 5.3, Chapter 6 - Castaldo et al.

Prof. Elisa Martinelli

A.Y. 2017/18 - I semester

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
 Agenda

In which business areas suppliers and retailers

interact?

What are the sources of competition vs cooperation

in suppliers retailers relationships?

Power, Trust and conflict

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
 Supplier-retailer relationships

purely
long-term-
transactional
oriented
market
partnerships
relationships

short-term cooperative
economic interaction
exchange strategies

Generally, supplierretailer relationships are

situated along a relationship continuum

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
3
Business areas of supplier-retailer interaction
Contractual Logistics relationships Marketing relationships
Relationships
Products Order taking o Market positioning
Margins/profitability Order execution o Product quality
Inventory turnover Order perfection o Advertisement
Price list Stock breakages investments
Discount levels and Average stocks o Promotional
types Lead time investments
Payment terms and Delivery frequency & o Innovation level
time punctuality o chain store formats
Negotiation time Pallet handling o Customer service
Contact frequency Returns offered
Seller/buyer Product coding o Information sharing
transparency o Merchandising
Information systems
Decisional levels o Category management
o Product display in-
store
Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
4
 Supplier-retailer relationships in evolution

Contractual Relationships Logistics relationships Marketing relationships

Discrimination Technical function Distribution as a

Tatical role marketing mix lever
(efficiency)

Differentiation Strategic tool Distribution with an

Efficiency & autonomous MKTG
effectiveness Retailing mix
Trade Marketing;
ECR; Integrated logistics; CM/ECR; information
co-packing; Trade marketing; sharing
relational selling ECR
Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
5
 Supplier-retailer relationships: a
complex interaction

Contractual
Dimension
Market power
conflict

Competitive
Dimension

Coopetition
Trust
Value creation Cooperative
Dimension

Value co-
creation
Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
6
 Power
Power is the ability of one channel member to get another channel member to do what the
latter would not otherwise have done. Power is the inverse of dependence: the more highly
dependent one channel member is on another, the more power the latter has relative to the
former (Stern and El Ansary, 1988)
dyadic relationship between channel members
Power sources

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
7
 Manufacturers vs retailers
Manufacturers and retailers have divergent profit objectives.

Manufacturer Retailer
wants to maximize wants to maximize the profit
the profits of its own brands. of its entire product range.

CONFLICT

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
8
 Trust
Both the retailer and the supplier have faith that each will be truthful and
fair in their dealings with the other

Capabilities Conflict (-)

Past experiences Commitment (+)
Lenght of the relationship Uncertainty (-)
Customer orientation Long-term relationship (+)
Opportunism Performance (+)
Reputation Resources devoted to the
Reliability relationship (+)
Mutual organisational value TRUST Transactional costs (-)
Power/dependence Two-way communication (+)
Idiosyncratic investments Customer satisfaction (+)
etc. Cooperation (+)

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
9
Suppliers and retailers can serve
consumers better, more quickly
and more cheaply by working
together as trading partners!!!

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
10
 Channels and value
A product can be perceived as different (it performs different functions) if
offered in different retail service situations (different retail contexts).
Consumer behaviour, relative to consumption and buying both, is critical to
define the product value Importance of channel policies

Can 33 C&C
clX24
A cola could be offered in
Supermarket
Pet 1L different places and in
different formats/packs.
Hypermarket
Pet 2Ltx6 Then, it will be perceived
as different in satisfying
Vending
Can 33 cl customers needs and
wants
Caf
Bottle 25 cl
The product and the retail service, together, offer a unique value proposition to the consumer.
It is on this linkage that suppliers are trying to strenghten their relationship with retailers

Trade Marketing Orientation

Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa
11
Supplier-retailer relationships

SEE YOU TOMORROW

Prof. Elisa Martinelli

A.Y. 2017/18 - I semester
Course: Trade Marketing and Sales Management - A.Y. 2017-18 Prof. E. Martinelli
Degrees: International Management; Direzione e Consulenza di Impresa