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Unformatted text preview: tributor of Spanx brand hosiery in the region. How does this form of market coverage benefit the retailer? How
does it benefit the manufacturer?
Exclusive distribution entails only one or a few dealers within a given market area. It is the most
restrictive form of distribution intensity. Retailers may be unwilling to commit the time and
money necessary to promote a product unless the manufacturer guarantees them an exclusive
territory. The arrangement shields the retailer from direct competition and enables it to be the
main beneficiary of the manufacturer’s promotion within the geographic area. For the
manufacturer, exclusive distribution can serve to project an exclusive image for the product.
KEY: CB&E Model Distribution OBJ: 13-4 TOP: AACSB MSC: BLOOMS Synthesis 12. List and briefly define the three basic types of channel relationships. Explain why they are
described as a continuum.
ARM’S-LENGTH RELATIONSHIPS. In these relationships, both parties retain their
independence and pursue only their own interests while attempting to benefit from the goods and
services provided by the other.
INTEGRATED RELATIONSHIPS. These relationships are at the opposite end of the relationship
continuum from arm’s-length relationships. In this situation, one company, or several companies
acting as one, performs all channel functions.
COOPERATIVE RELATIONSHIPS. These relationships exist between arm’s-length and
integrated relationships. In general, cooperative relationships are administered using some sort of
formal contract. They tend to be more flexible than integrated relationships. Also, they tend to be
used when a company wants less ambiguity in the channel relationship than the arm’s-length
relationship can provide but without the long-term and/or capital investment required to achieve
The three basic types of channel relationships are organized by how close the buyer and the
supplier interact with each other. Students need to understand that certain channel relationships
can fall between arm’s length and cooperative, or that a relationship can be integrated at some
point and then cooperative at others. All of the factors that affect choice of channel type also can
influence the relationship. A combination of relationships can exist––one that is kind of
cooperative and still has a degree of arm’s length can exist. A continuum indicates that
relationships can and do fall at many points within the graphic representation.
KEY: CB&E Model Distribution OBJ: 13-5 TOP: AACSB MSC: BLOOMS Synthesis 13. Define channel power, channel control, channel leadership, and channel partnering and explain
how these four terms are related.
Power, control, leadership, conflict and partnering are the main social dimensions of marketing
channel relationships. CHANNEL POWER refers to the capacity of one channel member to control or influence the behavior of other channel...
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This document was uploaded on 09/29/2013.
- Fall '13