Distribution Strategies

Distribution Strategies

Five Strategies for Motivating the Dealerships

Following is the list of five Strategies that S company may use to motivate its dealers, as the competition in the market is very much high, and because of which it is becoming difficult for the company to motivate deales and intermediaries to deal in their brand.

Coercive power

Reward power

Legitimate power

Expert power

Referent power

Briefly Description of Each Strategy

Coercive Power

It is the ability to get the submission of other channel members through intimidation of economic loss, as could be a great decline in purchase orders, replacement, payment delays, abuse especially given the price set by a monopoly position, etc.

The exercise of this power causes conflicts increasingly frequent and intense according to the penalty imposed by the graph indicates when such occurrences will be higher.

The persistence of the exercise of coercive power may give rise to the emergence of countervailing power, i.e. in this case the affected members are integrated to defend or resist, and help S company in gaining the interst of the dealers.

Reward Power

Reward power is the ability to offer another channel member benefit or compensation. As an example we can take a preferential order and important distinction in the provision, granting exclusive or collaborative campaigns.

Legitimate Power

Legitimate Power is the authority granted under a contract or agreement to impose a decision on other channel members. He who possesses such a franchisor may impose the purchase of certain supplies, personnel and products that must sell the franchisee. Therefore confers a benefit to the intermediate distributor in the chain.

Expert Power

Expert Power is the ability to influence based on experience and knowledge. Examples: The possibility of the use of patents or trademarks, sharing key contacts, provide technical, commercial or administrative.

Reference Power

Reference Power involves a leadership and a recognized authority by members of a channel. For example being Walt Mart provider involves production capacity, reliability of supply, and also become a supplier of Rolex or BMW or any brand recognized and prestigious reputation in the marketplace provides the intermediary.

Advantages and Disadvantages of Each Strategy

Coercive Power

Coercive power's easy handling has been considered its main advantage, besides it increases self-esteem.

However, in coercive power subordinates will tend to end the relationship which is the disadvantage of this strategy. Moreover, the vigilance requirement is marked as another disadvantage of the strategy.

Reward Power

Reward power has been percieved as the most effective strategy because it keeps the individual in the relationship. ...