Transplantation a Channel Design from one Country Directly to Another without any Modification - Assignment Example

APPLIED CHANNEL SYSTEMS PART II Name of Student Institution Date Chapter 5 Question 3: Use the concept of demand side gaps to explain why it is frequently a bad idea to transplant a channel design from one country directly to another without any modification. It is never advisable to take a channel design from one country to a different one before doing any modifications because it is bound to be faced with problems. Modifications should be done on the channel design to ensure that the goods and services it is offering will be able to provide exactly what the customers in the new country are demanding for. Business is all about customer satisfaction and competition with the other players offering the same products and services. What the channel is offering should be in line with what the customers need. Modifications must be made in terms of the prices of the products being offered and the quality or level of those services Coughan et al (2006, 154). The prices and the quality of services that a channel is offering should not be at a disadvantage when compared to the other channels operating in the same country. If anything they should be higher or the best. These are the things that management should give much attention to before taking any channel design to another country. The quality of the services and product together with after sales service should be modified to fit in the new society. The likes, dislikes and preferences of the new market should be studied before modifications are made. Anything being done should be done in comparison to the players already in the market of the new country. The channel design being transferred should be tuned to offer something different from what is already being offered in the new country. If it has to be the same let it be offered in a differed way so that the channel can appear to be unique. Failing to make modifications is not good because once a gap has been established; it becomes costly to close it. When customers are dissatisfied and have already decided to move to a different supplier for better services, their actions may cause the supplier they are abandoning to incur heavy losses Coughan et al (2006, 155). In some cases the end user of the product may be advised to destroy the product. This is very costly to the seller because there is no revenue fetched from this product. Taking back that product that is unwanted is also a costly affair. Any channel design being transplanted to a different country must be reviewed for any possible formation of demand side gaps since they affect performance. If this fails to be done then the channel that adopts the design will encounter gap formation Coughan et al (2006, 156). Before transplanting the channel, the managers need to give attention to the demand side in order to avoid the gaps that may come thereafter. The prevailing market conditions and the demands and expectations of buyers differ from country to another. This is dictated by things such as policies, market trends, personal likes and dislikes among other factors. These factors which determine the pattern of purchasing cannot be expected to be the same in every country. As a result it is important to consider that what works for a given channel in one country will probably not work for the same channel in a different country. It therefore demands that the demands of the customers in the new host country be considered to determine how the channel will be operated Coughan et al (2006, 158). Failure to do modifications on the channel means that when it begins operations in the new country it will be faced by serious marketing problems. Gaps will definitely develop in any place where the customer is not satisfied or has other options that can bring more satisfaction than the channel being transplanted. An example of an expectation or demand that end users may expect from the new channel that has been transplanted is the delivery service whenever they purchase from the channel. Other channels offering the service might snatch these buyers from the new channel if its managers have not thought of providing such services. A demand size gap is then formed which will then be very costly to close once the customers have moved to the next channel. Failing to make modifications on a channel design makes that design to become vulnerable to determining factors like culture. Cultures of people vary from one place to another. Culture will determine how people in the country that is receiving the channel design will react to it. Culture may make them accept it or reject it Coughan et al (2006, 220).The design should then be modified depending on the culture of the people of the country that it is being transferred to. Another thing that can make a channel design taken to another country to fail is competition between players in the same industry. Competing channel designs make the market a very difficult place for the new channel to penetrate. Those with the intention to transfer the channel design should therefore do market surveys and study their potential competitors so that they can make appropriate modifications before beginning the process of transfer. Chapter 6 Question 6: You are the owner of or Manager of an auto dealership in Germany selling the Audi line. Your dealership is exclusive to Audi; you have invested heavily to build the dealership; and your contract is such that, if you decide to sell your dealership, Audi has the right to approve or disapprove any buyer you might find. What is the balance of power in your relationship? What sort of working relationship are you likely to have with your supplier? What could your supplier do to ensure you do not become alienated? Marketing channels have systems that rely on each other such the one in the question. Power is normally used to manage interdependence. In order for the channel to be able to generate value and to work together successfully there should be proper management of interdependence. Power belongs to the relationship but there are some relationships in which power is reserved for one partner. The auto dealership and Audi have an imbalanced relationship where Audi maintains power over the dealership Coughan et al (2006, 220). The dealership is weaker in this power balance and it depends on Audi. However Audi is expected to use power in a judicial and considerate manner Coughan et al (2006, 219).With Audi as the supplier having the power to approve and disapprove the buyer of the dealer it is obvious that it has all the control of the relationship on its side with the dealer having no say at all in the relationship. In the case at hand there is likely to be exploitation with the weaker partner often being dissatisfied with the decisions taken by Audi. The supplier should assess countervailing power and calculate the net dependence. Audi must be able to consider the relationship it has with the auto dealer. With Audi having power to approve or disapprove any buyer that will be found to take the dealership it means that there is dependence in this relationship. The dealership therefore depends on Audi to show the way forward for the dealership or to make decisions for it. In such a case Audi could lead to a sour relationship with the dealership if there is continued excessive control. This could possibly lead to frustration on the part of the dealership which means Audi must make steps towards ensuring that the relationship does not lead to alienation. Alienation would definitely spell doom for the relationship Coughan et al (2006, 220). However with enough care it has been proven that many relationships in which there is an imbalance of power do not always go bad. Because the balance of power in this particular relationship favors the supplier then exploitation can result to the disadvantage of the more dependent which is the dealership. There is possible realization of the potential. What results is that the dealership will suffer and one of the ways it will suffer is through economic and non economic ways as well. This can take place even in cases where Audi has not tried the appropriation of the rewards due to the dealership. The weaker and more dependent member in this case the dealership is likely to suffer because of dependence whenever the fortune of Audi which is stronger in the relationship registers any decline. The dealership can cushion itself from exploitation by the supplier and any other suffering by raising the dependence of the supplier in an effort to take care of the imbalanced dependence. Otherwise it can opt to take no step or reaction and wait for the supplier to do something instead. In order to avoid alienation especially on the side of the auto dealership Audi should support coordination and cooperation in the matters of the business Coughan et al (2006, 224). The supplier can initiate communication in an effort to reduce the feeling of alienation on the side of the dealership. The nature and manner in which the communication is carried out determines the direction that the relationship will take. The supplier can also employ strategies such as information exchange strategy, promise strategy which are friendly and can affirm the dealership and confirm to them that the supplier is still interested in having good ties with them. Such strategies and many others will help the supplier to show positive influence. The promise strategy which offers a reward is particularly important because it can be received as a positive gesture that can foster relations. It is known to be the most natural and very unobtrusive Coughan et al (2006, 224). The promise strategy as the name suggests is a promise given by the stronger partner to the weaker one for a reward that will be given if there is good performance. When the supplier employs the use of non contingent appeals the dealership will feel more trusting and more satisfied with another feeling that its autonomy is given more respect. Audi should ensure that the power it has is used judiciously and not for exploitation. The stronger in this case the supplier should share rewards with the weaker or the leadership in an equitable manner. Bibliography Coughlan A. T., Anderson E., Stern L.W, & El-Ansary A.I, 2006, Marketing Channels seventh edition; Accessed 4th August 2011 from< http://www.coursesmart.com>. Read More