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Keywords
Distributors, Channel relationships, Supplier relations
Abstract
Due to the increased domination of industrial sales channels by distributors, suppliers must develop strong relationships with industrial distributors in order to succeed in new markets. Initiating partnering relationships with distributors in new markets, however, entails significant risks and commitments with the prospect of substantial long-term rewards. To help suppliers assess and select distributor partners, this study focuses on the starting-point of the relationship by exploring industrial distributors' expectations of benefits. A nationwide survey of US industrial distributors showed that distributors expect financial and competitive differentiation benefits with greater differentiation benefits inferred to lead to fewer financial benefits. Several observable distributor characteristics can be used by suppliers to conduct preliminary assessments of distributor expectations and thereby prepare for a healthy future relationship.
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Introduction
As trade barriers continue to decline across the globe, the intensity of competition continues to rise in consumer and industrial markets (Kotler, 2003). Firms battle for survival by seeking opportunities in new markets due to stagnating demand in current markets, influx of foreign suppliers to domestic markets, and increased pressure from stockholders and top management to maintain growth rates and profits. In this increasingly competitive environment, where the bar on customer service continues to be raised, and cost containment pressures are unrelenting, manufacturers are learning that initiating, building, and maintaining successful relationships with current and new industrial distributors are essential in order to succeed in industrial markets (Palmer, 1997; Rao and Perry, 2002; Walter and Gemünden, 2000).
Past studies consistently show that a relationship's success is often dependent on the satisfaction among channel partners (Abdul-Muhmin, 2002; Anderson and Narus, 1990; Gaski, 1984; Patterson et al., 1997; Schellhase et al., 2000). Satisfied partners invest more resources into the relationship, thus increasing the sustainable advantages accruing to both parties. The distribution literature documents that satisfaction is influenced by factors such as power, trust, dependence, and the nature and number of conflicts that arise (Anderson and Narus, 1990; Dwyer, 1980; Frazier, 1983; Gaski, 1984; Rosenberg and Stern, 1971; Wilkinson, 1981). Related studies also explore how relationship promoters can be used...