In role playing scenario 1, Rebecca Stanley advises Wilson to make his own strategy to deal with the Hypermart situation. In the trust-based strategy of selling, the salesperson (SP) strives to build a long-term relationship with the customer. This relationship will be built on generating customer value. In the scenario, Hypermart is interested only in gaining market share not profit. They see all retailers including Biomed itself and its retail website as competition. Wilson’s choice will be in providing customer value for new clients as well as existing ones and the possible conflict which will arise in the future when the Biomed website begins to offer more web-based retail services.
Location – Stanley’s office 48 hours later. Wilson discloses his plan to deal with the Hypermart situation.
Stanley: Have you come up with a way to deal with the situation with Hypermart and Ed-Toys?
Wilson: Yes, however, I may need more detailed reports on the market share of existing businesses versus Hypermart ordering capability. Hypermart has the ability to disrupt future sales of the product to other companies. Because of this we will have to choose between selling to them and not selling much to others. Hypermart has a totally self-serving agenda that will discourage other firms from doing business in the market. Already Ed-Toys has voiced objection to them selling at a 20% discount. And Hypermart has voiced objection to our plans to make website friendly retail available to our future customers once the website is done. At this point we may have to determine if an account with Hypermart is worth any new business that may come in later for this product. Unless their impact is more important than any new business they should be dropped as a client. The possibility of generating new clients who will adhere to suggested retail pricing with the advent of the website modifications will generate less channel conflict in the future. It is already evident that Hypermart is trying to utilize a dominant power relationship to force its goals onto the rest of marketing channels. Satisfying this one client will generate continued problems in the future.
Stanley: After I confirm the numbers generated by Hypermart’s purchasing goals, I am sure I will come to agree with your decision. The stability of our market channels is more important the goals of one company.
A manger will want to avoid unfair power relationships that create dependence on one client or channel member. This conflict can be avoided by detaching from the channel which causes the conflict. In this case, it is Hypermart, which is only concerned with its own goals. They have the potential to discourage future clients and dominate too much of the revenue stream for the product. It is wise for Stanley to let Wilson figure this out on his own because it is his presentation of the purchasing terms which will generate the next situation like this. If Wilson doesn’t learn how to spot the channel conflict before it happens, Stanley will constantly have to manage the conflict later on.
If the initial terms required the use of suggested retail pricing for a certain number of months per year or if all retailers are informed of Biomed’s own retail capabilities on the website, this problem can be avoided before the sale. Having a schedule of pricing will help generate confidence in competitors who like Ed-Toys only wanted to know when Hypermart would resume normal pricing. If companies like Hypermart are unwilling to work within a comfortable channel structure for all the members, contracts with them should be discontinued or avoided altogether.
Ingram, LaForge, Avila, Schwepker, Williams, SELL, 3rd ed., South-Western, Cengage Learning, 2013
Palmatier, Stern, El-Ansary, Marketing Channel Strategy, 8th ed, Pearson, 2015