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Article Excerpt
Introduction
At this point in time when an important turning point is emerging in the relationship between manufacturers and dealers, we note the increasing power of negotiation of the latter, vis-a-vis the manufacturers. There is a tendency for consolidation at the level of the dealers, which are creating quasi associations to achieve superior powers of purchasing and novel forms of integrating their common interests. The bottom line for these changes is to improve the competitive position and the negotiating capacity of the dealers, to promote a significant increase in the growth sales through franchising (Stern and El-Ansary 1992), to increase the quality sought by the consumers (a feature of the franchising approach) and to improve the demand for custom quality goods on the domestic and export markets.
The franchising sectors, which have experienced the most dramatic increase in volume of sales, are those in services, and, of course, evidently those associated with automobiles sales.
The Canadian car industry is the eighth most important car industry in the world. In 2003, it contributed 12% of the net national product. The dominant manufacturers, which maintain assembly presence in the country, are Ford, Daimler Chrysler, GM, Honda, Toyota and Suzuki (Government of Canada, Canada's Automotive Industry 2003).
Although superficially alike, the American and Canadian automotive markets show some differences. For example, on the American market, we can find makes (Japanese and European) in the mid range and high end of the product offerings (luxury segment). This is not necessarily true in the Canadian market, where the imported brands are present in almost every segment of the market. The average Canadian consumer also has the penchant to buy more compact vehicles than his American neighbours and his purchasing behaviour is different. Most of the major studies of automobile sales have been carried out in the US. Therefore, it is interesting to enrich these existing studies from the perspective of the peculiarities of the Canadian market.
Within this context, the objective of this article is to analyse the present relationships between manufacturers and Canadian dealerships selling American cars (GM, Ford and Daimler Chrysler) by examining, in particular, the level of satisfaction of the latter with the manufacturers.
This research specifically analyses the impact of communication on the dependence, the coercive and non-coercive powers, the cooperation, the conflict and finally, the satisfaction of the automobile dealers (Anderson and Gerbing 1988). To do this, we start with the model of Skinner, Gassenheimer and Kelly (model 1) and integrate communication as a construct having an effect on the other concepts (model 2). We then analyse the moderating effect, that is to say the difference between the effects in model 2 and model 1, subsequent to the introduction of the communication effect.
The scope of the study is limited, as only 62 of 400 total dealers have returned properly filled out replies to the survey. Nevertheless, this is an acceptable response rate given that the average survey copes with a 5% response rate. The analysis is based therefore on a regression analysis of latent variables using the optimization technique of the Partial Least Squares (PLS).
This study puts forth a conceptual model and a strategic framework with a set of hypotheses to be tested, a description of the employed methodology, an analysis of the results and finally the pertinent management conclusions along with a proposed future research course of action.
Conceptual Model and Strategic Framework
The distribution channels represent a system of economic and social interaction (Stern and Reve 1980) considered as a supra organization (Stern and El-Ansary 1992) which integrates the dependence (Emerson 1962; Frazier 1983a; Frazier, Gill and Kale 1989; Skinner et al. 1992; Stern and El-Ansary 1992) and the sources or basis of power (Hunt and Nevin 1974; Gaski 1984).
Therefore, the dependence and basis of power represent the fundamental structure of the model. This model is characterized by the nature of the relationship between the parties (Anderson and Narus 1984, 1990), which can affect the level of satisfaction of the dealers (Robicheaux and El-Ansary 1975, Frazier 1983a, b; Anderson and Narus 1984, 1990).
Conflict and cooperation correspond to the dominant behaviours which rule the interactions, the first being an obstacle to the achievement of stated goals, while the second having the opposite effect. These behaviours are distinct but not necessarily opposite. By themselves, they lead to an interdependence of the interactions. In the initial model it is the intermediate latent variables, which mediate the level of satisfaction (Stem and Reve 1980; Brown and Day 1981; Lusch and Brown 1982). The concepts of conflict and satisfaction in the distribution channels have been the focus of numerous researchers (Etgar 1979; Lusch 1976; Brown and Day 1981; Brown, Lusch and Muehling 1983; Dwyer 1980).
But certain variables such as cooperation and dependence have received a lot less attention in marketing literature. This is the primary motivator for introducing these variables in the model.
The initial structural model (model 1) brings together six constructs derived from the previously discussed concepts. The relationships among these constructs (positive or negative) give rise to nine hypotheses in this study (H1 to H9; Fig. 1).
The Dependence Relation
Dependence was first analysed by Emerson (1962), who concluded that in each relation between two parties, the dependence of A increases when A assimilates the objectives of B.
Pfeffer and Salanick (1978) suggested that dependence is a function of the resources invested by A, resources which permit B to attain its objectives. This investment into resources increases the dependence of B relative to A. Frazier, Gill and Kale (1989) determined dependence of the retailer as a function of the need to maintain a relationship with the manufacturer or wholesaler in order to reach its stated goals. When the objectives of the distribution channel partners are compatible, the result is a high level of dependence characterized by an active cooperation (Childers and Ruekert 1982, Mohr and Nevin 1990). The dependent member of the channel tries to preserve the relationship (Ross, Lusch and Brown 1982). This effort is what is referred to as cooperation.
[FIGURE 1 OMITTED]
The power relationship, when it is unidirectional, can and often does lead to unearned profits for the party exercising this power. This thing occurred with Ford when it started to generate Internet presence and attempted to reach the customer without the dealers' mediation.
The dealerships sent a clear message to Ford; either include in the Internet advertising the location of the nearest dealer or face the consequences. So within the distribution channel from the manufacturers to the buyers, the power slowly shifted downstream towards the dealerships.
When the...
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