The role of key account programs, trust, and brand strength on resource allocation in the channel of distribution

Abstract

Purpose

Seeks to better understand whether a retailer's trust in a manufacturer is a key concept in their motivation to allocate resources to those manufacturers with whom they have a long‐term relationship compared with economical motivations.

Design/methodology/approach

A survey research method is used to study all customers from three large manufacturers in The Netherlands. These retailers had to answer questions about their trust in a manufacturer, the manufacturer's investments in the relationship, and their marketing efforts. Questions were also asked about the allocation of their own scarce resources for the manufacturer, specifically their adoption of in‐store marketing campaigns initiated by the manufacturer. Structural equation models and regression analyses were employed.

Findings

Trust is not that important, but the manufacturer's investments in the brand are the most important predictors. However, interaction effects were also found: trust interacts with investments in the brand to influence resource allocations. It was also found that personal contact of salespeople of the manufacturer with managers at store as well as their contact with headquarters had an effect on resource allocation. This is conceived to be an indication that people at headquarters take into consideration how people at the floor level evaluate the brands and their effects on customers when making resource allocation decisions. In other words, retailer chains have complex buying centers.

Research limitations/implications

A large set of customers was analyzed from three different manufacturers, but customers could have been investigated from many manufacturers.

Practical implications

Retailers respond to manufacturers mainly with economic motivations (e.g. what is the value of this brand for my own firm?). However, trust at times interacts with these economic motivations. This means that manufacturers should invest both in the relationship with the retailer and in their brands, if they want to motivate the retailer to allocate scarce resources (e.g. time).

Originality/value

This paper identifies important factors that influence retailer behavior that have not been studied within a fast‐moving retail context.

Citation

Verbeke, W., Bagozzi, R.P. and Farris, P. (2006), "The role of key account programs, trust, and brand strength on resource allocation in the channel of distribution", European Journal of Marketing, Vol. 40 No. 5/6, pp. 502-532. https://doi.org/10.1108/03090560610657813