Diminishing Returns for Customer Service

Abstract

The power of a distribution channel member represents “(his) ability to control decision variables in the marketing strategy of another member operating at another level”. Bucklin and Alderson stress that power relationships are essential for strong marketing channels. The five bases of power which have been identified and discussed in the marketing channel literature include rewards, coercion, expertness, legitimacy and identification. These power bases are useful in understanding the nature and use of customer service in channels of distribution. For example, reward power is based on the belief by one channel member that another member has the ability to mediate rewards for him. The customer services, fill rate and lead time can be viewed as bases for reward power. Expert power is based on one channel member's belief that another member has some special knowledge or expertise. The ability of a manufacturer to provide market information and/or assistance in inventory management is a potential basis for expert power. Thus, a supplier's strategy for achieving power bases is by providing customers with packages of customer service which they find particulary important.

Citation

Levy, M. (1981), "Diminishing Returns for Customer Service", International Journal of Physical Distribution & Materials Management, Vol. 11 No. 1, pp. 14-24. https://doi.org/10.1108/eb014483