The influence of relationship orientation on enterprises use of channel power

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1 Available online Journal of Chemical and Pharmaceutical Research, 2014, 6(7): Research Article ISSN : CODEN(USA) : JCPRC5 The influence of relationship orientation on enterprises use of channel power Peng Zhang, Juan Lv and Feifei Liu Tourism and Hospitality Management School, Qingdao Vocational and Technical College of Hotel Management, Qingdao Shandong, China ABSTRACT In China, relationship orientation has close connection with and great influence on enterprises use of channel power. This essay first introduces the relationship between relationship orientation and channel power under the marketing background, and explores the influence of relationship orientation on enterprises use of channel power by studying the theory of relationship marketing orientation and enterprises use of marketing channel power. Then based on these research results, this essay proposes the influence of relationship marketing orientation on enterprises use of compulsory and optional power. Then, this essay highlights the correlation between the use of power and relational governance, which are the main ways of enterprises marketing channel, and also tresses the value of this research in terms of theory and practice. This essay also completes the original measurement methods of relationship orientation, in the hope of improving the management level of enterprises and promotes their development. Key words: marketing; relationship orientation; enterprises use of channel power; compulsory; optional INTRODUCTION The analysis of relationship marketing orientation and enterprises use of marketing channel power is the basis of exploring the influence of relationship orientation on enterprises use of channel power. Under the background of marketing, the transference process of products and service is called marketing channel. The analysis of marketing channel includes two aspects: the structure and composition of channel, and marketing channel behaviors. The analysis of marketing channel behaviors is an important part of marketing channel theory. Marketing channel control is more visible in cross-organization control. The characteristic of cross-organization control is that the controller and controlee are independent from each other but can also influence each other. The controller and controlee are on an equal base because the controller can turn into controlee and vice versa. Relationship marketing refers to the marketing activity based the goal of forming, maintaining and developing relationship. It is based on the exchange of intangible things such as emotion and promise. It can t gain immediate payback but can save costs if used properly. Channel power has always been the focus of previous researches, but some problems still remain unsolved, including the influence of relationship marketing orientation on enterprises use of channel power. Though people often relate relationship marketing orientation with channel behaviors and conclude that relationship marketing orientation decides channel behaviors, however, there is no systematic result to show the essence of relationship marketing orientation s influence on the use of channel power or real experience to show how relationship marketing orientation can influence the use of channel power in various ways, or the impact of these different ways. This essay will use the theory of relationship marketing and the use of channel power as theory basis to analyze the influence of relationship orientation on enterprises use of channel power under the marketing background by adopting certain inspection methods. This essay will analyze this influence by proposing hypothesis and adopting 751

2 certain research methods. Market data is also collected to analyze whether the hypothesis is correct and to draw the final conclusion as well as to explain the conclusion. The value of this research in terms of theory and practice and future research topics will also be included. 1 RESEARCH THEORY Viewing previous literature, I will first propose hypotheses to explore the influence of relationship influence on enterprises use of channel power. 2.1 Relationship marketing orientation Relationship marketing refers to the marketing activity that is based the goal of forming, maintaining and developing relationship. Unlike discontinuity of traditional marketing relationship, relationship marketing is based on the exchange of intangible things such as emotion and promise, and pays more attention to time dimension. It is a long-last exchange activity that does not orient towards gaining immediate payback, but it can save costs if used properly. Relationship marketing is gradually taking form and showing its great potential. It can not only overcome the shortage of conventional marketing theory but also explore new areas of marketing study. However, currently speaking, it still has many problems, among which the most important one is to strengthen the operability of marketing relationship. If we view the operability of marketing relationship from the aspect of relationship, internet and interaction, then the essence is relationship marketing orientation s influence on enterprises use of channel power. Relationship marketing orientation is a marketing theory that develops from production-orientation to sales-orientation and finally market-orientation. In the course of economic development, marketing theory, as the guiding theory of enterprises in marketing activity, is changing continuously to adapt to market competition and to manage the relationship between enterprises and customers. In the marketing theory of enterprises, relationship orientation stresses to maintain good relationships with customers, to benefit mutually and develop together to gain long-term benefits. The enhancement of relationship orientation helps to build a relationship featuring mutual reliance, shared value and mutual benefits between enterprises and their customers. One big difference between relationship marketing and conventional marketing is that the subjects of relations are different. In relationship marketing, subjects of relations include non-individual ones such as enterprises and organizations, so relationship marketing is the exchange activity between enterprises and organizations. 2.2 Channel power Channel power refers to the different degrees of influence between members at different levels in the process of mutual influence in the same marketing channel. It can be real ability as well as a kind of ideology. The owner of power can use channel power directly to influence the decision making process of other members, or use the channel power indirectly by letting the members know the power owned by him/her so that these member can obey him/her or form co-operations with him/her. Channel power includes two basic forms: compulsory power and optional power. The size of channel power is an important factor to decide the type of power, generally a negative correlation, which means larger size of power, tends to go along with optional power instead of compulsory. 2.3 The influence of relationship orientation on enterprises use of channel power We can see from above that the enhancement of relationship orientation helps enterprises to build a relationship featuring mutual reliance, shared value and mutual benefit with their partners. So relationship marketing orientation can influence enterprises use of channel power directly. When enterprises are exercising power on their partners, they would do so from the perspective of co-operators to guarantee the interests of both parts and would use relatively soft ways to let the partners accept the dominance of channel power. However, when the relationship orientation of enterprises is relatively weak, enterprises would not value the co-operative relationship enough but only regard it as a common deal without emphasizing the establishment of long-term co-operation, and then enterprises would tend to use compulsory channel power and use tough ways to enforce this power. So the first hypothesis is that enterprises would tend to use less compulsory power when the relationship orientation is stronger, with other factors kept under control. 2.4 How does the relationship orientation adjust the use of channel power The adjustment function of relationship orientation on enterprises use of channel power is mainly reflected by the indirect influence of relationship marketing orientation on the use of channel power. If the correlation between power and the use of compulsory rights is positive, then enterprises would tend to use more compulsory power when the power is greater. However, as the relationship orientation is strengthened, enterprises would attach more importance to the stability and longevity of co-operation between partners, and try to reduce the use of compulsory power. Though the power of enterprise is becoming greater, however, being influenced by the enhanced relationship orientation, enterprises would reduce their use of compulsory power by a large margin. If the correlation between 752

3 power and the use of compulsory rights is negative, then with the enlargement of the enterprises power, enterprises can deter their parters to a certain extent, and partners would be more cooperative, so that enterprises would tend to use less compulsory channel power. Besides, the enlargement of relationship orientation will also lead enterprises to use less compulsory channel power. So the second hypothesis is that with the enhancement of relationship orientation, the correlation between enterprises channel power and the use of compulsory channel power is less negative and more positive, with other factors under control. 2 RESEARCH INSTRUMENT 3.1 Research object The focus of this study is the relationship between enterprises and their dealers, and sample is collected from the perspective of enterprises. Enterprises and dealers are closely connected, with various types of relationship. This provides conditions for the difference between marketing theory and the use of channel power. To guarantee that there is difference existing between marketing theory and the use of channel power, the fixed pair relationship in traditional research methods poses great difficulty to the survey. This survey uses students in a university as the represents of enterprises, and asks administrative staff in the enterprise under question to answer questions in the questionnaire. This survey aims to verify hypotheses. This sample is not randomly chosen, thus may not be representative enough, but this will not influence the essence of research. 300 questionnaires were distributed with 240 effective ones being collected. The valid return rate is 80%. 3.2 Research variables (1) Relationship marketing orientation and the design of chart. Conventional measurements of enterprises marketing orientation, such as the Oliver Yau Hou-min scale, mainly include variables such as honesty, mutual benefits, shared value, communication and sympathy, which are enterprises viewpoints of co-operative relationship. However, the essence of relationship marketing orientation and marketing theory requires the relationship marketing orientation to represent the ideology of enterprises instead of enterprises attitudes towards co-operation. The relationship marketing orientation used in this survey is different from previous charts, with more importance attached to the willingness and recognition of enterprises to better show the essence of relationship marketing orientation. The relationship marketing chart used here includes 21 items, such as mutual trust, mutual benefits, shared value, communication, and sympathy. People being survey can express their opinions by marking with 1 representing highly disagree, 2 disagree, 3 neutral, 4 agree, 5 highly agree. Three factors are proposed to analyze the results, these three factors are trust, R1~R8, understand, R9~R18, and return, R19~R21. After examining the credibility of these three factors and eliminating the content of lower factor loading, this essay gets the results as showed in table 1. As the α of all the three factors are above 0.7, so the content represented by these three factors can be summed up to get the measurement index of these three factors. After analysis, we can see that correlation of trust and understand is high, so we can combine these two together to avoid colinearity. Table 1 Relationship Marketing form Project Mutual trust Understand Return Each factor value To explain the extent of each factor to scale % 5.326% R1 I think, we trust each other with each other R2 I feel that the other is worth trusting R3 my company is willing to continue to trust each other R5 I try to keep in constant contact with each other R6 my company is willing to work more closely with each other R7 our company strive to let each other have a sense of intimacy to us R8 I often take the initiative to communicate with each other R12 our company expect to be with each other with common values R13 my company will tell each other the specific advice for a commercialactivity R14 I will consult on an activity specific feel for each other R15 my company is willing to consider the problem from the perspective of the other party R16 my company is willing to experience the feelings of each other R17 my company is willing to understand each other's values R18 I will consider each other's feelings before taking action R19 I want to understand each other's values and goals R20 I hope that the company is in any case to keep a promise to each other Have difficulty R21 my company, to give the other side a helping hand, I will return (2) The used of channel power and scale. We can assess the influence of enterprises use of channel power by assessing enterprises use of marketing measures. 1 represents not at all, 2 a little, 3 some, 4 mostly, 5 completely. The scale includes structure, number of 753

4 orders, publicity, promotion, after-sale service of goods and etc. Combining the score of every item, we can get the measurement index PW of enterprises degree of power influence. To measure enterprises use of power, the grading method is also used with 1 representing never, 2 seldom, 3 sometimes, 4 often, and 5 always. The items to be graded are six measures of compulsory power, such as threating to terminate co-operation, refusing or delaying delivery of goods, and withdrawing support; and eight measures of optional power, such as providing market information, technology and sales training for partners. The final result is as showed in table 2. To reflect the influence of relationship marketing orientation precisely, the correlation between the use of compulsory power and optional power is also considered. Table 2 the mean and standard deviation data Variables The mean RMO 1 RMO 2 PW UCP UNP Mutual trust and understanding RMO Return RMO Right PW The use of mandatory rights UCP The use of non-mandatory rights UNP Note: the data on the diagonal line is standard deviation; RMO 1 index of trust and understand, RMO2 index of return;ucp the use of compulsory power; UNP then use of optional power; PW the degree of influence of enterprises power RESULTS 4.1 Result Multivariable regression analysis is adopted to analyze these two hypotheses. Dependent variables are UCP, UNP, independent variables are PW, RMO 1, RMO 2, the cross term of PW and RMO 1, the cross term of PW and RMO 2, control variable UNP for UCP and control variable UCP for UNP. Based on related research and data, the variable TIME is also used to represent the time of enterprises representatives in office, which can influence the use of channel power. In the questionnaire, 1 represents within one year; 2 over one year but within three years; 3 over three years. Table 3 is got by analyzing the variables above. Table 3 multiple hierarchical regression analysis results Model TIME PW RMO1 RMO2 PW RMO1 PW RMO2 UCP UNP F Ad R3 F Change UCP UCP UCP UNP UNP UNP Conclusion We can draw following conclusions from above: Firstly, relationship marketing orientation has apparent influence on enterprises use of channel power; secondly, RMO 1 influences the use of compulsory power (UCP) indirectly by adjusting the relationship between PW and UCP, but it can influence the use of optional power (UNP) directly; thirdly, relationship marketing orientation will undermine the positive relationship between enterprises power and enterprises use of compulsory power; fourthly, under the influence of relationship marketing orientation, trust and understand have significant influence on enterprises use of channel power, while the influence of return is insignificant. CONCLUSION Under the marketing background, after the research and analysis of relationship orientation s influence on enterprises use of channel power, we can know that the influence include both direct influence and indirect influence. Direct influence means that enterprises tend to use more optional channel power when relationship orientation is enhanced; indirect influence means that the correlation between relationship orientation and enterprises use of compulsory channel power is negative, so the positive correlation between enterprises power and enterprises use of compulsory power is undermined with the increase of relationship orientation. By analyzing the influence of relationship orientation on enterprises use of channel power, this essay illustrates and 754

5 tests the essence of relationship marketing orientation s influence on enterprises use of channel power to overcome the disadvantages of precious literature s research methods and charts. This essay provides more precise and scientific measurements for similar studies in the future and helps to analyze the influence of relationship orientation on enterprises use of channel power more deeply. Meanwhile, the research results and conclusion provide precious data and information for the control and management of enterprises use of channel power in practice. This enables enterprises to know the influence of relationship orientation on the use of channel power, thus helping them to make effective channel control strategies, strengthen cooperation and increase profits. REFERENCES [1] Yang Qian, Liu Yi, Hou Jigang. The Effects of Multiple Relationships among Enterprises on New Product Innovation. SCIENCE & TECHNOLOGY PROGRESS AND POLICY. 2011(3) [2] Zou Ling, promised to use reseller channel power on manufacturers attitude, analysis of the impact of relationship satisfaction -- Taking the pharmaceutical industry as an example of enterprise management.zhejiang Gongshang University.2010 (academic year) [3]Li Wanjun, Li Yanjun. An Empirical Research on Impact of Resource Elements of Seed Distribution Firms on Channel Power. Journal of Northwest A&F University (Social Science Edition). 2013(3) [4]Lai Hongyi, Chao Gangling. Comparative study on the effects of different channel powers. Modern Management Science [5] Wu Lizhu, Qin Hui, Qiu Hongliang. An empirical analysis of the use of private relationship between channel power based on strategy. "The modern economy (magazine Modern Property").2009 (9) [6] Gong Wuxiu. Review of channel power. DAJIANG WEEKLY. 2013(2) 755

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