An exclusive dealership is a marketing representative or a middleman who facilitates the selling of goods. He makes sure that goods reach the consumer effectively, that is, he links the consumer to the manufacturer. They also carry out wholesaling as well as retailing tasks for producers who might not have other intermediaries in the marketing channel. As an exclusive dealer of Audi, the dealer is a full representative of the producer of the Audi line. All the products of this company pass through the dealership before reaching the consumers.
As an exclusive dealer or agent, one has the power to handle order processing as well as billing for the producer’s (Audi line) account. This is a direct involvement in the number of products to be manufactured and at what time they are supposed to be in the market. It is the obligation of an exclusive representative (dealership) arranges for shipping, storage facilities for the manufacturers (Audi). The exclusive representative may have his own warehouses for storing the good and also trucks for transporting the goods.
This way he controls the movement of goods. He knows when to make orders from the producer as well as when to sell the products and where to sell them. He also accesses the risks involved in the market and advices the producer accordingly. Furthermore, as the representative, the dealer can organize credit conditions in addition to facilitating merchandise guarantees for Audi. It is also within the dealer’s power as an exclusive representative to sell the Audi’s products via merchant wholesalers and can also sell directly to retailers and users. However, an exclusive dealer or agent does not represent the retailers to the manufacturers as it is the case for brokers.
In marketing channels, channel power and channel conflict move together. It is always good to know how much power you have in a manufacturer-distributor relationship as this helps in solving the conflicts that may arise. There are some factors that determine the power that the manufacturer may have. These are demand segmentation factors, supply-cost factors as well as coordination factors. Channel power is the capability to affect the behavior of another organization. The three factors balance the power between Audi and its exclusive distributor of its products. The dependence of Audi on dealership also determines the amount of power that each of has over the other. As the exclusive representative of Audi, the dealer has the power which may help him realize his potential.
The judicious way of using power helps in sharing the rewards equally with the other channel members. In addition, the capability of delivering profit in return for changing behavior is a clear demonstration of reward power and it is regarded as one of the most effective way by which power can be exerted. The importance of the products also determines the channel power. Moreover, the profit earned from the products determines who has more power over the other, for instance, if one dealer is making a lot of profit from distributing the Audi lines, then Audi has more power over that dealer.
In this case, the easy flow of goods in the market determines the amount of power that the dealer’s supplier may have over the dealer. However, this depends on our relationship. However, if the dealer is the one advertising the products, then he might have more powers over the supplier. In the event that the dealer is selling his dealership, the supplier should use his power properly to avoid the dealer’s alienation. He (supplier) should try and use reward power so that the dealer cannot submerge under the influence of other potential distributors.
Moreover, he should not at any one moment use coercive power. This kind of power destroys the relationship between the dealership and the manufacturer. This kind of power is like a punishment that may result from dealer’s intentions of selling the dealership; if it is used, it ruins the relationship between the two. The supplier should also make use of the influence strategies that can protect the dealership from being alienated. The strategy of promise or giving a reward for producing a likable behavior becomes effective in building strong and long-lasting relationships. The supplier can also protect the dealership by making recommendations.