A study of partnership models in distribution channels

Abstract

Recently Japanese oil companies have been struggling to provide customers with differentiated services and satisfaction, and to capture their perception. They tried changing the relationship with dealers over multiple distribution channels in order to solve this issue. Through trials and errors the oil companies managed to have dealers under their control by vertical integration, but the vertical integration did not result in positive impact for either the oil companies or the dealers since lack of communication brought about conflict between them regarding marketing approach. By learning from practice oil companies have been changing their channel control policy from vertical integration to partnerships that enable the oil companies and their dealers to create more intimate and consequently cooperative relationships. Furthermore, their challenge to channel management has resulted in developing new distribution channels by building partnerships with unrelated industries. This thesis focuses on the dynamics of two partnership models in the distribution channel, vertical partnerships, a new type of relationship between suppliers and their dealers, and horizontal partnerships that are strategic distribution alliances with unrelated industries. First, the driving forces of these partnerships are presented and from that hypotheses are built that determine successful relationships with partners and positive impact for customers. Following that is research and analysis of partnership cases from Japanese oil companies that verify these hypotheses. Further, key factors are extracted from the cases and their validity is checked by adapting each hypothesis. Finally, key factors are prioritized by using an attribution map and the conclusion is a successful methodology for vertical and horizontal partnerships specific to Japanese oil companies.