Academic journal article International Advances in Economic Research

The Moderator Effect of Communication in Marketing Channels of Distribution; the Case of Car's Industry in Canada

Academic journal article International Advances in Economic Research

The Moderator Effect of Communication in Marketing Channels of Distribution; the Case of Car's Industry in Canada

Article excerpt


At this point in time when an important turning point is emerging in the relationship between manufacturers and dealers, we note the increasing power of negotiation of the latter, vis-a-vis the manufacturers. There is a tendency for consolidation at the level of the dealers, which are creating quasi associations to achieve superior powers of purchasing and novel forms of integrating their common interests. The bottom line for these changes is to improve the competitive position and the negotiating capacity of the dealers, to promote a significant increase in the growth sales through franchising (Stern and El-Ansary 1992), to increase the quality sought by the consumers (a feature of the franchising approach) and to improve the demand for custom quality goods on the domestic and export markets.

The franchising sectors, which have experienced the most dramatic increase in volume of sales, are those in services, and, of course, evidently those associated with automobiles sales.

The Canadian car industry is the eighth most important car industry in the world. In 2003, it contributed 12% of the net national product. The dominant manufacturers, which maintain assembly presence in the country, are Ford, Daimler Chrysler, GM, Honda, Toyota and Suzuki (Government of Canada, Canada's Automotive Industry 2003).

Although superficially alike, the American and Canadian automotive markets show some differences. For example, on the American market, we can find makes (Japanese and European) in the mid range and high end of the product offerings (luxury segment). This is not necessarily true in the Canadian market, where the imported brands are present in almost every segment of the market. The average Canadian consumer also has the penchant to buy more compact vehicles than his American neighbours and his purchasing behaviour is different. Most of the major studies of automobile sales have been carried out in the US. Therefore, it is interesting to enrich these existing studies from the perspective of the peculiarities of the Canadian market.

Within this context, the objective of this article is to analyse the present relationships between manufacturers and Canadian dealerships selling American cars (GM, Ford and Daimler Chrysler) by examining, in particular, the level of satisfaction of the latter with the manufacturers.

This research specifically analyses the impact of communication on the dependence, the coercive and non-coercive powers, the cooperation, the conflict and finally, the satisfaction of the automobile dealers (Anderson and Gerbing 1988). To do this, we start with the model of Skinner, Gassenheimer and Kelly (model 1) and integrate communication as a construct having an effect on the other concepts (model 2). We then analyse the moderating effect, that is to say the difference between the effects in model 2 and model 1, subsequent to the introduction of the communication effect.

The scope of the study is limited, as only 62 of 400 total dealers have returned properly filled out replies to the survey. Nevertheless, this is an acceptable response rate given that the average survey copes with a 5% response rate. The analysis is based therefore on a regression analysis of latent variables using the optimization technique of the Partial Least Squares (PLS).

This study puts forth a conceptual model and a strategic framework with a set of hypotheses to be tested, a description of the employed methodology, an analysis of the results and finally the pertinent management conclusions along with a proposed future research course of action.

Conceptual Model and Strategic Framework

The distribution channels represent a system of economic and social interaction (Stern and Reve 1980) considered as a supra organization (Stern and El-Ansary 1992) which integrates the dependence (Emerson 1962; Frazier 1983a; Frazier, Gill and Kale 1989; Skinner et al. …

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