Managing Promotion Program Participation within Manufacturer–Retailer Relationships

Abstract

The authors report the results of a study that examines retailer participation in manufacturer-sponsored promotion programs. Two particular aspects of participation are studied, namely, (1) retailer agreement to participate in point-of-purchase programs and (2) retailer compliance with established agreements. Previous research in marketing, economics, sociology, and organization theory suggests that participation is influenced by two types of variables. The first is the nature of the interpersonal relationship that exists between the boundary personnel in the retailer's and manufacturer's firms. The second are various organization-level variables, including incentive premiums (promotional allowances) and monitoring efforts. The authors extend previous research by examining both the independent and joint effects of these factors on retailer participation. On the basis of an empirical study involving a conjoint task, the authors show that the presence of a strong interpersonal relationship does not diminish the importance of other variables, such as incentives. Within the limits of the conjoint task, the results also suggest that interpersonal relationships are less important determinants of participation than economic incentives. The authors discuss the implications of the study for marketing theory and practice.