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This is to certify that the

thesis entitled

Retail-Supplier Channel Relations:
Dependence, Negotiation, Coercion

and Reciprocal Actions
presented by

Rodney C. Runyan

has been accepted towards fulfillment
of the requirements for

Master of Science degree in Merchandising Management

 

 

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07639 MS U is an Affirmative Action/Equal Opportunity Institution

 

PLACE IN Reruns BOX to remove thin chockwt from your record.
TO AVOID FINES return on or before date duo.

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MSU In An Affirmative Actlon/Equal Opponunny Institution
Wanna-m

RETAIL-SUPPLIER CHANNEL RELATIONS:
DEPENDENCE, NEGOTIATION, COERCION
AND RECIPROCAL ACTIONS

BY

Rodney C. Runyan

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER OF SCIENCE

Department of Human Environment and Design

1993

ABSTRACT
RETAIL-SUPPLIER CHANNEL RELATIONS:

DEPENDENCE, NEGOTIATIONS, COERCION
AND RECIPROCAL ACTIONS

by
Rodney C. Runyan

Through the examination of retail-supplier channels,
researchers may gain valuable insight into the workings of this dynamic,
yet often neglected segment of marketing channels. this study examined the
relationship of department store buyers and their major supplier, from the
buyer’s viewpoint. The variables investigated were: perceived dependence,
actual dependence based on supplier contribution of sales, profit and role
performance, negotiation behavior, supplier coercive influence attempts,
and buyer reciprocal influence attempts. The findings of ‘the study
revealed that: 1) sales and profit had a significnat effect on the level
of perceived buyer dependence, but role performance did not. 2) the amount
of experience buyers posessed had no significant effect on either the
frequency, or the success of negotiations with suppliers. 3) perceived
dependence, sales, profit, and role performance did not significantly
effect supplier coercion, or buyer reciprocal actions. 4) supplier
coercive influence attempts had a significant and positive effect on buyer

reciprocal actions.

ACKNOHLEDGEHENTS

The author would like to thank the following persons for their help,
direction, and support. First, I would like to thank my major Professor,
Dr. Brenda Sternquist. Through her* encouragement to produce quality
research, she has helped me to become a better researcher, and hopefully
a better educator. I would also like to thank the other members of my
comittee, Dr. Tom Page and Dr. Patricia Huddleston. Their input and
direction was greatly appreciated.

I would also like to recognize the support and friendship of two
others from the University. Judy Osbun’s help and expertise involving
relevant computer operations were invaluable. Lisa Phillips’ support and
editorial comments were also quite important.

Finally, I would like to thank my family for their support
throughout my graduate program. My daughter Kyle and son Brett have been
very understanding and patient. Special thanks must go to my wife Kimberly
for her patience, support and belief in my ability to see this project to

its completion.

iii

TABLE OF CONTENTS
Chapter

I. INTRODUCTION
Statement of Problem
Justification
Research Objectives

II. REVIEW OF LITERATURE
Dependence and Power
Negotiation
Coercion
Reciprocal Actions
Retail Buyer Behavior
Information Sources
Supplier Selection
Supplier-Retailer Relationships
Hypotheses

III. METHODS
Survey Instrument
Sampling Methods

IV. THE RESULTS

The Sample

Data Analysis
Dependence
Sales
Profit
Role Performance
Negotiation
Coercion
Reciprocal Actions

V. DISCUSSION
Sample
Dependence
Negotiation
Coercion
Reciprocal Actions

iv

Chapter

VI. SUMMARY, IMPLICATIONS AND RECOMMENDATIONS
Summary
Implications
Recommendations

APPENDICES
Appendix A: The Questionnaire
Appendix B: Pre-Notification Report

REFERENCES

Table
4.1
4.2

LIST OF TABLES

Demographic Characteristics of Respondents
Correlations: Perceived Dependence, Sales,
Profit, Role Performance, Supplier Coercion,
and Buyer Reciprocal Actions

Means: Buyers’ Perceived Dependence

T-Test with Dependent Variable: Perceived
Dependence (Sales)

T-Test with Dependent Variable: Perceived
Dependence (Profit)

Means: Supplier Role Performance

T-Test with Dependent Variable: Perceived
Dependence (Role Performance)

Means: Buyer Negotiation Behavior

T-Test with Dependent Variable: Negotiation
Frequency (Experience)

T-Test with Dependent Variable: Negotiation
Success (Experience)

Means: Supplier Coercion Attempts

Stepwise Regression Analysis: Perceived
Dependence, Sales, Profit, Role Performance
with Dependent Variable: Supplier Coercion
Means: Buyer Reciprocal Actions

Stepwise Regression Analysis: Perceived
Dependence, Sales, Profit, Role Performance,

Supplier Coercion with Dependent Variable:
Buyer Reciprocal Actions

vi

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42
43

45
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46

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49

50

CHAPTER I

INTRODUCTION

The current market conditions in the U.S. have been changing rapidly
during the past decade. Consolidations have occurred in major department
store chains such as May, Federated, Allied, and Macy’s. Other companies
have simply gone out of business (8. Altman, Zayre, Gold Circle), while
still others (Hills, Macy, Federated, Jamesway) have such formidable
financial problems that suppliers are reluctant to sell to them. This has
created an environment in the U.S. where financially strong retailers are
highly sought after by suppliers. This market may assume the
characteristics of a "buyer’s" market.

In the past decade, an increasing number of retailers and suppliers
have been describing their relationships as "partnerships." This
description is usually used to describe the relationship between a large
retailer and a large supplier. With both parties in the channel becoming
more important to each other, problems may develop. This study is
concerned with the interaction of the buyer and their major supplier in

the process of the retailer’s operations.

Statement of the Problem
There has been a lack of’ empirical research directed at the

behavioral dimensions of retail channel members, specifically the

relationships between retail buyers and the suppliers they deal with. It
is not clear whether the market in the U.S. is a buyer’s market or a
seller’s market. In a buyer’s market, the channel power should lie with
the retailer. Both parties may engage in attempts to influence the other
through various types of strategies. To understand the manner in which
these channel members interact, these and other variables must be
investigated to further the knowledge of retail channel behavior. Tlii 5
study will examine behavioral aspects in the retail-wholesale channel of
distribution. The relationship between the retailer and the supplier will
be examined from the perspective of the supplier’s attempts to influence,
coerce, and exert power over the retailer. Retailer's perceptions of the
supplier’s performance, dependence on the supplier, bargaining behavior,
and reciprocal actions in the face of supplier’s influence or coercion

attempts will be studied.

Justification

Retail buyers are concerned with procuring the best products at the
best price in order to assure their company of desired profits. Many
large retailers develop close relationships with certain vendors, and
refer to the relationship as a partnership. This partnership, viewed from
the retailer’s position, includes a basic agreement from the supplier to
insure the retailer’s profitability. From the supplier’s viewpoint, it is
an agreement to assign a considerable portion of the retailer’s purchase
dollars to that supplier’s product. Intuitively, coercive influence

attempts, reciprocal actions, etc., should play a minor role in a true

and equal partnership, where the success of both channel members depends
on the other.

Retailers that are very dependent on their major suppliers may be
more susceptible to coercive influence attempts. They may also be less
successful in their bargaining, and take fewer reciprocal actions when
faced with influence attempts. Variables that affect the retailer’s
dependence on a supplier include the supplier’s past performance, sales
and profit contribution, anticipated performance, and replaceability. By
understanding how these behavioral aspects affect retailers, some insight
may be gained into how channel members interact. This information could
help both the retailer and supplier improve and understand their

relationship, thereby increasing the performance of both.

Research Objectives

The research objectives of this study were:

1. To determine the effect that supplier performance (sales, profit,
role performance) has on the relationship between department store
buyers and their major supplier.

2. To determine the effect that a department store buyer’s dependence
(actual or perceived) has on the relationship with his/her largest
supplier.

3. To further the knowledge and understanding of retail-wholesale

distribution channels.

CHAPTER II

LITERATURE REVIEW

Little empirical work has been devoted to retail store buyers and
their relationships with other channel members. For this reason, much of
the background information gathered will center on distribution channels
other than the retail-wholesale channel. The literature reviewed is
seperated into specific areas: dependence and power, negotiation,

coercion, reciprocal actions, and buyer behavior.

Dependence and Power

Dependence and power are discussed in the literature together.
Generally, the variables used to measure power actually measure the
dependence of one member on another. Dependence refers to the need of
members within a channel of distribution to maintain the channel
relationship to achieve their desired goals (Gaski and Nevin, 1985).
Dependence is affected by power and is inversely related to it (Emerson,
1962). That is, as channel member A becomes more dependent on member B, B
acquires more power over A. In retail channels, the dependence of a
retailer on a supplier would be derived from the supplier’s ability to
provide the retailer'with scarce resources. These resources might take the
form of merchandise, delivery, information, etc. In the literature, the
member that is the dependent member is referred to as the target firm, and

the member that exerts power over the target is refered to as the source

firm. The target firm’s (retailer) dependence is measured by the degree to
which a firm needs to maintain its relationship with a source firm
(supplier), in order to achieve desired goals.

The relationship between power and dependence is seen as being very
strong (Emerson, 1962; El-Ansary and Stern, 1972; Roering, 1977; Brown,
Lusch and Muehling, 1983). If power is low, dependence is likewise low,
and in the absence of power, there is no dependency (McGannon, 1970).
Jacobs (1974) found however, that dependence had a greater affect on a
target firm’s compliance with the source firm’s influence attempts than
did power.

There are two basic theoretical approaches to studying dependence in
a distribution channel. The first is the "sales and profit " approach,
initially developed by El-Ansary and Stern (1972). In this approach, the
greater the percentage of sales and profit contributed by the source firm
to the target firm, the greater the target’s dependence on the source
(Frazier, Gill, and Kale 1989). In a study conducted by El-Ansary and
Stern (1972), it was found that dependence was a function of one channel
member’s contribution to another’s profit, and the amount of business that
is done. They also found that commitment, and the difficulty or cost
involved in replacing a channel member had an effect on dependence.

In two studies similar to the El-Ansary and Stern study, the target
firm’s dependence related positively to the source firm’s control and
perceived control, economic and non-economic sources of power, and the
frequency of disagreement between channel members (Etgar, 1976; Brown,
Lusch, and Muehling, 1983).Kale (1986) conducted a similar study, but

included the expectations of future sales and profits in his measurement.

In this study, target firm dependence was found to be inversely related to
noncoercive strategies and positively related to coercive strategies by
the source firm. Dependence was also found to be positively related to the
source firm’s attributed power.

The second approach is referred to as 'the "role performance"
approach. A firm’s role performance refers to how well it carries out its
role in a channel relationship with another firm (Frazier 1983a). In
Frazier’s study, the dependence of the target firm related positively to
interfirm agreement on marketing strategy, target satisfaction, and the
source firm’s perceived interest in the target firm’s welfare. Frazier and
Summers (1986) found that target firm dependence related positively to the
source firm’s use of noncoercive strategies, and negatively to the use of
coercive strategies. These findings appear to conflict with the previously
cited findings from Kale. These conflicting findings could be attributed
to the difference in approach, (sales and profit vs. role performance). In
addition, the setting of the study may have an effect (developed vs.
undeveloped marketplace.

There have been mixed results in the empirical investigation of
channel member dependence to date. It has been stated that the actual
dependence of a retailer on a supplier is reflected in the perceived or
actual alternative sources of supply (Jacobs, 1974; Frazier, Gill and
Kale, 1989), how essential the goods and services obtained are (Jacobs,
1974; Brown, Lusch and Muehling, 1983) and the difficulty in switching to
alternative suppliers (El-Ansary and Stern, 1975; Brown, Lusch and
Muehling, 1983). As noted earlier, little work has been done in the area

of dependence in the retail field. For this reason, as well as the mixed

findings reported, it is difficult to draw any conclusions as to the
effects of dependence levels in channel relationships (Frazier, Gill and
Kale, 1989).

Power is defined by Dahl (1957) as the ability of one individual or
group to prompt another unit to do what it would not have otherwise done.
Emerson (1962) discussed power-dependence relationships, referring to two
members of a channel, where the power of member A over member B is equal
to the dependence of member 8 on member A. Most of the literature on power
involves the concept of bases of power, i.e. the type of power that a
channel member posesses.

There are five bases of power that are discussed in the literature
first proposed by French and Raven (1959):

Referent Power- one channel member’s desire to be closely associated with
another member. In retail channels, examples of this would be a well known
name brand, or a prestigious department store.

Expert Pewer- this is the ability of one member to supply information
needed by another channel member. This type of information would include
computer support, marketing information, and trend forecasting.

Reward Powe - the perception by channel members that another member can
mediate rewards for it. Advertising allowances, special trade terms, and
return allowances are examples of this.

Ceereive Pewer- the perception by one channel member that another member
can mediate punishment. Examples of this power would include cessation of
business with the member, cancellation of an order, monetary chargebacks,

etc.

Legitimate Power- This is the perception by a member that another channel
member has a right to influence another. This is the type of power held by
franchisors over franchisees, and of that held in formal agreements.

Although Gaski and Nevin (1985) found that the excercise of power
bases elicited a much more intense reaction than the mere presence of
power, most of the research literature does not distinguish between the
presence of power bases and the use of them (Frazier and Summers, 1984).
Etgar (1978) found that suppliers in a conventional channel relied heavily
on expert power bases.The Etgar study also found that reward power was
more effective in a contractual channel, such as franchises. The findings
from Gaski and Nevin (1985) were tested in a study by Keith, Jackson, and
Crosby (1990) in the food distribution channel. They studied a supplier
using different power bases in an attempt to influence a broker. They
found that there was a minimal difference in the type of power base used
and the success of the attempt.

The five bases of power discussed can be classified as either
coercive, or non-coercive. The coercive-noncoercive dichotomy was first
suggested by Hunt and Nevin (1974), and has been subsequently used by
others (Lusch, 1977; Michie, 1978; Lusch and Brown, 1982). The power bases
classified as non-coercive are: reward, expert, referent, and legitimate.
Skinner, Gassenheimer, and Kelly (1992) found that the use of noncoercive
power reduced channel conflict and increased cooperation, while Hunt and
Nevin (1974) found that franchisors utilized coercive power frequently to
achieve control over their franchisees.

Perceived power and dependence may differ from actual power and

dependence. That is, a channel member' may perceive their level of

dependence on another member as being quite different than it actually is.
Anderson, Chu and Neitz (1987) suggested that just the perception of a
power imbalance could motivate a channel member to act in a manner
inconsistent with their own interests in an attempt to correct the
imbalance. The perceived power of a buyer will have an influence on the
buying decision. Buyers seem to develop their own perception of power in
relation to focal buying decisions (Cooley, Jackson and Ostrom, 1977). In
fact, Bunn (1993) defined buyer power as the "buyer’s perception of the
firm’s negotiating strength in a particular buying situation." This would
seem to point to a buyer’s percieved power/dependence as fluctuating

according to the situation.

Neggtietign

In the literature, the terms bargaining and negotiating are both
used to describe the same process. Negotiation has been defined as a
technique for communicating ideas wherein both parties are intent on
convincing the other party to accede to its demands, with the ultimate
objective being to arrive at an agreement that is mutually beneficial
(Barlow and Eiser, 1983). Negotiation is a phenomenon that occurs in every
person’s life, almost on a daily basis. Husbands negotiate with wives (and
vice versa), parents negotiate with their children, employees negotiate
with their boss, and business people negotiate with other business people.
Everyone must negotiate for something in their life.

Much of the literature involving negotiation has been theoretical in
nature (Stern and Reve, 1980; Dickinson, 1988), rather than empirical

(Walker, 1971; Roering, 1977; Dwyer and Walker, 1981). Much of the

empirical work on bargaining in distribution channels has involved
laboratory research. Although this does not invalidate these studies’
findings, it is worth noting that many of these studies involve one-time-
only bargaining sessions. In these sessions, bargainers do not expect to
interact with each other again. Research has shown that there is a
tendency for parties to be more cooperative when they expect to interact
in the future (Roering, Slusher, and Schooler, 1975). Expectation of
future interactions also leads to more integrative (win-win) agreements
(Ben-Yoav and Pruitt, 1984). In the retail-wholesale channel, most
relationships do not involve single transactions. The ultimate success of
the retailer relies heavily on developing and maintaining desirable
relationships with suppliers (Packard, Winters, and Axelrod, 1983). These
relationships are characterized by mutual dependence between members
(Roering, 1977). Each party is usually entering an initial bargaining
session with the goal of establishing a profitable, long term
relationship.

In channel relationships, there are two possible situations that
negotiators face. The relationship between buyer and seller will either be
symmetrical or asymmetrical (Dwyer and Walker, 1981). In a symmetrical
relationship, both parties depend on each other relatively equally.
Neither channel member is able to exert a significant amount of power over
the other. In an asymmetrical channel, one party has a decided advantage
over the other in terms of power or dependence. This latter situation is
what typically exists in a channel relationship, especially with

franchisors and franchisees, and retail chains and the suppliers of their

10

private label merchandise (Dwyer and Walker, 1981). This situation can
have a significant effect on negotiating behavior.

In an asymmetrical relationship, negotiation has been identified as
a viable strategy for overcoming one member’s dominant position (Walker,
1970; Rosenberg and Stern, 1971). Dwyer and Walker (1981) found that
bargaining was more efficient in an asymmetrical relationship. In
addition, the absence of both power and dependence leaves channel members
with no motivation to cooperate (McGannon, 1970).

How effective the less powerful member is depends on that member’s
negotiation skills. Dwyer and Walker (1981) hypothesized that in an
asymmetrical situation, asymmetrical negotiations will result, with the
more powerful member dominating. In a laboratory study, Dwyer and Walker
(1981) found that in an asymmetrical power situation, those holding the
power made more demanding initial bids and gave in less. They also found
that agreement was reached faster in this type of situation.

Experience appears to have a significant effect on negotiation
outcomes. There has been little research conducted concerning the
negotiation behavior of retail buyers. The previous literature has dealt
with channels other than retail/wholesale (Walker, 1970; Roering, 1977;
Dwyer and Walker, 1981). However, much of the research may be applicable
to retail channel behavior. The level of experience of the negotiator will
have an impact on negotiation behavior (Wall and Blum, 1991). As members
bargain with other members, they gain experience and become more
efficient.

Experienced bargainers also tend to be better at understanding

what transpires in a negotiation session (Neale and Northcraft, 1986). An

11

understanding of the processes in negotiations may help bargainers to be
more successful, and reach agreements more quickly (Scholz, Fleischer and
Bentpup, 1982). Negotiating repeatedly with the same member may prove to
be even more beneficial to both parties. Repeated interactions between
both parties allow communications and mutual perceptions to improve
(Cottam, 1985). These improvements lead to greater cooperation and
increased conflict resolution (Wall and Blum, 1991). Experience has been

identified as an antecedent to integrative bargaining (Thompson, 1990).

Coercion

In an asymmetrical channel setting, the source firm seeks to
maintain its dominant position through some form of influence strategy
(Frazier and Summers, 1986). Angelmar and Stern (1978) in a'study on
bargaining in distribution channels, established categories to classify
influence attempts: promises and threats, and rewards and punishment.
Promises and rewards predict pleasant outcomes versus threats and
punishment which predict unpleasant outcomes. As influence strategies, all
are considered coercive in nature (Frazier and Summers, 1986). Although
previous researchers had classified rewards as non-coercive, Frazier and
Summers found that some channel members consider them as coercive in
nature. Threat strategy involves the source firm suggesting or implying
that it will apply negative sanctions if the target firm does not comply
with its requests. Promise strategy takes place when the source agrees to
provide the target with specific rewards if requests are complied with
(Frazier, Gill and Kale, 1989). In the Frazier and Summers study (1986),

legalistic pleas were also classified as being coercive in nature.

12

Legalistic pleas involve the source firm referring to a contract or other
binding agreement with the target firm in attempting to get the target
firm to comply with a request.

Coercive tactics seem to be the influence strategies used by many
channel members (Frazier and Summers, 1986). Hunt and Nevin (1974) found
that in a franchise channel, franchisors relied heavily on coercive
sources. They also found however, that non-coercive strategies increased
channel satisfaction. In pre-study interviews, Frazier, Gill and Kale
(1989) found that suppliers indicated they tended to Lflfilize coercive
strategies with dealers. In the actual study, they found that coercive
strategies utilized by the source firm were positively related to both
perceived channel conflict and target firm dependence. Dwyer and Walker
(1981) found that a greater percentage of coercive messages were sent in
asymmetrical settings compared to settings where power was equal between

channel members.

Reeiprocgl Actions

Very little work has been done on reciprocal actions in a channel
setting. Of the studies that have been done, most were theoretical, not
empirical. The predominant viewpoint is that coercive strategies cause
like reciprocal actions, and increase conflict (Stern and Gorman, 1969;
Lusch, 1976). The setting in which a study is conducted will have an
effect on the occurence of reciprocal actions. There will be a different
reaction to a source firm’s coercive influence attempts in a buyer’s
market compared to a seller’s market. When there are few alternative

suppliers, firms which are the target of coercive inluence attempts are

13

less likely to respond with reciprocal actions. Target firms are more
likely to respond to coercive strategies in a similar manner in a buyers
market (Frazier and Summers, 1986). In a buyer’s market, there are more
alternative suppliers than in a seller’s market. Coercion attempts from a
supplier could "backfire" and cause the buyer to seek out an alternative
supplier.

In an empirical study by Frazier and Summers (1986), it was revealed
that a supplier’s use of coercive strategies was related positively to
dealer’s use of coercive strategies. Frazier, Gill and Kale (1989) found
that dealer dependence is inversely related to reciprocal actions (i.e. as
dependence increased, reciprocal actions decreased). In studying Japanese
retail channels, Sternquist, Runyan and Ogawa (1993) found that although
dependent buyers reported more frequent coercion attempts from suppliers,
they also reported more frequent reciprocal actions than did non-dependent
buyers.

As with dependence, there have been mixed results in the study of
reciprocal actions in a channel setting. In this case, the small amount of
studies, as well as the diversity of settings may contribute to the
findings. The study by Frazier, et. al. (1989) was set in India, which
they considered a buyer’s market. The research by Sternquist, et. al.
(1993) was in Japan, in a channel setting that is unique compared to other
countries. The previous studies in this area have been done domestically,
and it appears that any other findings must be examined within the context

of where the study is done.

14

Wharton

Although there has been more empirical work done concerning consumer
and industrial buyer behavior (Sheth, 1981), the past decade has seen a
marked increase in the research dealing with retail buyer behavior (Sheth,
I981; Hirschman, 1981; Hirschman and Mazursky, 1982; Francis and Brown,
1985; Keveaney, 1988; Fairhurst and Fiorito, 1988; Shim and Kotsiopulos,
1988; Tolbert, Sternquist and Davis, 1988; Fiorito and Fairhurst, 1989;
Stone and Cassill, 1989; Sternquist, Tolbert and Davis, 1989; Fiorito,
1990). Buyers function in a somewhat similar fashion as consumers do in
that they normally purchase finished products, rather than raw materials
(Sheth, 1981). However, consumers normally buy goods based on personal
taste and immediate need. Retail buyers are required to buy goods based on
their prediction of what their customer’s will desire.

Much of the research on buyer behavior has been related to Sheth’s
(1981) model of retail buyer behavior (Fairhurst and Fiorito, 1988; Stone
and Cassill, 1989; Fiorito, 1990). Sheth’s model was designed to take into
account the uniqueness of retail buyer decision making as compared to
industrial buyers and consumers. The constructs in the model include the
merchandise requirements of the retail organization, supplier
accessibility, and what Sheth refers to as a choice calculus.

Merchandise requirements represent retailer needs ( e.g. goods),
motives (e.g. profit), and purchase criteria (e.g. price, quality, etc.).
Supplier accessibility relates the product and/or supplier choices
available to the retailer with which to meet their merchandise
requirements. Choice calculus describes the manner in which a retailer

chooses a supplier for a certain item or items they wish to purchase. The

15

retailer establishes criteria by which they make their buying decision.
The choice calculus of Sheth’s model is made up of three calculi that
retailers follow when selecting suppliers. The first, trade-off choice,
refers to the retailer being willing to make allowances for one criterion
in exchange for another. A retailer who needs immediate delivery may pay
a higher price, in order to get this delivery. In the second, dominant
choice, one criterion is selected as being the most important, and the
buying decision is based on this. If product quality is an overriding
issue, then the buyer’s concern for price, delivery, etc., would be
secondary to quality. The third, sequential choice, involves criteria
being rated from most important to least. In this instance, a supplier
might not be the best in terms of one criteria, but the weight of all

other criteria could cause the buyer to choose that supplier.

r ti rc s

Regardless of the type of choice calculi utilized by a retail buyer,
information regarding potential suppliers must be gathered prior to the
final decision (Wagner, Ettenson and Parrish, 1989). Sources that are
available to retail buyers include: trade press, past sales, projected
sales, competitor’s sales, buying offices, supplier advice, other buyer’s
advice, consumer demand, and their own experience. Mazursky and Hirschman,
(1987) found that retail buyers rely more on sources such as the trade _
press, past sales, and their own experience than they did on other
sources. In small retail stores, consumer demand was the most frequently

used source of information (Fiorito and Fairhurst, 1989).

16

Because consumer demand usually lags behind the actual period during
which merchandise must be procured, information other than past sales and
consumer demand may be utilized. The supplier’s representative is also
very important to the retailer as a source of information (Francis and
Brown, 1985; Fiorito and Fairhurst, 1989). Competitors that are perceived
as industry leaders may also serve as sources of information. Stone (1989)
found competitors to be the most frequently used source of information by
both men’s and women’s apparel buyers. The buyer’s upper management and

sales representatives were also ranked highly, but behind competitors.

Supplier Selection

Utilizing the information gathered, the retail buyer selects a
supplier to purchase from. Some research discusses selection in terms of
merchandise selection, however, when a buyer chooses a product, a de facto
choice of supplier is being made, i.e. to place an order for a product, a
buyer must place it with someone. Selection criteria have been identified
as including vendor reputation, price, quality, delivery, past selling
history, length of relationship, markup, and estimated demand (Hirschman,
1981). The Hirschman study found that departmental concerns and projected
sales were the primary concerns of retail buyers, while they put little
stock in external factors such as consumer demand.

It is difficult to determine the most important variables that
buyers use when selecting a supplier. Hirschman (1981), found that
department store buyers tend to use price and innovativeness as criteria
for selecting a supplier, more often than quality and selling history.

However, others have found that department store buyers utilized selling

17

history and markup (Ettenson and Wagner, 1986), as well as delivery
(Wagner, et al., 1989) the most frequently as selection criteria. In
addition, Shim and Kotsiopulos (1988) found that merchandise quality was
the most important selection criterion, and price one of the least
important. In a study by Hirschman and Mazursky (1982), it was revealed
that estimated consumer demand was the most important selection factor.
Ettenson and Wagner (1989) found that the amount of experience a buyer
posessed also was an important factor. They found that experienced buyers
(more than five years) relied on their own opinions more than less

experienced buyers did.

Spppljer-Reteiler Relationship

 

There have been few empirical studies conducted involving supplier-
retailer relationships. The recent climate in this channel structure has
given rise to new research issues involving the uneven nature of power
structures in the channel (Bowlby, Foord, and Tillsley, 1992). It is
becoming increasingly common in the manufacturing arena to find large
companies (GM, GE, Xerox, etc.) forming closer, more collaborative ties
with their suppliers (Spekman, 1988). These companies are using fewer
suppliers than before, seeking design input earlier, and share more
proprietary information with them than in the past (Spekman, 1988).

In the past, buyers have treated their relationship with suppliers
as adversarial in nature. In the adversarial model of purchasing, buyers
relied on a large number of suppliers to insure sufficient supply, but
would play each off the other to obtain price concessions, allocate

certain amounts to each to maintain control, and utilize only short term

18

purchase agreements (Jackson, 1985). This approach provided lower purchase
prices, but did not take into account other aspects of production,
delivery, service, etc., that can often add to long term success. In the
past decade, increasing off-shore competition for suppliers, and
increasing competition in the retail sector have caused forward thinking
companies to rethink this type of relationship.

Retailer and supplier competition has not been the only driving
force behind closer retailer-supplier links. It is posited by some
researchers that changes in consumer demand in the 1980’s, created by a
growth in niche marketers, forced retailers to pressure suppliers for
shorter production times, increased variety, and higher quality (Bowlsby,
et.al. 1992). They also discuss the use of private label programs from
suppliers as a means to increasing store loyalty. Private label programs
also allow buyers to take increased markups and realize larger profits
(Sternquist, Tolbert and Davis, 1989). Skytte (1992) suggested that both
supplier and retailer transaction costs are reduced when their
interactions move from being price-mediated to coordinated negotiations.
This type of situation permits both sides to achieve desired goals and
work toward mutual long term benefit.

Retailer-supplier relationships are sometimes referred to as
"partnerships, ostensibly to denote shared goals. This type of
relationship infers an extendedness in interaction that is greater than
the typical buyer seller relationship. Heide and Miner (1992) found that
extendedness of the relationship between buyer and seller had a
significant and positive effect on cooperation. They found that frequency

of delivery had the same effect on cooperation. In this case, frequency of

19

delivery was an indication of the level of interaction between the buyer

and supplier.

Hypotheses

Based on the previous discussion, the following hypotheses are suggested:

H-1.

H-2.

H-3.

H-4.

H-5.

H-6.

H-7.

There is a significant difference in the level of perceived
dependence of the buyer on the supplier based on the level of
sales contributed by the supplier. As sales increase,
dependence will increase.

There is a significant difference in the level of perceived

dependence of the buyer on the supplier based on the level of
profit contributed by the supplier. As profit increases,
dependence will increase.

There is a significant difference in the level of perceived
dependence of the buyer on the supplier based on the
supplier’s level of role performance. As role performance
increases, dependence will increase.

There is a significant difference in the frequency of
negotiation based on the length of tenure of the buyer in the
buying position. As length of tenure increases, negotiation
frequency will increase.

There is a significant difference in buyer’s success levels in
negotiation based on the length of tenure of the buyer in the
buying position. As length of tenure increases, negotiation
success will increase.

The perceived dependence of the buyer, level of sales, level
of profits, and level of role performance from the supplier
will be significant predictors of the level of coercive
behavior of the supplier. As these variables increase,
coercive behavior will increase.

The perceived dependence of the buyer, level of sales, level
of profits, role performance and frequency of coercive
influence strategies from the supplier will be significant
predictors of reciprocal influence attempts by the buyer. As
perceived dependence, sales, profits and role performance
increase, reciprocal actions will decrease. As supplier
coercion increases, reciprocal actions will increase.

20

CHAPTER III

METHODS

Sppyey Instrument

In this study, retail department store buyer’s perceptions about
their majOr supplier were studied. The survey instrument, containing 86
variables, was previously used in a study of Japanese Department store
buyers (Sternquist and Ogawa, 1990). Some parts of the instrument were
adapted from a questionnaire developed by Frazier, Gill and Kale (1989).
Constructs designed to measure negotiation behavior were added for this
study.

Retail buyers were asked to consider the major supplier or
wholesaler/manufacturer for the department they'were responsible for. They
were asked to keep that supplier in mind when answering all questions

regarding a supplier, unless otherwise noted.

Sampling Methpde

A national sample of U.S. department store buyers was selected from
two seperate publications. "Homen’s and Children’s Wear Buyers" (1992),
provided the majority of names. Several major department store groups did
not list buyers names in this publication. "Men’s and Boy’s Wear Buyers,"
(1992) was used to provide the few department store listings that were
not found in the other directory. Included in the sample population were

all buyers listed, except children’s wear, furniture, and other hardlines.

21

Associate buyers, divisional, and general merchandise managers were also
excluded, unless also listed as a buyer.

Buyers names were selected at random utilizing a random number
computer program through "Mini-Tab." The process first selected page
numbers from the guides by generating 100, three digit random numbers from
1 to 519, which was the highest page number possible to pick. To select
five buyers per page, two digit random numbers from 1 to 70 were generated
for each page. This was the maximum possible number of buyers per page. If
a chosen page had less than seven buyers listed, the next available page
was used. In the event that the random numbers selected for buyers on a
page were greater than the number of buyers on that page, numbers were
chosen from a random number table until five buyers were selected. This
process produced a total of 500 buyers for the initial sample.

From the original list of 500 buyers, 250 were chosen to be sent a
pre-notification letter asking for their cooperation in this research. The
other 250 were to be contacted by phone to seek a verbal commitment to
take part in the research. Odd numbered buyers, one through 499 were
selected to be mailed a letter only, followed by the survey instrument.
Even numbered buyers, two through 500 were selected to be phoned first.
Phone numbers for all selected buyers were listed along with addresses in
the guides used for sample selection.

A phone calling format was established to maintain uniformity
throughout the process (Appendix B). Each buyer was called a maximum of
three times. If the buyer had not been contacted personally by the third

call, the caller left a message briefly detailing the research, the

22

importance of the buyer’s participation, and that the survey would be
mailed to them immediately.

Through these phone calls, it was ascertained that many of the
buyers selected were either no longer with the company or had been moved
to a different department. If the new buyer in the department chosen was
available, the person was substituted for the original name. Although the
information in both guides was current, it was discovered that many of the
stores choSen were closed or had merged. This information was discovered
before the first mailing to the non-phone call group, from the initial
phone calls. For example, if five buyers from a company were initially
chosen for the sample, up to three may have been selected to be phoned. If
the line was disconnected and there was no further listing, or a company
representative supplied information about the closing, buyers in both
groups selected were not sent a questionnaire. They were not replaced in
the sample.

The response rate of the group that was called first was much
higher. There were a total of 186 buyers called, 129 of whom agreed to
participate in the study. There were 43 who were not contacted personally,
but were given a message by an employee of the store, with 14 refusing to
participate. Of the 129 who initially agreed to participate, 49 returned
the questionnaire for a response rate of 38 percent. Thirty-one were
returned immediately, 11 after a reminder letter, and seven after a second
and final reminder. There were 9 total surveys returned from the group
that had been left messages, for a response rate of 21 percent. Three were
returned immediately, five after the first reminder and one after the

second reminder.

23

Two-hundred and two letters were sent to the buyers who were not
chosen to be phoned. This letter explained briefly the reasons for the
study, the importance of each individual’s participation, an assurance of
confidentiality, and notification that they would receive a copy of the
survey within the next week. They were then sent a copy of the survey,
with a stamped, self-addressed envelope enclosed. After the initial
mailing, 18 were returned. Seven surveys were returned after the first
reminder letter, with ten more being returned after a second and final
reminder, for a total of thirty-five returned surveys. There were four
surveys returned that were not useable for various reasons, as well as 11
surveys returned unopened due to store closings. These unuseable surveys
were considered as not mailed, yielding a response rate for this group
nineteen percent. For the entire survey, there were 359 questionnaires
mailed out, with 14 returned unuseable, and 92 useable questionnaires.

This resulted in an overall response rate of 27%.

Dependence

Buyer dependence was measured in two different ways: perceived
dependence and actual dependence. To measure perceived dependence, buyers
were asked to respond to nine questions/statements, beginning with ”How
important is: 1) Current level of sales from the supplier as a percent of
total sales? 2) Current level of profit from the supplier as a percentage
of total profit? 3) Anticipated sales from supplier as a percentage of
total sales in the next five years? 4) Anticipated profits from supplier
as a percentage of total profit in the next five years? These questions

were answered on a seven-point scale anchored from Not at all Important

24

(l) to Extremely Important (7). These variables measured the buyer’s
perception of their dependence based on current sales and profits.

Respondents were then asked to respond, on a seven-point, Likert
scale anchored from Strongly Disagree (1) to Strongly Agree (7), to the
following statements: 5) I am largely dependent on this supplier for
achieving my goals in terms of sales and profits. 6) This supplier is
aware of how dependent I am on him/her. 7) I could easily replace this
supplier with another supplier(s). 8) I depend primarily on my own
knowledge of the product quality to assess the products I buy for my
company. 9) I depend primarily on my knowledge of the product quality to
assess the products I buy for my company. The last four statements
measured the buyer’s perceived dependence based on constructs other than
sales and profits.

To measure actual dependence, based on the levels of sales and
profit contribution, buyers were asked the following questions: 1) What
percentage of your total sales comes from this supplier? 2) What
percentage of your total profit comes from this supplier. It is assumed
that whether a buyer perceives themselves as dependent or not, this
variable measures the true level of dependence on a supplier.

Actual dependence based on supplier performance was also measured by
asking respondents to evaluate their major supplier in relation to the
industry average for each of six elements. These were measured on an
eleven point scale anchored from Very Poor (-5) to Very Good (5). The
midpoint was indicated on the scale by the number 0. The six elements
werezl) product quality, 2) allocation and delivery of goods, 3)

acceptance of unsold merchandise returns, 4) provision of sales support,

25

5) provision of financial support for remodeling, advertising, etc., 6)

customer recognition of name brand.

Negptjation

In measuring negotiation behavior, buyers were asked if they engaged
in any negotiations with any of their suppliers. If they answered in the
affirmative, they were then asked to respond to twelve statements, six
each under two general statements, measured on a seven point scale
anchored from Never (1) to Always (7), regarding the frequency of their
negotiation behavior. The two general statements were: 1) "I negotiate
with suppliers on the following points": price, delivery, any trade terms,
markdowns, advertising, or other areas. 2) "In negotiations with my
suppliers, I feel that my company does better than the standard offered to
others on the fellowing": price, delivery, any trade terms, markdowns
advertising or other areas. The first statement was designed to measure
the buyers’ frequency of negotiation behavior, while the second was
designed to measure the buyer’s perception of their level of success at

negotiating.

Cpepcjon

Buyers were then asked to respond to the following statements on a
scale anchored from Never (1) to Frequently (7): 1) "You would receive
poorer service and/or cooperation from them if you did not comply with
their request." 2) “You would receive better service and/or cooperation if
you complied with their request." 3) "Your dealership agreement and/or

legal considerations either require or suggest your compliance on a

26

particular issue." Buyers then responded to the following three statements
on a Likert scale anchored from Strongly Disagree (1) to Strongly Agree
(7): l) "I have frequently been threatened with negative consequences by
the supplier if I failed to abide by their requests involving critical
matters." 2) "When attempting to influence me, the supplier frequently
implies that I would receive better service and/or cooperation if I
complied with their requests." 3) "In attempting to change my behavior,
the supplier frequently draws my attention to our dealership agreement."
These statements measured the frequency with which the supplier engaged in

coercive influence strategies directed at the buyer.

Reejppocal Actions

When faced with the prospect of coercive influence strategies, it is
common for firms that are targets of the influence to answer with coercive
tactics of their own. To measure this type of action, buyers were asked to
respond to the following statements on a seven point scale, anchored from
Never (1) to Frequently (7): 1) "You would be less likely to accommodate
the supplier in the future if they do not comply with your requests
now." 2) "You would be more cooperative with the supplier in the future
if they complied with your request." 3) "Your agreement with the supplier

either required or suggested the supplier be in compliance with your

desires."

27

CHAPTER IV

RESULTS
MEL“:

The majority of the respondents (54.9%) reported that they had been
in their current buying position for five years or less, although the
sample included buyers with as little as three months to thirty-seven
years experience in the position. Sixty-four percent of the buyers had
more than five years experience in retailing before reaching their current
position. All but one respondent (98.9%) were high school graduates, and
60.9% reported having four or more years of college education. There was
a fairly even distribution of men and women in the sample; 45.7% men and
54.3% women.

The buyers in this study were responsible for departments with a
median annual sales volume of $6,000,000. The companies they worked for
had a median annual sales volume of $150,000,000. Medians are used in
these instances due to the inclusion in the sample of three exceptionally
large department store companies, as compared to the rest of the sample.
Fifty-one of the respondents (55.4%) were from companies that are
considered to be "major” department store companies. These would be
national or regional groups with several to hundreds of stores, and sales
in excess of $100 million. However, only 40 of those respondents reported
their department and/or company volume. 0f the major suppliers in this
study, 87% were domestic (U.S.) companies, with 56% selling nationally
advertised name brands. Private label products were provided by only 16%

of the suppliers (Table 4.1).

28

Table 4.1 Demographic Characteristics of Respondents

 

 

Varjaplea
Position Experience

5 years and less
5+ - 15 years
16 years or more

Totals
No response

54.
18.
100.

N
03
O “#40

 

Retail Experience - Years in Retailing Prior to Current Position

 

 

 

0 - 5 years 32 35.6
5+ - 15 years 39 43.3
16 years or more 19 21.1
Totals 90 100.0
No Response 2
Education
Less than High School 1 1.1
High School Graduate 12 13.0
1 - 3 years of College 23 25.0
4 years of College 42 45.6
More than 4 years 14 15.3
Totals 92 100.0
No Response 0
Sex
Male 42 45.7
Female 50 54.3
Totals 92 100.0
No Response 0
Continued

29

Table 4.1 (Continued)

 

 

 

 

 

 

 

N . 92
Varjaples Number Pereept
Department Annual Sales Volume
90,000 - 1,000,000 20 24.1
1,000,001 - 5,000,000 18 21.7
5,000,001 - 10,000,000 17 20.5
10,000,001 - 80,000,000 25 30.1
80,000,001 - 900,000,000 3 3.6
Totals 83 100.0
No Response 9
Company Annual Sales Volume
130,000 - 1,000,000 11 16.4
1,000,001 - 10,000,000 10 14.9
10,000,001 - 99,999,999 5 7.6
100,000,000 - 999,999,999 30 44.8
1,000,000,000 - 17,000,000,000 11 16.4
Totals 67 100.0
No Response 25
Supplier Location
Domestic 80 87.9
Foreign 9 9.9
Joint 2 2.2
Totals 91 100.0
No Response 1
Continued

3O

Table 4.1 (Continued)

 

 

 

 

 

N - 92
Variables Number ,_Percent
Products Supplied
Nationally Advertised 56 60.9
Non-Advertised Brands 6 6.5
Private Label 8 8.7
Combination 22 23.9
Totals 92 100.0
Supplier Private Label Program
Provided 14 16.0
Not Provided 77 84.0
Totals 91 100.0

No Reponse 1

 

31

In this study, the behavioral dimensions of the retail/wholesale
channel were investigated in an attempt to discover which party holds the
power. In addition, variables designed to measure negotiation, as well as
influence attempts by both parties were investigated. Analyses and results
are reported as follows: dependence, negotiation, coercion, and reciprocal
actions.

To determine the relationship between these variables, Pearson’s
correlation analysis was conducted (Table 4.2). Those variables that were
significantly correlated were: perceived dependence and sales (.359),
perceived dependence and profit (.364), profit and sales (.931), and
coercion and reciprocal actions (.484). As shown, these variables were all

positively related.

DATA ANA Y S

Depepde_nce. Respondents in this study were asked to rate their
dependence on their major supplier using nine statements (Appendix A)
relating to dependence levels. Item reliability analyses were conducted on
these variables to determine how well the scale measured perceived buyer
dependence. The entire scale yielded a Cronbach’s alpha of .67. Four
variables were then omitted from the scale to increase reliability. The
items omitted from the scale were: 6) this supplier is aware of how
dependent I am on him/her, 7) I could easily replace this supplier with
another supplier, 8) I depend primarily on the supplier to supply me with

high quality merchandise, 9) I depend primarily on my own knowledge of the

32

 

 

 

n o '1. it ’er : 'd I‘o‘nof .1- I o

P oau. c .ol 0- 'on -r :- ipro . iu
Role Perceived Reciprocal
Coercion Performanee Sales Profit Dependenee Aetione

Coercion 1.000
Roleperf ' .168 1.000
Sales .189 .195 1.000
Profit .157 .181 .931* 1.000
Perceived
Dependence .136 .149 .359* .364* 1.000
Reciprocal
Actions .484* -.007 .080 .101 .115 1.000
* p<.001

33

product quality to assess the products I buy for'my company. The remaining
five variables produced a scale that yielded a Cronbach’s alpha of
.90. These items were then analyzed to identify the mean level of
importance given to each measure. The buyers were asked to give the level
of importance placed on the first four measures, on a scale anchored from
one to seven (I-Not at all Important, 7=Extremely Important). The fifth
item measured the level of agreement or disagreement on a Likert scale
anchored from one to seven (l-Strongly Disagree, 7=Strongly Agree). Means
for these variables are presented in Table 4.3. The means for these
variables were high, with all but the fifth item having means above 5.0.
The distribution for these variables was weighted toward the upper part of
the scale, showing the respondents placed high levels of importance on
these constructs. The items in the scale were sunmed to create one
variable for further analysis. This variable represented the buyers’
perceived level of dependence.

Salea. Buyers were asked to give the percentage of sales that their
major supplier contributed to their overall departmental sales. Answers
ranged from a low of 3% to a high of 100%. The mean percent of sales
contribution was 26.3%. To determine if there was a significant
difference in the level of perceived dependence between buyers reporting
high sales from suppliers and those reporting low sales, a T-Test was
conducted. Frequency distributions were examined to determine where to
best seperate the variable. A natural division was found at the level of
20% sales contribution. Those buyers reporting sales from suppliers as

being 20%.or less were grouped as low sales. This group represented 49% of

34

Taple 5,3 Burers’ Eereejveu Dependence: Means

 

Measurements of Buyers’ Perceived Depenuence

How Important is:

Current level of sales from the supplier as
a percent of total sales

Current level of profit from the supplier as
a percent of total profit

Anticipated sales from supplier as a percentage
of total sales in the next five years

Anticipated profits from supplier as a percentage

of total profit in the next five years

Means

5.8

5.6

5.6

5.7

 

1=Not at all Important, 7=Extremely Important

 

Please respond to the following statements:

I am largely dependent on this supplier for
achieving my goals in terms of sales and profits

This supplier is aware of how dependent I
am on him/her

I could easily replace this supplier with
another supplier(s)

I depend primarily on the supplier to supply
me with high quality merchandise

I depend primarily on my own knowledge of the
product quality to assess the products I buy
for my company

5.0

4.6

2.8

5.5

5.4

 

1=Strongly Disagree, 7=Strongly Agree

35

the respondents. Those reporting sales of more than 20% were grouped as
high sales. This represented 51% of the respondents. The results were
significant (t- -3.47, p<.001) (Table 4.4). Hypothesis number one is
accepted. There are significant differences between groups. Buyers who
received lower of amounts of sales from their major supplier, perceived
themselves as less dependent (X-26.4) than did those who received higher
amounts of sales (X-30.7).

Pruitt. Respondents were asked to state the percentage of profits
contributed by their major supplier as a percentage of their overall
departmental profit. The percentages given ranged from 1% to 65%, with the
mean level of profit contribution being 24.8%. To test if there was a
significant difference in the level of perceived dependence of buyers on
their supplier based on the level of profit contributed, a T-Test was
conducted. A frequency distribution was used to determine the point at
which to separate the respondents for this variable. Those buyers who
reported profit contribution from the supplier of 20% or less were
classified as receiving low profit. This represented a natural break in
the respondents, and was 50% of the sample. The respondents who reported
30% or more in profit contribution from their supplier were classified as
receiving high profit. This represented only 28% of the sample, but 30%

fell as the next natural break in the number of respondents. Those who

36

T1! : ' ‘ - - ' |-.-n.-n aritPl':P° - v:q 1:9: o:n - . -.:

 

Pooled Variance
Standard Estimate

 

 

 

Means Demti on T-Value__
Group 1 - Low Sales 26.4 5.26 -3.47 *
Group 2 - High Sales 30.7 4.24

 

*p<.001 (one-tailed t-test)

37

reported profit contributions in between were not included in this test,
in order to group the buyers as high or low profit. The results were
significant (t- -4.39, p<.001) (Table 4.5). Hypothesis number two is
accepted. There is a significant difference between groups. Buyers who
received low amounts of profit from their suppliers perceived themselves
as being less dependent (X-25.8) than those who received high amounts of

profit (X-30.6).

Bole Perfprmanee. The third measure of actual dependence was
supplier role performance. Survey respondents were asked to evaluate their
major supplier, in relation to the average of all their sources of supply
on a scale anchored from -5 to +5 (-5=Very Poor, +5=Very Good). Because
this scale included negative numbers, the scale was changed to positive
(1=Very Poor, 11=Very Good) for further data analysis. The means for these
items are presented in Table 4.6. Buyers rated their major suppliers
highly on product quality (Xa9.4), delivery (X=8.8), and recognition of
brand name (X=9.7). They rated their major suppliers low on merchandise
returns (X=6.5), provision of salespeople (X=7.2) and financial support
(it-7.1). Item reliability analyses were conducted to determine which
variables most accurately measured supplier role performance. The original
scale yielded a Cronbach’s alpha of .63. Three variables were deleted from
this scale to increase reliability. Items deleted from the scale to
increase reliability were: 1) product quality 2) allocation and delivery
of goods 3) acceptance of unsold merchandise returns. The remaining scale
yielded a Cronbach’s alpha of .68. The remaining items were then summed

for further analysis.

38

ariable:' r -iv-d I-c-nc-I - . -

 

Pooled Variance
Estimate

T-Value

 

 

T.- - . -T- with i-,- -e
Standard
Means. Deviation
Group 1 - Low Profit 25.8 5.27
Group 2 - High Profit 30.6 3.89

-4.39 *

 

*p<.001 (one-tailed t-test)

39

Table 4.6 Supplier Role Performance: Means

 

Measurements ef Supplier’s Role Perfprmanee

Means

 

Please evaluate your major supplier,

in relation to the average of all sources
of supply, for each of these elements:
Product quality

(Allocation) and delivery of goods
Acceptance of unsold merchandise returns

Provision of salespeople

Provision of financial support for
remodeling, advertising, etc.

Customer recognition of supplier’s
brand name

9.4
8.8
6.5
7.2

7.1

9.7

 

1=Very Poor, 11=Very Good

40

To determine if there was a significant difference in the level of
perceived dependence of buyers based on supplier’s role performance, a T-
Test was conducted. A frequency distribution of the responses was analyzed
for naturally occurring divisions. The role performance variable was then
divided into two groups. The bottom 56% were classified as achieving low
role performance, while the top 44%,were classified as achieving high role
performance. The results were not significant (Table 4.7). Hypothesis
number three is not accepted. There is no significant difference between

groups.

Negotiation. Buyers were asked to respond to two statements
regarding negotiation behavior on a seven point scale anchored from one to
seven (1=Never, 7=Frequently). The first was designed to»measure frequency
of negotiations, and the second to' measure the buyer’s success in
negotiating. Means for both of these scales are presented in Table 4.8.
Buyers stated that they engaged in negotiations with their suppliers most
frequently concerning delivery (X=5.4) and advertising (X-5.2). They were
most successful negotiating delivery (X=4.8), with price, markdowns, and
advertising all showing less success (X=4.5).

Item reliability analyses were conducted on both scales to'determine
which variables best measured negotiation frequency and success. There
were no items deleted from either scale, yielding a Cronbach’s alpha of
.70 for frequency and .71 for success. Both scales were then summed

seperately to create two variables for further analyses.

41

T pl- . - - w' h Ie--no- - i .l-° '- i- -. I--en-~n - . .

 

Pooled Variance

 

 

Standard Estimate
Means Deviation T-Value
Group 1 - Low Role Performance 26.5 4.95 -1.80
Group 2 - High Role Performance 28.7 4.96

 

p<.001 (one-tailed t—test)

42

T N iation h vi r: Mean

 

 

 

Measurements at Buyers’ Negptjatipn Behavior Meap_
Frequency: 1 negotiate with my suppliers on
the following points:

Price 5.0
Delivery 5.4
Any trade terms 4.1
Markdowns 4.9
Advertising 5.2
Success: In negotiations with suppliers, I feel

that my company does better than the

standard offered to others on the following:
Price 4.5
Delivery 4.8
Any trade terms 4.3
Markdowns 4.5
Advertising 4.5

 

1=Never, 7=Frequently

43

Buyers were asked to state in terms of years and months, how long
they had been in their current buying position. Although experience levels
ranged from as little as three months to 37 years, the mean experience
level was 8 1/2 years. To test for significant differences in the levels
of negotiation behavior based on length of tenure, T-Tests were performed
using both negotiation variables as the dependent variable. Aldistribution
of the frequency of responses was analyzed to determine the point at which
a natural break accurred. Those respondents that had 4 or less years on
the job were grouped together, representing low experience. This
represented 46% of the respondents. Those having been in their jobs more
than four years were grouped, and considered to have high experience.
This represented 54% of the respondents. The results were not significant
for either test (Table 4.9). Hypotheses 4 and 5 are not accepted. There

are no significant differences between groups in either case.

Coercion.To measure the frequency of coercive influence attempts by
the supplier, buyers were asked to respond to six different statements on
two scales anchored from one to seven (1=Never, 7=Frequently) (I-Strongly
Disagree, 7=Strongly agree) respectively. Means for both scales are
presented in Table 4.10. Means for these variables are relatively low. In
terms of frequency, promise strategy (better service/cooperation) was
reported as the most frequently utilized coercion strategy. After
conducting an item reliability analysis, all items were included in the
scale which yielded a Cronbach’s alpha of .88. The variables were summed

to create one variable for further analyses.

44

T.u ' ‘ ° -T‘ .. 9‘0: 0‘ 1 .0]:: N"‘ . .0 F '0 -ncy df-7§__

Pooled Variance

 

 

 

Estimates
.Means T-Value
Group 1 Low Experience 24.3 -.41
Group 2 High Experience 24.9
p<.001 (one-tailed t-test)
T-Test njth Dependent Marjaple: Negetiatjpn Sueeess df-Zfi
Group 1 Low Experience 22.1 -.97

Group 2 High Experience 23.2

 

p<.001 (one-tailed t-test)

45

lap]e 5,19 Supplier Cpereipn Attempts: Means

 

Wcion

You would receive poorer service and/or
cooperation from them if you did not
comply with their request

You would receive better service and/or
cooperation if you complied with
their request

Your dealership agreement and/or legal
considerations either require or suggest
your compliance on a particular issue

Means

2.2

2.9

2.7

 

1=Never, 7=Frequently

 

I have frequently been threatened of negative
consequences by the supplier if I fail to abide
by their requests involving critical matters

When attempting to influence me, the supplier
frequently implies that I would receive better
service and/or cooperation if I complied

with their requests

In attempting to change my behavior, the
supplier frequently draws my attention to
our dealership agreement

1.9

2.3

2.0

 

l-Strongly Disagree, 7=Strongly Agree

46

Stepwise regression analysis was conducted to determine if perceived
dependence, sales, profit, and role performance were significant
predictors of coercive actions by the supplier. None of the variables were
significant (Table 4.11). Hypothesis number 6 is not accepted. None of the

variables are significant predictors of supplier coercion.

.Reeiprpeafl_Aetjpns, To measure the frequency of reciprocal influence
attempts, buyers were asked to respond to three statements on a seven
point scale anchored from one to seven (l-Never, 7- Frequently). Means for
this scale are presented in Table 4.12. Buyers indicated that they were
more likely to try to influence their supplier than their supplier was to
influence them. Promise strategy (cooperation if comply with request) was
the most frequently used (X-3.5). Legalistic pleas (pointing to dealer
agreement) and threat strategy (less accomodation without compliance) were
less frequently used (X-3.1, X-3.0 respectively). An item reliability
analysis was conducted, with no items being deleted from the scale,
yielding a Cronbach’s alpha of .82. The scale was then summed to create
one variable for further analyses. Stepwise regression analysis was
conducted to determine if perceived dependence, sales, profit, role
performance, and supplier coercion were significant predictors of buyer
reciprocal actions. Supplier coercion emerged as the only significant
predictor of reciprocal actions, with a beta weight of .52, and p<.001.
The adjusted R square for the overall equation was .22 (Table 4.13).
Hypothesis 7 is accepted. Coercion, is a significant predictor of

reciprocal actions.

47

Iaple 1,11 Stepwise Begressjpn Analysis; Supplier Cpercion

Multiple R .25
R Square .06
Adjusted R Square .01
Standard Error 8.27

 

Analysis of Variance

 

 

 

 

 

 

DF Sum of Squares Mean Square

Regression 4 313.14 78.29
Residual 71 4817.01 67.84
F- 1.15. Signifieanee F=.34

Variables in the Eguation
Variable B .SE B. Beta T
Perceived
Dependence .11 .19 .07 .58
Sales .14 .16 .29 .92
Profit -.08 .16 -.16 -.51
Role Performance .16 .15 '.13 .58
**p<.0001

48

 

Measurements pf Duyers’ Reejprpcal Actions Means

You would be less likely to accomodate the supplier
in the future if they do not comply with your
requests now 3.0

You would be more cooperative with the supplier
in the future if they complied with your request 3.5

Your agreement with the supplier either required
or suggested the supplier be in compliance
with your desires 3.1

 

1=Never, 7: Frequently

49

T.o - '. --w - Reore ion A . ° : : - '- i~ . - ' '1

Multiple R .51
R Square .26
Adjusted R Square .22
Standard Error 3.92

 

Analysis of Variance

DF Sum of Squares Mean Square
Regression 5 444.16 88.83
Residual 82 1259.74 15.36
F-dS.78 Signifjeance F: .0001

 

 

Variables in the Equation

 

 

 

 

 

Variable 8 SE B sBeta T
Coercion .28 .05 .52 5.26 **
(Constant) 5.68 2.55 2.22
**p<.0001

50

CHAPTER V
DISCUSSION

The focus of this research was the relationship between department
store buyers and their major supplier. The level of dependence of the
buyer on the supplier should be a function of the positive elements the
supplier brings to the channel relationship (El-Ansary and Stern,1972),
including sales, profit, performance, etc. Both the buyer’s perceived
dependence and actual dependence should affect other aspects of the

relationship.

mm

The demographic characteristics of this sample are somewhat
different from what has been found in other studies. In a study by
Tolbert, et.al. (1989), 43%. of retail buyers had 5 ,years or less
experience at their position, as compared to 55% of the buyers in this
study. Of the buyers in the Tolbert study, 71% had more than five years of
retail experience before attaining their current position, compared to
just 65% in this study. In addition, 72% of the buyers in the Tolbert
study were male, versus 46% in this survey. This may be the result of the
difference in retail stores surveyed. The earlier study’s sample consisted
of buyers from 32 department stores, eighteen specialty stores, and

nineteen discount store operations.

51

The sample for this study was drawn exclusively from department
stores, 55% of which are major chains. Discount store companies tend to
promote their buyers from the store ranks, promoting them to buyer only
after many years at the store level. They also keep them in their buying
position longer than do department stores. Many department stores, such as
Federated Department Stores, start buyers in a merchandising training
program, and move them to different departments frequently. Other
companies, such as Mercantile Stores move their store buying staff from
buying to operations often, e.g. trainee to assistant buyer to department
manager to buyer to assistant store manager to divisional merchandise

manager to store manager, etc.

Perceived Dependenee
In this study, it was revealed that both sales and profit had a

significant effect on buyers’ perceived dependence. Those buyers who
perceived themselves as more dependent on their supplier received higher
levels of sales and profits from the supplier than did less dependent
buyers. This supports previous research (El-Ansary and Stern, 1972;
Frazier, et.al., 1989). Role performance however, did not have a
significant effect on the level of perceived buyer dependence. This also
supports previous findings (Frazier and Summers, 1986; Frazier,et.al.,
1989) that role performance is not a good indicator of dependence.
Considering the current retail climate in the U.S., these findings
make sense. Role performance is perhaps the easiest variable for a

supplier to control. Product quality, delivery, merchandise returns,

52

provision of sales people, advertising support, and customer brand
recognition are all areas over which the supplier has control. The most
difficult to control may be brand recognition, because advertising to
increase brand awareness is costly.

Sales and profit however, although easily measureable, are out of
the control of the supplier. The retail price is set by the retailer, as
is floor space, and position. Perhaps the most crucial aspect of a
product’s profitability is the frequency of sales, and the timeliness of
permanent markdowns. Poor timing in these areas may lead to less than
profitable results.

A retailer in the U.S. may choose a supplier based solely on sales
or profitability. Although a buyer will look at other areas, the buyer’s
choice calculus (Sheth, 1981) will force them to choose a profitable
supplier over one who may perform their role better. An excellent example
of this is the supplier, Liz Claiborne. Claiborne is considered by most
retailers as the leading producer of women’s clothing. The company
provides many major retailers with high levels of sales in many
departments. Claiborne is below average in terms of provision of financial
support, acceptance of unsold merchandise, and would rate only average in
product quality, however the company has built a reputation on good fit

and leading fashions, and the products continue to perform.

Negotiations

It was hypothesized that more experienced buyers would engage in

negotiations with suppliers more frequently than less experienced buyers.

53

Negotiation success should also result more frequently with experienced
buyers. The results of this study were contrary to these expectations.
There was no significant difference in levels of negotiation frequency or
success between more and less experienced buyers. These findings run
contrary to the buyer behavior literature. Experienced buyers tend to rely
on their own opinions more than less experienced buyers (Ettenson ans
Wagner, 1989). This would seem to point to more frequent disagreement with
supplier’s opinions, and result in more frequent negotiation sessions to
resolve differences.

These findings may also be explainable in the context of a
"partnership" style arrangement with the major supplier. If a supplier is
acting with both channel member’s best interests in mind, differing
opinions may occur less frequently. In other words, a decision that
negatively affects the retailer would eventually affect the supplier
negatively. In addition, a more experienced buyer may be more easily able
to deal with suppliers, due to their level of expertise and previous
negotiations (Wall and Blum, 1991).

When channel members interact on a regular basis, comunication will
improve (Cottam, 1985). This regular communication between members may
more closely resemble dialogue than negotiations. If the buyer and
supplier are discussing each other’s needs regularly, they may not view
the communication as negotiation at all. In the current retail market, it
is probable that suppliers do not want to lose "good" customers. This may
cause suppliers other than a store’s major supplier to act cooperatively

with retailers. It will be easier for a supplier to concede in some areas

54

rather to seek out new customers. This would lead to less frequent

negotiations between the channel members.

Mien

The previous literature has examined channels which by their very
nature tend to be asymmetrical (Walker, 1970; Dwyer and Walker, 1981).
Buyer-supplier relationships found in franchise, automotive,
manufacturing, etc. have been shown to be asymetrical settings. In
addition, many laboratory studies have used an asymmetrical approach. In
an asymetrical setting the more powerful member will seek to maintain its
position through forms of influence strategy aimed at the dependent member
(Frazier and Summers, 1986). Although it has been shown that non-coercive
influence attempts elicit more positive results (Hunt and Nevin, 1974;
Skinner, et.al., 1992), coercive tactics are those used by most channel
members (Frazier and Summers, 1986).

Frazier, et.al. (1989) found that source firm coercion related
positively to target firm dependence. This finding was supported in a
study by Kale (1986). A considerable amount of coercive attempts will be
found in an asymmetrical channel setting (Dwyer and Walker, 1981). The
results of this research do not support the previous literature concerning
supplier coercion. The means for each coercion construct indicate that
most buyers do not frequently face coercive tactics from their major
supplier. In addition, correlation and regression analyses show that there
is no significant relationship between any buyer dependence measure and

coercion. This is an understandable finding with relation to role

55

performance, but it was expected that other dependence measures would have
a significant effect on supplier coercion behavior.

As was the case in negotiation behavior, these findings may be
explained in terms of the market that the study was conducted in. A less
adversarial relationship between buyer and supplier will tend to produce
fewer coercive influence attempts. If the supplier perceives that
cooperation will be more profitable in the long term, less coercive

influence attempts should be made.

Reciprpeal Actions

When faced with coercive influence attempts, most channel members
will react with similar attempts (Stern and Gorman, 1969; Lusch, 1976).
However, Frazier, et.al., (1989) found that dependence and reciprocal
actions were inversely related. As dependence increased, reciprocal
actions decreased. This finding was from a study conducted in a ”sellers"
market. Still another study (Sternquist, et.al., 1993) found that in
Japanese channels, dependent buyers reported more frequent use of
reciprocal actions than non-dependent buyers.

The results of this study support only the findings that show
coercion being significantly related to reciprocal actions. Dependence
measures were found not to be significant predictors of reciprocal
influence attempts by buyers. Coercion was highly correlated with
reciprocal actions, in a positive direction. As supplier coercion attempts
increased, buyer reciprocal actions increased. Coercion was also found to

be a significant predictor of reciprocal buyer actions.

56

The current market conditions in the U.S. have been changing rapidly
during the past decade. These changes have created an environment in the
U.S. where financially strong retailers are highly sought after by
suppliers. This market may assume the characteristics of a ”buyer’s"
market. In a buyer’s market, channel members will act differently than in
a seller’s market (Frazier and Summers, 1986). When faced with coercive
influence attempts buyers will respond with like actions (Lusch, 1976),
but in a buyer’s market, retailers may be the channel member who first
attempts to influence the other member. It is clear however, that any
coercion from the supplier will elicit reciprocal coercion from the buyer.
In this study, the level of buyer dependence did not predict reciprocal
actions.

Due to the changing retail landscape in the U.S., many companies
have sought to create closer, more collaborative ties to their suppliers
(Spekman, 1988). The product life cycle in apparel retailing is short, and
has been getting shorter. This, coupled with competition from fereign
suppliers, has created a situation where both supplier and retailer have
actively sought these relationships. In this study, 87% of the major
suppliers were domestic (U.S.) companies, with 56% selling nationally
advertised, name brand merchandise. It has been shown that extended
relationships as well as frequency of deliveries have a significantly
positive effect on cooperation in channels (Heide and Miner, 1992).
Domestic suppliers are able to deliver merchandise in a more timely manner
than foreign producers. They normally utilize a four to six season

delivery schedule (spring, summer, back-to-school, fall, holiday, and

57

cruise). Each delivery cycle would include merchandise to be shipped
during a two or three month period. In addition, domestic companies have
the ability to add new items on short notice, when consumer demand
dictates new styles.

Private label programs have been a vehicle through which department
store buyers have sought to increase store loyalty (Bowlby, et.al., 1992)
as well as increase markup and profit (Sternquist, Tolbert and Davis,
1989). Only 16% of the suppliers in this study provided the private label
program for the buyers responding. This could be the result of the large
number of domestic suppliers in the study. Because private label programs
normally deal with large quantities, long lead times, and tend to be more
basic in fashion, buyers may rely more on foreign producers for these
items. Department store buyers still must count on name brand suppliers to
bring customers into their store.

In this study, it was revealed that buyers engaged in reciprocal
actions more frequently than they received coercive influence attempts
from their suppliers. It is possible that in the current market that even
infrequent coercion attempts may cause buyers to retaliate with their own
attempts.

In a buyer’s market, there are many alternative suppliers. This
tends to lower the buyer’s dependence on a given supplier. However, if the
buyer has made a commitment to the supplier, and established closer ties
than to other suppliers, the buyer may behave in certain situations in a
manner contrary to what would normally be expected. Length of tenure

should have an effect on negotiation behavior. Experienced buyers will

58

tend to have more confidence in their position, leading them to more
confidently press their position. However if the buyer-supplier
relationship operates as more of a "partnership," as some retailers view
it, this may not be the case. In this type of relationship, both members
would expect to interact regularly. There would be a tendency then for
channel members in this type of relationship to be more cooperative than
if they anticipated few or no further interaction (Roering, et.al., 1975;

Cottam, 1985; Heide and Miner, 1992).

59

CHAPTER VI

SUMMARY, IMPLICATIONS AND RECOMMENDATIONS

Summer!

The objectives of this study included: 1) to determine the effect
that supplier performance (sales, profit, brand recognition) has on the
relationship between department store buyers and their major supplier, 2)
to determine the effect that buyer dependence (actual or perceived) has on
the relationship with his/her largest supplier, 3) to further the body of
knowledge and understanding of retail-supplier relationships.

It was revealed that department store buyers’ perceived dependence
on their major supplier was significantly, positively correlated with
supplier sales and profit contribution, but not. with supplier role
performance. It was also found that there was a significant difference in
the levels of perceived buyer dependence based on both sales and profit
contribution levels from the supplier. Buyers who reported higher levels
of dependence also reported higher levels of sales and profits from their
major supplier. There were no significant differences based on supplier
role performance.

Buyer’s length of tenure in their position had no significant effect
on the frequency of negotiation with suppliers. Length of tenure also had
no significant effect on the success of negotiations with supplier. The
longer a buyer was in his/her position, the less frequently he/she engaged

in negotiations and the less successful he/she was at negotiations.

60

When investigating coercive influence attempts by the supplier, it
was discovered that sales, profit, role performance and perceived
dependence were not predictors of coercion. It was revealed that of these
variables: sales, profit, role performance, perceived dependence, and
supplier coercion, only supplier coercion was a significant predictor of
buyer reciprocal influences attempts. In addition coercion and reciprocal
actions were significantly and positively correlated.

The literature pertaining to power and dependence in distribution
channels is abundant. The literature related to retail buyer behavior is
growing, however studies dealing*with buyer-seller relationships have been
sparse. This study helps to add some understanding to this area of
scholarly research. Constructs that have seldom been investigated in
retail channels such as coercion, reciprocal actions, and negotiation were

looked at in terms of power and dependence relationships.

ion
Retailing in the U.S., as well as globally, is incurring change at
a rapid pace. Buyers can no longer operate under previous business
assumptions. They must understand that relationships with vendors are
necessary and need not be adversarial in nature. As suppliers have sought
in the past to "nurture" relationships with buyers, courting them to win
their business, buyers must realize that a "good" supplier is something to
be coveted.
Although this study was conducted from the retailer’s viewpoint, it
would serve suppliers well to understand the implications of this study

also. Buyers indeed view themselves as dependent on their major supplier.

61

They will not hesitate however to retaliate if faced with coercive
influence attempts. It is not clear from this research how negotiation
behavior is affected by this type of relationship. It is possible that
length of tenure is not as important as other aspects of the relationship,
such as buying power, alternate suppliers, etc.

Buyers in this study who received high amounts of sales and profits
from their major supplier perceived themselves as being dependent on that
supplier. These have been found to be good measures of buyer dependence,
should help to predict other behavioral aspects of the channel
relationship. The accepted paradigms of retail channels are changing
however, and these measures of dependence may be affected by the different
relationship between members. Although retail buyers may establish closer
ties to a supplier, even utilizing fewer suppliers overall, they are still
aware of the abundance of suppliers in the market. This allows them to act
in a less dependent manner, as they may move to another supplier and
establish close ties if necessary.

Buyers and suppliers may more quickly and easily begin working
together because of the rapid improvements being made in the areas of
technology and information systems. In the past, a supplier may have been
reluctant to tie themselves too closely with a retailer due to the costs
of system set-ups and potential losses from severing the relationship. In
today’s climate of rapid technological change, both suppliers and
retailers find themselves constantly updating their systems (computer,
delivery, point-of—sale, etc.). They also are finding more compatible

technology formats that allow new vendors to fit in quickly.

62

Negotiation behavior' among retail buyers. warrants further
investigation. It is clear from this study that more experienced buyers
engage in negotiations less frequently and are successful less frequently
than their peers with less experience. Experienced buyers may not find it
necessary to negotiate as frequently because they have become more
efficient at it. Intuitively, levels of success should increase however.
An inexperienced buyer may view small concessions from suppliers as a
greater level of success than an experienced buyer. They may also be more
zealous in their attempts to get the supplier to accede to their requests.
The more experienced buyer should be cognizant of complacency in dealings
with suppliers.

The level of coercive influence strategies from the supplier are
affected by this "new" channel relationship. Dependent buyers should
report more frequent influence attempts from suppliers. It is possible
that this relationship takes on the characteristics of a retailer and its
private label supplier, with the retailer more easily able to "call the
shots." This would imply more frequent influence attempts being directed
towards the supplier from the retailer.

The behavioral dimensions investigated here are of great importance
to buyers as they move toward closer ties with fewer suppliers. They must
understand the importance of strategic alliances with vendors in order to
remain competitive, profitable, and financially viable in the years ahead.
Retail buyer behavior warrants further study if retailers are to develop

and maintain a competitive advantage in the 1990’s and beyond.

63

R n ti n f r F r Re e r

The previously accepted paradigms involving retail channels need
further investigation. This research was an attempt to investigate the
behavioral dimensions of the retail-wholesale distribution channel.
Previous studies have focused on buyer behavior as it applies to vendor
selection and product procurement. Studies looking at coercion, reciprocal
actions and negotiation have been conducted in channel settings other than
department store settings (franchise, automotive, food brokers, etc.).
Department stores in the U.S. purchase a wide spectrum of soft-lines
merchandise, covering low to high prices and most product categories.

Because of their buying situation, department store buyers may offer
a unique opportunity to examine buyer behavior that is not available from
investigating specialty retailers, grocery retailers, or hardlines
retailers. Research in the retail channels should focus on examining the
changing dynamics of the retailer-supplier relationship. The results of
this study run contrary to previous research regarding coercion and
reciprocal actions.

Negotiation behavior was studied because of both its integral part
in buyer-supplier relationships, and the lack of empirical work on this
subject in current channels literature. The scales developed were reliable
(Cronbach’s alpha of .70 and .71), but there may be other variables better
suited to measure negotiation behavior. Questions asking respondents the
amount of time spent negotiating may reveal more than the frequency of
negotiation. A scale designed to measure the level of involvement from
upper management may also answer different questions, leading to a better

understanding of channels.

64

Previous literature have viewed the retail/wholesale channel from
the buyer’s viewpoint. Suppliers may percieve the relationship with their
major customer differently than the relationship is viewed by the
retailer. Future research into negotiation behavior and coercive actions
focusing on the supplier side of buyer-seller dyads may bring new insight
to the study of channels. In addition, as previously cited, much of the
work on channel behavior has focused on channels other than the retail
channel. Considering the dynamic growth and changes in the retail field,
it. would make sense that researchers seek. to add to this body of

knowledge.

65

APPENDIX: A

The Questionnaire

lion:

0'thng

This is a study conducted by researchers at Michigan State University. We would appreciate
your assistance in completing this questionnaire.

Please consiar your aim mlier or filesaIeflWacturer. In rmim to tFese ”stints, please respond

with this ewplier in aind.

 

 

BILL].
1-1 that percent of your total retail sales cones fm this miter? _%
1-2 that percent of your gross profit (at cost). comes free this mlier? __%
1-3 Over the next five years, do you expect your overall sales fro- this eqplier's predicts as a proportion of
overall sales to: 1) increase 2) raeain the sue or 3) decrease? (circle one)
1-4 that degree of change with respect to this mlier, would you expect as a percent of current sales?
x
1~5 Over the next five years do you expect your overall profit as a result of sales free this mlier's
predicts as a proportion of overall profit to: 1) increase 2) ruin the saee or 3) decrease? (circle one)
1-6 that degree of change with respect this “”4107, would you expect as a percent of currmt profit?
3
1-7 Asst-ins that there were no constraints on this mlier'e predate, would you be file to sell sore mite
in the predict categorri YES NO
1-6 how any aditional mite fra this similar, in percentage tam over current sales levels could you sell?
_%
1-9 is this mlier ardoeeetic comany or a foreim cw (Iaeed on outerahip)
1-10 0f the predicts that this miter provides, that x are:
Nationally advertised brand nues (to BM")
Irand naeee not advertised (to trade press)
Private label
100% ram
1-11 Does this ewplier provide your private label progru? YES MO
142 that is your initial earktp percent (on cost) for this ewplier? x
1-13 How many years has your comany been doing business with this mlier?

1436 in this position, or other positions you've held, how' any years have you, personally,

been doing business with this cowann

 

ELLLLL
Wot inortant Extruely
At All tnortant
inortant is:
24 Current level of sales free the emlier
as a percent of total sales? 1 2 3 4 S 6 7
2-2 Current level of profit free the ewplier
as a percentage of total profit. 1 2 3 4 S 6 7
2-3 Anticipated sales iron supplier as a
percentage of total sales in the next
next five years? ‘I 2 3 4 S 6 7
2-4 Anticipated profits froe ewplier as a
percentage of total profit in the next
next five years. 1 2 3 4 5 6 7

66

Please respond to the following cpeetione:

Stromly Strongly
Disagree Agree
2-5 1 an largely dependent on this mlier
for achieving ey goals in tern of sales
and profits. 1 2 3 4 5 6 7
2-6 This emplier is aware of how dependent
i a on hie/her. 1 2 3 4 5 6 7
2-7 1 could easily replace this stutter
with another somlierte). 1 2 3 4 5 6 7

2-8 1 depend priurily on the squatter to mly
as with hide (polity merchandise. 1 2 3 4 S 6 7

2-9 1 depend prinrily on ey out knowledge of
the product reality to assess the prostate

i buy for ey cowany. 1 2 3 4 S 6 7
EILLLLL
Please evaluate your major ewplier, in relation to the average of all sou-cos of «ply, for each of these
ale-ante. ‘
Very Poor Average Very Good
3-1 Product reality -5 -4 -3 -2 -1 0 1 2 3 4 5
3-2 (Allocation) and delivery of goods -5 -4 -3 -2 -1 0 1 2 3 4 5
3~3 Acceptance of meold nrchandiee
return -5 -4 '3 -2 -1 0 1 2 3 4 5
3-4 Provision of sales people -5 -4 -3 -2 -1 0 1 2 3 4 5

3-5 Provision of financial ewport for
raeodeling,advartieing.atc. .5 -4 -3 -2 -1 O 1 2 3 4 S

3-6 ultoeer recognition of usefacturer'e
brain's -5 -4 '3 -2 -1 O .1 2 3 4 5

Now iwtant are the following alnents in your selection/retention of a mlier?

lot inortant Extrasly
At All lnortant
3-7 Protect Quality 1 3 4 5 6 7
3-8 Allocation and delivery of good 1 2 3 4 5 6 7
3-9 Acceptance of unsold aarchandiea return 1 2 3 4 5 6 7
3-10 Provision of sales people 1 2 3 4 5 6 7
3-11 Provision of financial snort for
raeodeling. advertising, etc. 1 2 3 4 S 6 7
3-12 unto—er recognition of
mfacturer'e brand n- 1 2 3 4 5 6 7
33.1.1111!
Extra-sly Extruely
Probable inrobable
3b-1 how likely is it that your .negeeent would 1 2 3 4 5

W that you buy free a certain vendor?
36-2 In haying merchandise, how likely is it that

you would take your unaguent's advice with
regards to a certain vendor? 1 z 3 4 5

67

41

5-1

5-2

5-3

22:.

Plea;
II M,

6-1

6-2

6-3

6" I

LILLJ!

Within the nior supiiere' attawts to influence you. how frequently does its representatives state or iwly
that:
Never “tins frequently
4~1 You would receive poorer service and/or
cooperation from tho if you did not
coquly with their request? 1 2 3 4 5 6 7

4-2 You would receive better service and/or
cooperation if you cowlied with their
request? 1 2 3 4 3 6 7

4-3 Your dealership agreement and/or legal
considerations either require or suggest
your cowliance on a particular issue? 1 2 3 4 S A 7

Please indicate your level of agree-ant or disagree-ant with each of the followim statusnts with regara to your
nior smiier:
Strongly “MW
Disagree Agree
4-4 I have frequently been threatened of
negative consequences by the supplier if
1 fail to abide by their requests involving
critical utters. 1 2 3 4 5 6 7

4-5 than ettwting to influence we, the
mlier frequently iwliee that i would
receive better service and/or cooperation
if i cwlied with their requests. 1 2 3 4 5 6 7

4-6 in attewting to change I; behavior, the
supplier frequently draws ey attention

to our dealership agreuent. 1 2 3 4 S 6 7
BILLY
in your attqte to influence this nior mlier, how often do you state or iwly that:

lever Sowetiue frequently

5-1 You would be less likely to eccmdete

the staplier in the future if they a not

mly with your requests now? 1 2 3 4 S 6 7
5-2 You would be wore cooperative with the

supplier in the future if they coqlied

with your request? 1 2 3 4 5 6 7
5.3 Your egreewent with the similar either

required or suggested the aquifer be in

cowliance with your desires? 1 2 3 4 5 6 7

mun

Please indicate your level of egremnt or disagre-ant with the fellowim statute, keeping the nior mlier in
e nd.

Strongly Stromly

Disagree Agree
6~1 A hifli degree of conflict exists between .
the similar and ey fire. 1 2 3 4 5 6 7

6-2 the swplier and avy fire often disagree to a
great extent on certain key issues, thereby
creating a great deal of frustration for u. 1 2 3 4 5 6 7

6-3 1 a generally satisfied with ey coweny's
overall relationship with the miter. 1 2 3 4 5 6 7

6-4 There is a hid! degree of conflict between
eyself and the swplier's representative. 1 2 3 4 S 6 7

Part V11

7-1 Do you ergage in negotiations with any of your eqpliers?
Yes ito if yes go to the next question. if no, skip to part eight.

Regarding negotiations, that is the frequency with uhich youu engage in the following:
7-2 1 negotiate with suppliers on the followirug points:

ilever Always
Price 1 2 3 4 5 6
Delivery 1 2 3 4 5 6 7
Any trade term 1 2 3 4 S 6 7
Markdowns 1 2 3 4 5 6 7
Advertising 1 2 3 4 5 6 7
Other Areas 1 2 3 4 S 6 7

Please specify

7-3 in negotiations with suppliers, 1 feet that ey comany on does better than
the standard offered to others on the following:

lever Always
Price 1 2 3 4 S 6 7
Delivery 1 2 3 4 S 6 7
Any Trade Term 1 2 3 4 5 6 7
Markdowns 1 2 3 4 S 6 7
Advertising 1 2 3 4 5 6 7
Other Areas 1 2 3 4 S 6 7

Please specify

7-4 that percent of the merchandise youu buy can be returned to the suspiier, if it does not sell?
Part fill

 

84 How manyyears haveyoubeen lnyourcurrentposflon? years months

8-2 Hownwnyyaanddyouwoukhretalngbdorebehgpromotedlquuqunpoehbn? years

84! Yoursaua __Meie Female

8-4 Areyouehlgh school graduate? yes no Howmanyyaarsddyougotoschoolailerhighschooi? years

 

8-5 Whatannudsaiesvolumeareyoureeponsblaiorbuyhg? S

98 What is your store's annual sales volume? 5 Total

Company voluurne (if different) 3
8-7 What percentage of the produucts in your deparunarul are huports? a:
88 What percentage of youur total department prolt conuas from inputs? %
8-9 What is youur department‘s irullisl markup percent (at cost)? $

8.10 What parcarut oltha total products that you buy comelromtheiolowlng countries?

 

United States France
Korea llaly
Japan Great Britain
China Other European Country
Taiwan (Please specify: )
indonesie Shgepore
Germany Others
(Please specify: 1'

 

it you would Ike a copy of the results of this survey maled to you. please hclude your bushess card in your reply.
MSU is an Affirmative Action/Equal Opportunity institution

69

APPENDIX: B

Pre-Notification Report

-NO ON 0 EPORT

 

 

 

 

 

 

 

STORE NAME STATE
PHONE NUMBER

BUYER NAME DEPT.

1) Hello,isuhis ? ycs(goto#5) no

2) Are you the buyer for dept? ycs(go to #5) no

3) Is the buyer for ? yes

 

 

no or don’t know (ask to return to the operator)
4) Could you please give me that person’s # or connect me with the operator?

5) I’m calling from Michigan State University. A nationwide survey is being conducted of Department Store buyers
and their relationship with their major supplier or vendor. Your name was selected in a random sample of all
Department Store buyers in the U.S. This study is also being conducted in Great Britain and Japan. I’m calling
you today to ask for your help in this important research We have prepared a survey questionnaire that we
would like to send to you. Completing this questionnaire will take only fifteen minutes of your time. Before -
continuing, I want to assure you that all of your responses will be confidential, and the information you give me
will be combined with information from other study participants for the analyses, and that no individual data will
be released. Would you be willing to participate in this important research?

you (so to #7) no
(For questions on content, rights, and confidentiality - Dr. Brenda Sternquist 517-355-0256

6) I can appreciate your hesitation, but your partidpation is very important to the validity of our study. Is there any
question I could answer that would help to alleviate your concerns? ,
yes (answerqucstione) no (1040”)

7) Thank you! I will mail the survey out today. Ifyou could complete it as soon as possible, it would be greatly
appreciated. (Rechcck name, address and dept).
Thank you again for your help and cooperation.

8) I understand your reasons for not wanting to participate in the entire study. In lieu of us sending you the full
questionnaire, may I ask you four short questions that are keys to our study?

QUESTIONS TO BE ASKED IF BUYER BEING SURVEYED WILL NOT AGREE TO PARTICIPATE:
1. Is your major supplier:

Brand name manufacturer Private label manufacturer
Not Important Extremely
At All Important
How Important is:
2. Current level of sales from the supplier
as a percent of total sales? 1 2 3 4 5 6 7
3. Current level of profit from the supplier
as a percentage of total profit. 1 2 3 4 5 6 7

4. What percent of your total retail sales comes from this supplier? %
5. What percent of your gross profit (at cost), comes from this supplier? %

6. What percent of merchandise that your store sells falls into the following '
categories:
Clothing Food Household soft goods Household hard goods
(textiles & floor coverings)

Thankyouverymuuchforyourtimcandhelp. 70 questionnairccodc

EFF-1

E -c F-

E

c.

DRRaz

DA].

EDPU.

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.\—

filo-PMC—

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75

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