Does meeting manufacturers' representatives' expectations matter?

Author:Pass, Michael W.
Position:Report
 
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  1. INTRODUCTION

    Manufacturers may outsource all, or part, of the selling function to manufacturers' representatives, as a way to reach more customers, thus achieving sales objectives while also having the potential to reduce direct selling expenses. Adequate selling support must be provided because it influences a representative's ability to interact effectively with customers, on behalf of the manufacturer. Three categories of support are included in this study: (1) sales planning support, (2) selling process support, and (3) administrative support. Without appropriate selling support, the revenues desired by a manufacturer may not be reached and there is the possibility that a representative will end a contract so that a more suitable manufacturer can be served. For the remainder of this paper, manufacturers' representatives are referred to as MRs and the manufacturers are called principals, as commonly identified in the literature (Ross, Anderson and Weitz, 1997).

    Does meeting the MR's expectations matter? This guiding research question is answered by examining the influence that expectation fulfillment has on MR Satisfaction. This study focuses on an area that has not received much empirical attention. Examining expectations contributes to the business literature because, if they matter, a manufacturer should consider the representative's quality expectations, instead of developing selling support according to the manufacturer's internal standards.

  2. BACKGROUND

    Understanding how to work effectively with MRs is an important issue as firms increasingly outsource the sales function. MRs perform the selling function on an extended contract basis and typically do not take possession, or ownership, of products. Firms taking this role have also been called independent agents or brokers. They work with several principals by selling a portfolio of noncompeting product lines on a commission basis. The most recent economic census (released 11/24/2009) reported they operate 45,458 US firms (Economic Census, 2007) which is a substantial increase over 32,320 US firms reported in the previous census (Economic Census, 2002).

    A benefit that principals experience when outsourcing to MRs is that they do not have the same costs required to staff and supervise a direct sales force. However, a tradeoff for the principal is less ownership of the customer relationship. As closer and more frequent interactions occur with customers, the MR may form customer bonds that are stronger than ones existing between the end-customers and the principal. This is a significant issue because there is the possibility that a principal will lose customers if the MR switches to represent another principal. This could happen if the MR becomes dissatisfied with the MR-principal relationship, so it is important for the principal to satisfy the MR. The importance of knowing what

    influences interfirm relationship satisfaction is suggested by researchers explaining how inter-firm relationships develop through processes or stages (Robicheaux and Coleman, 1994; Ring and Van De Ven, 1994; Dwyer, Schurr and Oh, 1987).

    Knowing whether or not meeting the representative's expectations for support quality makes a difference in MR Satisfaction is useful because, presumably, the manufacturer desires a long-term relationship with ongoing contract renewals. The manufacturer makes decisions about the quality of support to provide and may consider, or choose to not consider, the expectations of MRs when developing support. Consequently, an MR may be satisfied with the principal when the quality aligns with the expectations or dissatisfied if support does not meet expectations. This interpretation aligns with the consumer marketing literature that suggests satisfaction judgments are based on expectations held by a consumer that are compared to product, or service, perceptions. Greater satisfaction is reported to the extent that expectations are met (Oliver, 1980; Zeithaml, Berry and Parasuraman, 1993; Parasuraman, Zeithaml and Berry, 1994).

    Practitioner literature suggests that principals should pay attention to the quality of support when describing different ways a principal can become the "emotional favorite" of representatives and maintain their "share of mind" in order to obtain greater sales coverage (Agency Sales, 2006a; Agency Sales, 2006b). However, the influence of meeting MR expectations has not been examined. The perceived quality of support is a subjective perception so identifying MRs' expectations for support quality may be more beneficial to the principal than independently developing potentially inaccurate quality standards.

    Not much research on the effect of principal selling support has been completed even...

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