A comparative analysis of channel incentive programs in Brazil and the USA

• Published in: International journal of emerging markets 2017-01, Vol.12 (2), p.263-278
• Main Authors: Castro, Luciano Thome, Neves, Marcos Fava, Akridge, Jay Taylor
• Format: Article
• Language: English
• Subjects: Communication strategies; Companies; Comparative analysis; Conceptual models; Control theory; Coordination; Developed countries; Distribution channels; Emerging markets; Fines & penalties; Incentives; Information sharing; Infrastructure; Limitations; Literature reviews; Marketing; Multinational corporations; Power
• ISSN: 1746-8809; 1746-8817
• DOI: 10.1108/IJoEM-02-2014-0016

Purpose The purpose of this paper is to propose a channel incentive program conceptual framework. In order to do so, a consolidated theoretical effort was completed together with observations from two countries – Brazil and the USA – to build evidence toward the proposed framework. Design/methodology/approach This paper first proposes a theoretical framework for understating marketing channel incentive programs, conceptualizing it as being composed by four dimensions being control, benefits, exclusiveness and formalization, mediated by power distribution between dealers and manufactures. Second, the developed framework was used for a cross-country analysis. Three multinational firms, global leaders in the crop protection industry, were selected in Brazil and the same three were selected in the USA. For completing each case report for the six companies in total, 16 people were interviewed, besides documental research over companies’ documents. Findings The framework helped describing and understanding the different group of incentives used per firm and country. Indeed, there are much more similarities within Brazil or the USA, than the same company in these two countries. The institutional environment and the network structure were fundamental to understand why the power center was different in these two countries that resulted in different channel incentive programs. In the USA, programs are very clear and straightforward in regard to a powerful dealer. If the dealer develops five or six output tasks, margins would increase considerably. In Brazil, however, dealers have a wider array of activities accompanying output measures. If they perform well they receive support, but fundamentally manufacturers strongly influence dealers’ daily management decisions. Research limitations/implications The incentive programs analyzed are mostly based on the set of standard documents manufacturers produced for dealers and on interviews for clarifying the content of the documents. Therefore, manufacturers probably set some relationship aspects aside since “individual approaches” to dealers might exist that were not captured in this study. Another limitation is the application to one sole industry that may per se present particularities that could be inducted too far the conceptual model that was built. Practical implications The framework as suggested might first help to organize the thinking of first identifying the power distribution between manufacturer and dealers and