Structure of Channel Management and Agency Theory: Relationship Marketing Approach for Fast Moving Consumer Goods (FMCG) Business

Abstract

This article aimed at identifying, describing, and obtaining deep understanding about channel management to reveal the characteristics of relationship-marketing theory. As such, it utilizes the agency theoretical perspective which is occasionally used in prior relationship-marketing research. The research uses qualitative method based on phenomenology theoretical-design and constructivism philosophy to observed fast-moving consumer goods business phenomenon within transactional buying-selling process in the channel management structure. Such design will be applied through the mechanism of distribution channels in traditional trade. The result identifies three positions of distribution channels within the agency theory perspective: (1) relationship between principal, distributor and promotional agencies in an efficient contract position, (2) relationship between distributor, wholesaler and retailer in the position of the realized outcomes, and (3) relationship between wholesaler, retailer and the end-users in a pay-offs position. The findings viewed as a constructive way in describing the re-design model structure of channel management from the agency theoretical perspective. As such, the research revealed three characteristics of relationship marketing; exclusive contract, direct competitive, and temporary contract approach. This research implies that the agency theoretical perspective will emerge as a new and prosperous theoretical perspective in the field of relationship marketing research in the future. It might be argued that managers in applying any relationship marketing approach are advised to stay focused on improving the quality of relationships among the partners covered by each channel-group. Further, it is expected that future research in the field of marketing management, particularly on relationship-marketing research, to utilize the agency theory as their theoretical strands.