A Marketing-Finance Approach towards Industrial Channel Contract Relationships: A Model and Application

Channel contract relations are dynamic. In this paper, it is argued that one of the drivers for this dynamism is a firm's strive for shareholder value. Using channel contract relationships as market-based assets, firms are managing a portfolio of spot and forward contract relationships. By exclusively focusing on the cash flow consequences of contract relationships, in the context of an industrial marketing channel, we introduce a decision-oriented, normative, multichannel dyadic model that shows how channel contract relationships interact, thereby explaining the various contract relationships that exist and the dynamics within these relationships. The model transforms top management's financial objectives into marketing management decisions and guides the decision process of channel members in optimizing the cash flow consequences of channel contract relationships. The properties of the model are illustrated for the meat departments of European retailers. keyword(s) Cash flows, Channel contract relationships, Marketing-finance interface,