Understanding industrial distributors’ expectations of benefits from relationships with suppliers Amit K.Ghosh, W. Benoy Joseph, John T. Gardner and Sharon V. Thach The authors Amit K. Ghosh is Associate Professor of Marketing and W. Benoy Joseph is Associate Dean and Professor of Marketing, both at the James J. Nance College of Business Administration, Cleveland State University, Cleveland, Ohio, USA. John T. Gardner is Associate Professor of Marketing at the College of Business Administration, SUNY at Brockport, Brockport, New York, USA. Sharon V. Thach is Professor of Marketing at the College of Business Administration, Tennessee State University, Nashville, Tennessee, USA. Keywords Distributors, Channel relationships, Supplier relations Abstract Due to the increased domination of industrial sales channels by distributors, suppliers must develop strong relationships with industrial distributors in order to succeed in new markets. Initiating partnering relationships with distributors in new markets, however, entails significant risks and commitments with the prospect of substantial long-term rewards. To help suppliers assess and select distributor partners, this study focuses on the starting-point of the relationship by exploring industrial distributors’ expectations of benefits. A nationwide survey of US industrial distributors showed that distributors expect financial and competitive differentiation benefits with greater differentiation benefits inferred to lead to fewer financial benefits. Several observable distributor characteristics can be used by suppliers to conduct preliminary assessments of distributor expectations and thereby prepare for a healthy future relationship. Electronic access The Emerald Research Register for this journal is available at www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at www.emeraldinsight.com/0885-8624.htm An executive summary for managers and executives can be found at the end of this article. Introduction As trade barriers continue to decline across the globe, the intensity of competition continues to rise in consumer and industrial markets (Kotler, 2003). Firms battle for survival by seeking opportunities in new markets due to stagnating demand in current markets, influx of foreign suppliers to domestic markets, and increased pressure from stockholders and top management to maintain growth rates and profits. In this increasingly competitive environment, where the bar on customer service continues to be raised, and cost containment pressures are unrelenting, manufacturers are learning that initiating, building, and maintaining successful relationships with current and new industrial distributors are essential in order to succeed in industrial markets (Palmer, 1997; Rao and Perry, 2002; Walter and Gemu ¨ nden, 2000). Past studies consistently show that a relationship’s success is often dependent on the satisfaction among channel partners (Abdul- Muhmin, 2002; Anderson and Narus, 1990; Gaski, 1984; Patterson et al., 1997; Schellhase et al., 2000). Satisfied partners invest more resources into the relationship, thus increasing the sustainable advantages accruing to both parties. The distribution literature documents that satisfaction is influenced by factors such as power, trust, dependence, and the nature and number of conflicts that arise (Anderson and Narus, 1990; Dwyer, 1980; Frazier, 1983; Gaski, 1984; Rosenberg and Stern, 1971; Wilkinson, 1981). Related studies also explore how relationship promoters can be used to bridge the gap between suppliers and their distributors (Walter and Gemu ¨ nden, 2000). All these studies provide valuable insights into initiating and managing relationships that suppliers have already chosen to get into. They are, however, of limited value for assessing how suppliers should select distributors in a manner that enhances their chances of building successful future relationships. This paper explores the critical initiation state, which has received considerable theoretical attention in the relationship marketing literature (Batonda, Journal of Business & Industrial Marketing Volume 19 · Number 7 · 2004 · pp. 433-443 q Emerald Group Publishing Limited · ISSN 0885-8624 DOI 10.1108/08858620410564382 The authors wish to thank Applied Industrial Technologies, Inc. (formerly Bearings, Inc.), Cleveland, Ohio, for their financial support and the Industrial Distribution Association for their cooperation and assistance in collecting data. 433