The Deterring Effect Of Group Sanction On Distributor’s Interntion Of Gray Marketing

Gray marketing is problematic for manufacturers,because it can have a negative impact on distributor relations and the manufacturer‘s brand equity, ultimately undermining the integrity of the distribution channel(Corey, Cespedes, and Rangan 1989; Myers and Griffith 1999). To understand how to control and reduce gray marketing is of great significance in both theory and practice.As a field in marketing theoretical research, gray marketing was studied mainly from the perspective of bilateral relationship between the manufacturer and the distributor. The work of Antia, Bergen, Dutta & Fisher(2006) revealed what led to the effectiveness of the gray market governance strategy. The study was based on the manufacturer-distributor bilateral relationship. Under the theoretical framework of Deterrence Doctrine, they examined the effects of punishment on the likelihood of gray market incidence. Three characteristics of punishment were also examined, namely enforcement severity, certainty and speed. Antia and his co-worker declared that none of the three characteristics of enforcement(i.e., severity, certainty, and speed) has deterrent value alone. Rather, deterrence is most likely to occur when the penalties for gray market violations are severe, when manufacturers are able to detect violations or mete out punishments in a timely fashion, or both.The punishment adopted by manufacturer belongs to formal sanction. Its effect on deterrence for gray market incidence is verified both in practice and academic research. However, this perspective dose not reveals all the factors that deterring the gray market incidence. Hence not all governance strategies for gray market have been discovered. In order to have a larger picture of the factors deterring gray market incidence, and develop further strategy of deterring gray market incidence, I examined the effects of the distributors‘ social network‘s on gray market incidence.Based on the reviews on relevant literatures, a theoretical model of explaining the effect of the distributors‘ social network on the intention of gray marketing was developed, which employed Group Sanction as the intermediary variable. The construct of Group Sanction bridged social network factors to the intention of gray marketing.A survey on 320 distributors of two distilled spirit(baijiu) factories was conducted to collect data. 274 valid returned questionnaires were generated. Based on these data, my study discovered that social sanction does have the deterring effect on gray market incidence. It also revealed three factors of the distributors‘ social network which led to higher group sanction. They are Communication in the Network, Group Norms and Involvement. The moderating effect of Dependence on the Network and Individual Norms were also found on the relationship between Group Sanction and the Intention of Gray Marketing.My work is the first one that studies deterrence of gray marketing from the social network‘s perspective. It is the first academic research, which views the gray market phenomenon as a social dilemma. This helps to understand how the social interaction of distributors affects their intention of gray marketing. It is also the first academic research which adopts research paradigm of general deterrence doctrine to examine the deterrence effect of informal sanction.There are theoretical contributions of my study.My work defines the construct of Group Sanction under the scenarios of social network in marketing channel. With factor analysis, the paper extracts three factors for group sanction, namely group sanction by attitude, group sanction by reputation and group sanction by action.This paper reveals that communication in the network, group norms in the distributors‘ social network and involvement of distributors are three social network factors that determine group sanction. My study also demonstrates the effects they have on the group sanctions. This paper constructs a theoretical model, which can be widely applied for studies on social network‘s effect on the opportunism behavior of distribution channel members. The main path of this model is ―characters of social network→social sanction→opportunism behaviors.In this paper I use this theoretical model to examine effects of network communication, group norm and group participation on gray marketing intention via the intermediate variable: group sanction.In my study, I defined different categories of distributors in terms of their sensitiveness on group sanction. It is confirmed that dependence on social network and individual norms are the two factors that differentiate distributors‘ categories for sensitiveness on group sanction. Actors with high dependence on the network and high personal recognition on ―no gray marketing norms‖ belong to the high sensitiveness category; actors with low dependence on the network and low personal recognition on ―no gray marketing norms‖ belong to the low sensitiveness categoryAlthough this study I reported herein provide several contributions to academics and managers alike, much work remains to be done.The samples of this study were taken from the distributors of two spirit companies both located in Sichuan province. Although the samples are generated randomly, but the two companies located in a same province and they are from the same industry. The validity of the results from this paper needs to be verified by data from samples from different industries and different locations.⑵ There are some implicit attitude variables involved in the theory model of this study. The questionnaire I used to collect data may not be able to measure these attitudes accurately. Individual norms and intention of gray marketing are implicit attitude variables. Further technics should be used to increase the accuracy of measuring these variables.