Mktg476 Marketing Strategy - Research Article Synopsis and Analysis

Marketing Strategy (MKTG 476):  Research Article Synopsis and Analysis 

Reviewer: Mason Bailey

Article Title: Retailers' new product acceptance decisions: incorporating the buyer-supplier relationship perspective

Author(s): Jiun-Sheng Chris Lin; Yun-Chi, Chang.

Journal: ; Santa Barbara.

Publication Information: 2012, Vol. 27 issue 2, pgs. 89-99

Publisher Information: Emerald Publishing

Introduction: 

My group and I chose this article because our product “SnowGrip,” is a relatively new product that needs to be accepted by buyers in order to do well in the snow retention industry. The issue pertaining to buyers being skeptical of a new, unproven on the big stage, product is the core problem SnowGrip is facing and should be focused on.

Abstract and Overview: 

Due to a product overload in certain markets and companies competing for limited shelf space, retailer acceptance of new products is crucial to buyer and supplier relations. Lots of empirical research has been conducted on product and market factors but little research has addressed the importance of buyer-supplier relationships dealing with the influence of retailer’s acceptance of new products.  Four constructs were created from papers on buyer-supplier relationship marketing and new products to determine their influence on the retailer's decision to accept a new product. The constructs are buyer-seller relationship factors (relationship intensity and channel motivation) and non-relationship factors (product advantage and market competitiveness). These scores are based off of a psychometric scale and the hypothesis was tested using least squares regression. Every factor tested was found to have a positive relationship with the retailer's acceptance of new products. The willingness of a retailer to stock a new product does not necessarily depend on product and market factors, suppliers must also consider the importance of the buyer-supplier relationship before entering negotiations with retailers regarding the acceptance of a new product.        

Analysis of Article:

The sample and its generalizability:

How and why a retailer chooses a new product is a serious concern for both parties involved. The profitability and consumer excitement generated by a new product drives the buyer’s interest in potentially shelving new products, but the risks associated with new products, the limited shelf space and high new product failure rates create a dilemma for the buyer. Both the buyer and the supplier seek to maximize value and efficiency so this research pertains to the effect that the buyer-supplier relationship have on the retailer’s acceptance of a new product. The study was done by collecting survey data, and then the hypothesis was tested with data collected from a national sample of cellular phone retailers in Taiwan. This data was chosen because retailers sell a wide variety of new products from multiple suppliers, providing the potential for variance. The sample included a national list of cellular phone retailers published by Chunghwa Telecom Corporation. Also included in the sample were retailers outside the list, the authors obtained three additional lists from leading distributors. Since the study was conducted using a face-to-face interview method, the researchers used cluster sampling due to a budget. The researcher’s grouped retailers in northern Taiwan into 20 clusters based on geographic locations and then randomly selected five clusters. The researchers chose retailers from all the chosen clusters and interviewed them in their stores. This data can be generalized to all retailers who have to decide whether or not to sell a new product in an industry that can potentially sell a decently sized array of products.

Constructs and variables:

This research used four main models to prove the hypotheses, separated into two categories, relationship perspective and non-relationship perspective. The relationship perspective was broken down into two models, relationship intensity and channel motivation. The dependent variables for both categories are the acceptance of a new product. Relationship intensity’s independent variables include trust, commitment, dependence and effective communication. Independent variables for channel motivation include financial support, promotional support and managerial support.

The second category, non-relationship perspective has the same dependent variable as well, which is retailer acceptance of a new product. The first model is based on product advantage with the independent variables being uniqueness, the ability to meet market needs, variety and manufactures reputation. The second model is market competiveness with independent variables that includes potential market competition, competitive intensity, size and growth of the market and dynamism.

One key construct in this research is success of a new product often depends on retailers' acceptance and support. However, retail shelf space is a scarce resource and its effective deployment could determine the success of a retailer. All these independent variables pertaining to the models were hypothesized to positively affect the probability of a new product landing on the shelf of a retailer. These do a very good job of representing the construct because in today’s day and age of market success being based on the relationship, it is important to determine which factors affect the acceptance of a new product the most. The variables of relationship-perspective do have face validity because they all offer insight to the most important aspects of buyer-seller relationships.

Data Analysis:

In this research, scale validation was assessed using exploratory factor analysis, confirmatory factor analysis, assessment of scale reliability, along with convergent and discriminant validity analyses. A 22-item, four-dimension confirmatory factory analysis, “using LISREL 8.70 with maximum-likelihood estimation,” was then measured on the scales to determine if all models met the .01 significance expectations of the t-test, which they did. To determine discriminant validity, they used the chi-square test with one degree of freedom. The unconstrained model must fit significantly better than the constrained model. The chi-square difference statistic is significant at the 0.01 level, effectively supporting discriminant validity. Then, all models were tested using least squares regression, in which every hypothesis was determined positive and significant. All models were proven to have positive and significant results on determining whether or not a new product will be accepted by a retailer. It is also noted after doing least squares regression that relationship perspective models proved to have higher coefficients than non-relationship perspective models. These techniques were all appropriate because all models were done at using random samples and the same variables to assess whether or not they have a positive effect on the relationship.