managing channel conflicts

MANAGING CHANNEL CONFLICTS

TOPICS

What is channel conflict?

How do you measure the conflict?

Consequences of conflicts

Sources of conflict in marketing channels

Conflict resolution strategies

What is Channel Conflict

It is a behavior by a channel member that is in the opposition to its channel counterparts.

Occurs when one member view its upstream or downstream as an opponent.

Channel conflict occurs when manufacturers dis intermediate their channel partners, selling their products direct to consumers through general marketing methods.

CHANNEL CONFLICTS?

Perceived conflict

Latent conflict

TYPES OF CONFLICTS

Channel conflict is of three types.

Vertical channel conflicts

Horizontal channel conflicts

Multilevel channel conflicts

MEASURING CONFLICTS

1.Counting up the issue

2.Importance

3.Frequency of disagreement

4.Intensity of dispute

CAUSES OF CONFLICTS

Structural factors

Resource scarcity

Goal incompatibility

Poorly defined roles and responsibilities

Communications difficulties

Poor channel management

Weak channel performance assessment -

CONSEQUENCES OF CONFLICTS

When conflict is desirable

How intense conflict damages channel performance and coordination.

MAJOR SOUCES OF CONFLICT

COMPETING GOALS

DIFFERING PERCEPTION OF REALITY

CLASHES OVER DOMAINS

INTERCHANNEL COMPETETION

MULITPLE CHANNELS

UNWANTED CHANNELS:GRAY MARKETS

COMPETING GOALS

The set of goals and objectives are very different .

Clash between the desires of the principal and the agent.

Example- Nike vs foot locker

DIFFERING PERCEPTION OF REALITY

Indication od differing bases of action in response to the same situation

Perceptions differ on Attributes of the product

Application it serves

Competition

creates fiction -Damages channel performance

Solution –communication

Cultural sensitivity

CLASHES OVER DOMAINS

Channel member has their own domains or functions.

Conflict occurs due to perception of channel member to others when proper care or responsibility is inappropriate.

Common case pre and post sale support-

INTRACHANNEL CONFLICT

Downstream partners representing competition

Downstream partners violates understanding of upstream party

Intensive distribution: Supplier sells through many downstream parties

Multiple channels for the same geographical market

MULTIPLE CHANNELS

Increased competition, Technological advances,

Increase market penetration, raise entry barriers

Downstream channels might lose motivation and withhold support, retaliate or exit

UNWANTED CHANNELS:GRAY MARKETS

It is the sale of unauthorized , brand product through unauthorized distribution channels.

Ex-swatch watches , designer clothing other apparel items.

Gray marketing is legal compared to black marketing or counterfeiting.

FUELLING CONFLICT

CONCLUSION

Channel conflict can have many causes and result in profit erosion. However, not all channel conflict is unhealthy and can be incorrectly confused with channel competition.

Some channel conflict is a consequence of optimizing market reach and market penetration.

To manage channel conflict, it is necessary to assess whether such conflict is leading to a fall in channel, channel partner or principal profitability.

There are many proven strategies to deal with channel conflict based on an evaluation of the root causes rather than the symptoms.