This action might not be possible to undo. Are you sure you want to continue?
• A channel conflict may be defined as “A situation in which one channel member perceives another channel member(s) to be engaged in behavior that prevents it from achieving its goals”. • Conflict is opposition, disagreement or discard among the organizations.
• It is needed to have positive effect as loopholes in the existing system can be plugged timely and performance can be maximized. .Channel Conflict • Conflict is not always undesirable. • It can keep other channel members on their toes knowing that a decline in performance might lead to a change in the channel arrangements.
They do not fully sense the conflict. the relationship and the tensions differently. i. or of intensions exists. It is more psychological.Types of conflict • Each channel member views the conflict. .e. • Perceived conflict – The channel members sense that some sort of opposition of perceptions. of interest. Following are the types of channel conflicts – • Latent conflict – The channel members may be unaware about the opposition. This is due to the separate or un-conflicting goals. two organizations can perceive that they are in disagreement but their individual members do not consider it as a very serious issue.
• Manifest Conflict – If felt conflicts are not managed in time and properly. obvious and sometimes desirable too due to the interdependence of channel members on each other.Types of conflict • Felt conflicts – When channel members not only perceive the opposition or disagreement but also feel it actually they are felt or affective conflicts. this opposition will improve their relationship. it becomes functional conflict. It is common. . This needs to be sorted out at a early stage to avoid further consequences. • Functional Conflict – When channel members accept that there is opposition and disagreement but actually. they can become manifest or overt conflicts and these conflicts stop the cooperation and understanding between two organizations and block the other from achieving its goals.
Conflicts can also be classified as • • • • Vertical conflict Horizontal conflict Inter type conflict Multi Channel conflict .
Hence there are often conflicts between these giant retailers and the manufacturers. misunderstandings. and mainly due to the poor communication • Lack of role clarity and over dependence on the manufacturers. .Vertical conflicts • Vertical conflicts occur due to the differences in goals and objectives. For e.g. Today the large retailers dominate the market and dictate the terms.
channel conflict results. If they fail to conform each others expectations. In turn.• Wholesalers expect manufacturers to maintain the product quality and production schedules and expect retailers to market the products effectively. . retailers and manufacturers expect wholesalers to provide coordination functional services.
. i.e. • Over saturation. reduce sales opportunities for individual dealer and ultimately shrink their profits. manufacturers may bypass intermediaries and sell directly to consumers and thus they compete with the intermediaries.e. manufacturers permit too many intermediaries in a designated area that can restrict.Some common reasons for vertical conflict are • Dual distribution i.
i.• Partial treatment. i. manufacturers develop and use innovative channels that create threat to establish channel participants.e. .e. manufacturers offer different services and margins to the different channels members even at same level or favor some members. • New channels.
• No or inadequate sales support and training to intermediaries from the manufacturers. . • Irregular communication. non cooperation and rude behavior with the channel members.
high stock holding and dumping the stock at the intermediaries. . Non co-operation in replacement of faulty goods. and installations.• Stipulation of ordering in advance. • Delays in delivering the products or sometimes dispatching the products without confirmed order. • Refusal to replace or take back the goods damaged in transit. repairing services.
• No or inadequate credit offered to the intermediaries.• No co-operative advertisements. Manufacturers do not share any expenses of advertisements. Margins / commissions are not sufficient and there is no periodic revision of commission and other terms .
• Intermediaries encourage customers to switch to private labels / competitive products. .Conflicts due to the Intermediaries Actions • Intermediaries promote and sell more private labels than promoting the manufacturer’s brands. • Intermediaries carry competing lines and give more showroom space.
• Intermediaries fail to collect payment from market in stipulated time.• No support in the manufacturer’s promotional efforts. • Intermediaries fail to get the expected / promised efforts. .
. • No appropriate and timely market feedback and report to the manufacturers. • Intermediaries refuse to service and install manufacturer’s products.• Intermediaries deliberately cut the prices to harm the manufacturers.
two or more franchisees etc. . Competition or a price war between two dealers or retailers can be in favor of the consumers.Horizontal conflicts • Horizontal conflicts are the conflicts between the channel members at the same level. These conflicts can offer some positive benefits to the consumers. i.e. two or more retailers.
. • Aggressive advertising and pricing by one dealer can affect business of other dealers.Reasons behind horizontal conflicts Price-off by one dealer / retailer can attract more customers of other retailers.
. • Unethical practices or malpractices of one dealer or retailer can affect other and spoil the brand image.Reasons behind horizontal conflicts • Extra service offered by one dealer / retailer can attract customers of others. • Crossing the assigned territory and selling in other dealers / retailers / franchises area.
now the supermarkets such as Foodworld also sell vegetables and fruits and thus compete with small retailers selling these products.Inter Type conflict • Inter type conflict occurs when. the Intermediaries dealing in a particular product starts trading outside their normal product range. For example. This concept is called as “Scrambled Merchandising” where the retailers keep the merchandise lines that are outside their normal product range. Large retailers often offer a large variety and thus they compete with small but specialized retailers. .
the manufacturer uses two or more channel arrangements to reach to the same market. • Manufacturers can sell directly through their exclusive showroom or outlets. .Multi-channel Conflict • Multi-channel conflict occurs when the manufacturer uses a dual distribution strategy.e. i. This act can affect the business of other channels selling manufacturer’s brands.
which is possible due to a volume purchase.Multi-channel Conflict • Manufacturers can bypass the wholesalers and sell directly to the large retailers. . Conflict becomes more intense in this case as the large retailers can enjoy more customers and so the profit due to offering more variety and still economical prices.
it is a inevitable as many individuals. It is important to find out the root cause behind the conflict so that appropriate technique can be used to resolve the conflicts and lasting effect is possible. • The conflicts can be reduced and managed better to reduce the friction in the channel management. institutions are involved and they are interdependent. which cannot be eliminated. In channel management. . Various techniques can be used to resolve the conflicts. Certain conflicts are constructive too.Resolving Channel Conflicts • Conflict is a natural phenomenon.
Channel power can increase conflict and reduce cooperation if one channel member uses coercion to influence others. It enables the leader to influence overall channel performance. Channel leader is able to reduce conflicts because he possesses the channel power.Some techniques are as follows • Channel leadership – Many channel conflicts can be resolved through the effective channel leadership. Channel power is the ability of one channel member to influence another member’s marketing decisions and goal achievement. The channel leader controls resources on which other members depend. .
. Each will grow to appreciate the others point of view and carry more understanding when returning to their position.• Adoption of Super ordinate goals – The channel members come to an agreement on the fundamental goal they are jointly seeking. whether it is survival. • Exchange of persons between two or more channel levels – This helps in better understanding. market share. It can reduce the misunderstanding and conflicts can be reduced substantially through this communication. high quality or customer satisfaction.
.• Co-Opt – It is an effort by one organization to win the support of the leaders of another organization by including them in advisory councils. Co-optetion can reduce conflict provided both the parties compromise some or the other issues in order to win the support of the other side. board of directors so that they feel that their opinions are being heard.
. • Diplomacy – Diplomacy takes pace when each side sends a person or a group to meet with their counterpart from the other side to resolve the conflict. It makes sense to assign diplomats to work more or less continuously with each other to avoid the conflicts.• Joint membership in and between trade associations – Such associations bring all participants under one roof for more exposure to the public and to improve relations with each other by understanding their problems.
. and the above mentioned techniques are ineffective. both the parties may have to resort to third parties.• Third-Party Mechanisms – When conflict is chronic. which are not involved or not the part of the existing channel. the two parties agree to present their arguments to a third party and accept arbitration decisions. – Arbitration – In this method.
Effective mediation succeeds in clarifying facts and issues. Mediation is the process whereby a third party attempts to secure settlement of a dispute by persuading the parties either to continue their negotiations or to consider procedural recommendations that mediator may make. Mediator has a fresh view of the situation and may perceive opportunities that insiders cannot. Mediators help the parties to set up their own decisions whereas in arbitration it can be compulsory.Mediation – Mediation implies resorting to a neutral third party who brings skills in conciliating the interests of the two parties. .
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.