Channel Conflict is a state of opposition among organizations in a marketing channel, and it

seems to prompt negative connotations but among and between channels is in a more neutral
context. Latent conflicts arise when parties pursuing separate goals, retain market autonomy
and compete for resources thus interests of channel members collide. On the contrary,
perceived conflict is when the channel members sense opposition of any kind: emotions,
interests, intentions. When these emotions enter the picture, channel experiences felt conflict. If
this is left unmanaged, they escalate to manifest conflicts in order to take revenge. All conflicts
should be managed and monitored according to their implications. Counting the issues is the
first step in measuring the level of a conflict which must include all major aspects of channel
relationships. It is followed by assessing the importance with respect to a dealer’s profitability.
Next is determining disagreement frequency between dealer and manufacturer. Last is
measuring dispute intensity and combined together these four aspects form the index of
manifest conflict.
Functional conflict forces channel members to improve performance so they can oppose each
other without damaging their fit in the system. In case when the supplier tries to find weaker
channel members, then because of general indifference, there seems to be a state of neglect
from both ends. If managed properly, they can be channeled into constructive conflict. Channel
friction should never be ignored as it results in higher levels of dissatisfaction, tension, and
frustration amongst the channel members and as a result profit indicators decline. It also
diminishes trust at many levels and demotivates people involved and turns out to be costly.
Major sources of conflict in a channel lie in the differences between channel members’ goals,
perception of reality and perceived domain. Sometimes a difference in perceptions can be just
on the basis of basic things like attribute, application, and competition of a product. Multiple
channel types have their own advantages and disadvantages. For suppliers, they increase
market penetration and raise entry barriers. For customers, they might be able to find the one
which meets their service output demands. However, downstream players may retaliate by
exiting the supplier’s structure and lose motivation. Gray markets create incentives for both
upstream and downstream channels to permit them due to various factors, one among which
being differential pricing.
COnflicts are self-growing and perpetuating. The easiest way to increase channel conflict is to
threaten another channel member. In order to resolve conflicts, processes like
institutionalization, the most effective strategy is a collaboration but that requires extensive
commitment. It can also be resolved through the use of economic incentives coupled with good
communication.