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GU 06 Managing Channel Conflict PDF
GU 06 Managing Channel Conflict PDF
Channel Co-ordination
• Channel system is well co-ordinated if each member
understands his role correctly and performs it to help the
system achieve its customer service objectives.
• In a co-ordinated channel:
– Interests of all channel members are protected
– Actions of all are in line with overall objectives
– Flows are streamlined to achieve desired customer service
objectives
Conflict….
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Channel Conflicts
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Channel Conflict
CONFLICT
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Channel Conflict
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Conflicts Result
From…
• Each channel member wanting to pursue his own goals
• Each wants to retain his independence
• There are limited resources which all of them want to utilise
in achieving their goals
• Features of conflicts:
– Initially latent and does not affect the working
– Is not normally possible to detect till it becomes disruptive
Four stages….
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Four Stages
LATENT
PERCEIVED
FELT
MANIFEST
Types of Conflicts
• Latent Conflict:
– Some amount of discord exists but does not affect the
working or delivery of customer service objectives.
– Disagreement could be on roles, expectations,
perceptions, communication.
• Perceived Conflict:
– Discords become noticeable – channel partners are aware
of the opposition.
– Channel members take the situation in their stride and go
about their normal business
– No cause for worry but the opposition has to be recognized
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Types of Conflicts
• Felt Conflict:
– Reaching the stage of worry, concern and alarm. Also known
as ‘affective’ conflict.
– Parties are trying to outsmart each other.
– Causes could be economical or personal
– Needs to be managed effectively and not allowed to escalate.
• Manifest Conflict:
– Reflects open antagonistic behaviour of channel partners.
Confrontation results.
– Initiatives taken are openly opposed affecting the
performance of the channel system.
– May require outside intervention to resolve
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Reasons / Sources of
Channel Conflict
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Reasons / Sources of
Channel Conflict
• Future expectations not likely to materialize
• Decision domain disagreements – who has to decide on what
(key account pricing)
• Channel members do not agree on objectives
• Misunderstanding or mis-interpretation of routine business
communication
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Resolving….
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Resolving Conflicts
A 4 Stage Process
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Conflict Resolution
Styles
Avoidance Styles are a combination
of assertiveness and
Aggression co-operation.
Accommodation
Compromise
Collaboration
Kenneth W Thomas
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Avoidance
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Aggression
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Accommodation
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Compromise
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Collaboration
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Channel Policies
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Channel Policies
• Markets to be covered
• Customer coverage
• Pricing
• Product portfolio to be handled
• Selection, termination of channel members
• Ownership of the channel
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5 Characteristics of
Services
• They are intangible – can only be felt. No visual features like
size, style.
• They are inseparable from their service providers – a 3P
cannot deliver
• They cannot be standardized – custom made and delivered
• Customers are involved to a great degree – define the services
• They are perishable – cannot be stored for delivery later.
Salvage value of an unsold service is zero.
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Channels Used
• Shorter channels than for products
• Some channels used are:
– Direct from service provider to user
– Agents or brokers who primarily bring buyer and seller
together
– Franchisees or contractors
– Electronic channels
• High degree of customization is provided
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ITC e-Choupal
• Uses the power of the internet to ‘work’ with farmers
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E-Choupal Working
• Kiosks set up in villages with computers and internet
connectivity (phone-lines or VSAT)
• Kiosk run by a trained farmer known as a ‘sanchalak’
• Kiosk serves about 600 farmers from 10 villages within a
radius of 5 kms.
• Collection of agri-produce by ITC in warehouse hub
• Presently covers 6500 kiosks in 40,000 villages of 10 states
servicing 4 million farmers (growing)
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Shakti Working…
• Woman entrepreneur buys goods from the company
• Covers households in nearby villages and canvasses
sales of the company products and their benefits to rural
women consumers
• Typical distributor sells about Rs 10K to Rs 15K per month
and earns about Rs 1000
• Some salient numbers: 80,000 villages through 26,000
distributors (growing)
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Vending Machines
• A cash or card operated retailing format that dispenses
products or services
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Amway Features
• Four product categories – Personal care, Home care, Nutrition
and Wellness and Cosmetics
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MD Core Values
• No hierarchy in the organisation
• All members are shareholders of the organisation
• The only source of income for the members – deliver
service with utmost commitment
• Expect quick customer response to maintain delivery
record
• Simple processes, employees capable of multi-tasking
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Key Learnings
• Channel management is done by: use of power bases,
identifying and resolving channel conflicts and co-ordination
Key Learnings
• Channel conflicts are resolved by joint membership of
associations, exchanging personnel or arbitration
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Key Learnings
• Some unique distribution examples include:
– ITC e-Choupal
– HUL Project Shakti – empowering rural women
– Vending machines
– Eureka Forbes – direct selling
– Amway – multi-level marketing
– Mumbai Dabbawalas
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End
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