BEHAVIORIAL PROCESSES IN
MARKETING CHANNELS: CHANEL
CONFLICT
DISTRIBUTION MANAGEMENT
Channel managers need to be
knowledgeable of the behavioral
dimensions of the channel.
This is necessary because the
marketing channel is not simply a rationally-
ordered economic system devoid of social
system subject to the same behavioral
processes characteristics of all social
systems.
Understanding the behavioral
processes occurring in marketing channels
and having the ability to apply this
knowledge in the development and
management of the marketing channel.
THE MARKETING CHANNEL AS A
SOCIAL SYSTEM
SOCIAL SYSTEM
Can be defined as the system
generated by any process of interaction on
the sociocultural level, between two or more
actors.
When these individuals or
collectivities (firms or agencies) interact as
members of the marketing channel, an inter
organizational social system exists.
The fundamental behavioral
dimensions present in all social systems:
conflict, power, role, and communication
process come into play.
CONFLICT IN THE MARKETING
CHANNEL
- Channel strategy and management
could not possibly be implemented
effectively unless channel members
trust each other, are able and willing
to make a commitment to the
channel relationship in terms of
human and capital resources, and
are willing to cooperate with each
other.
- But given that the marketing channel
is a social system, there is no
escaping the fundamental behavioral
dimension inherent in all social
systems - conflict.
- Conflict exists when a member of
the marketing channel perceives that
another member’s actions impede
the attainment of his or her goals.
CONFLICT VS COMPETITION
● Competition is behavior that is
object-centered, indirect, and
impersonal.
● Conflict is direct, personal, and
opponent-centered behavior.
CAUSES OF CHANNEL CONFLICT
ROLE INCONGRUITIES
- A role is a set of prescriptions that
define what the behavior of position
members (such as member of a
marketing channel) should be.
RESOURCE SCARCITIES
- Sometimes conflict stems from a
disagreement between channel members
over the allocation of some valuable
resources needed to achieve their
respective goals.
PERCEPTUAL DIFFERENCES
- Perception refers to the way that an
individual selects and interprets
environmental stimuli. In a marketing
channel context, the various channel
members may perceive the same
stimuli but attach quite different
interpretations to them.
EXPECTATION DIFFERENCES
- Various channel members have
expectations about the behavior of
other channel members. These
expectations are predictions or
forecasts concerning the future
behaviors of other channel
members.
GOAL INCOMPATIBILITIES
- Each member of the marketing
channel has his or her own goals.
When the goals of two or more of
the members are incompatible -
which happens often - conflict can
result.
DECISION DOMAIN DISAGREEMENTS
- Channel members explicitly or
implicitly carve out for themselves an
area of decision-making that they
feel is exclusively theirs.
COMMUNICATION DIFFICULTIES
- Communication is the vehicle for all
interactions among the channel
members, whether such interactions
are cooperative or conflicting.
EFFECTS OF CHANNEL CONFLICT
HOW CONFLICT AFFECTS CHANNEL
EFFICIENCY?
CHANNEL EFFICIENCY
- The degree to which the total
investment in the various inputs
necessary to achieve a given
distribution objective can be
optimized in terms of outputs.
- The greater the degree of
optimization of inputs in carrying out
a distribution objective, the higher
the efficiency, and vice versa. These
inputs can be include anything
necessary to achieve the distribution
objective.
Negative Effect - Reduced Efficiency
- As the level of conflict increases,
channel efficiency declines.
No Effect - Efficiency Remains Constant
- In this relationship, the existence of
conflict has caused no change in
channel efficiency. The effect of
conflict on input levels necessary to
achieve distribution objectives is
insignificant.
Positive Effect - Efficiency Increased
- Conflict is shown to cause an
increase in channel efficiency.
Conflict and Channel Efficiency - General
Curve
- By combining the three models, a
general curve showing the possible
effects of conflict.
MANAGING CONFLICT
● Conflict is an inherent behavioral
dimension in the marketing channel.
● Given the numerous causes from
which conflict may stem, it is a
pervasive phenomenon in marketing
channels.
● Conflict can affect channel
efficiency.
● Various levels of conflict may have
both negative and positive effects on
channel efficiency, or possibly no
effect.
Detecting Channel Conflict: Channel
members can help spot potential conflict
areas by surveying other channel members’
perceptions of his or her performance.
● Surveying her channel members’
perceptions of his or her
performance
● Marketing Channel Audit suggests
a periodic and regular evaluation of
key areas of the relationship of a
given channel member with other
members.
● Distributors’ advisory councils or
channel members’ committees offer
another approach to early detection
of conflict - consist of top
management representatives that
meet on a regular basis to discuss a
wide range of channel issues and
strategies.
Resolving Conflict: Suggestions for
dealing with channel conflict
1. A channel wide-committee might
be established for periodic
evaluations of emerging problems
related to conflict.
2. Joint goal-setting by the
committee - that takes into account
the goals and specific capacities of
the various channel members, the
needs of consumers, and
environmental constraints - would
help to mitigate the effects of
conflict.
3. A distributor’s executive position
might be created for each major firm
in the channel. This would be
responsible for exploring the firm’s
distribution-related problems.
Resolving Conflict: Another approach is
through Arbitration.
1. Arbitration is fast. The parties in
dispute can be quickly informed that
a quarrel exists and told the time of
a hearing.
2. Arbitration preservers secrecy.
Outside parties can be barred from
the hearings. Decisions that are not
matters of public record can be kept
secret.
3. Arbitration is less expensive than
litigation.
4. Arbitration confronts problems in
their incipient stage when they
are easier to resolve.
5. Arbitration often takes place
before industry experts.
Resolving Conflict: Using organizational
development (OD) concepts and methods
in
resolving conflicts.
● This involves using behavioral
scientists as consultants to develop
educational strategies for helping
channel members to cope with
changes that may foster conflict.
Resolving Conflict: Specialized bargaining
and negotiating procedures might be
fruitfully applied to the resolution of channel
conflict.
 As long as the channel manager
promotes candid dialogue among channel
members, it can help bring differences out
in the open; likely to be beneficial for
resolving conflict.
Conflict solutions involve some
measure of compromise - but these are not
possible without substantial dialogue
between the parties involved.
It is up to the channel manager to
develop approaches in solving conflicts -
whether is through arbitration, channel-wide
committee, organizational development,
bargaining process, between channel
members.