NCRD’S STERLING INSTITUTE OF MANAGEMENT STUDIES.

Presented to: Dr. Anand Muley Presented by: Prashant Chaudhari

Suresh Pimpale

MANAGEMENT ISSUE IN DISTRIBUTION

Major issues
There are two major issue in distribution
Channel conflicts Use of power bases

Channel conflict
 A situation of discord or disagreement between channel

members from the same marketing channel systems.  Considered part of any social system.  Could be a result of: (a) each channel member wanting to pursue of his own goals; (b) each wants to retain his independence; and (c) there are limited resources, which all of them want to utilize in the pursuit of their goals.  A situation where one channel member perceives the behavior of another channel member to be impeding the attainment of its goals or its effective functioning.

Stages in channel conflict

Stages of conflict
 Latent. Some amount of discord exists but does not seem to be affecting the working of the

channel partners not affecting the achievement of the customer service objectives.  Perceived. Discord become noticeable and the channel partners become aware of the opposition. Still, channel members take the situation in stride and go about their tasks in a business like manner. There is still no cause for worry, but opposition has to be recognized.

Stages of conflict
 Felt. Reaching the stage of worry, concern, and alarm.

Parties already begin to outsmart each other. Also known as affective conflict as the channels get affected by the discord between the players. Channel members feel upset that the other parties do not value their ‘feelings’ of discontent. Has to be effectively managed and not let to escalate.  Manifest. Has escalated to a level which reflects the open antagonistic behavior of the channel partners who have a ‘dispute.’ There is an open confrontation. It could take the forms of openly opposing the initiatives taken by the other party thereby affecting the performance of the channel system. Resolution of the conflict may require an outside intervention. Even after resolution, it may permanently alter the chemistry of the channel system.

Types of conflict
HORIZONTAL CONFLICT  Occurs amongst distribution channel. similar firms at the same level in a distribution channel INTERTYPE CONFLICT  Occur among different intermediaries at same level in a channel  Differ from horizontal in that bit occurs among dissimilar institution VERTICAL CONFLICT  Occurs amongst different levels within a channel of distribution.

REASONS BEHIND CONFLICTS

REASONS BEHIND CONFLICTS

REASONS BEHIND CONFLICTS

CONFLICT RESOLUTION
 Sharing of information between channel partners can avoid

     

conflicts. Normally confidential information may have to be shared. Exchanging personnel between channel partners. Working together for sharing of responsibility. It is like having a permanent third party mediator on the premises. Use of third parties for mediation or arbitration. Clear rules of conduct to help build good relationships. Use of incentives and rewards. Joint goal setting by the channel principal and its channel members. Direct interaction between channel members for joint problem solving

USE OF POWER BASES
Power bases are used in the context of

implementing and managing channels. The channel system consists of a number of players who are not all equally motivated to implement the ideal channel design as their expectations from the channel differ. The efficient use of the power bases that brings diverse channel partners in line for the implementation and effectiveness of the channel.

USE OF CHANNEL POWER

FIVE SOURCES OF POWER
Rewards. Benefit given to a channel

member to conform his behavior in line with the system. Reward could be financial or otherwise. Most popular in the administration of marketing channels. Should not be used too often, it will be taken for granted.
Examples: Incentives on achieving sales targets; Best Distributor award in the annual sales conference

FIVE SOURCES OF POWER
Coercion. Hint of punishment for the

channel member if it does not fall in line with the requirements of the channel principal. Could again be economical or non-economical.
Example: Withholding of incentive payments if the infrastructure promised by an industrial distributor is not built up; Pushing the distributor on purchases through demand drafts against earlier permission to purchase checks.

FIVE SOURCES OF POWER
 Expertise.

Based on the special knowledge that the channel principal may have which is of particular benefit to the channel partners. Gets developed over a period of time
and may require investments in time, effort, and even financial terms.
Example: Developing an efficient supply chain system to reach the products faster to the markets at optimum costs; Handling institutional business and modern retail formats requires special knowledge of these customers.

FIVE SOURCES OF POWER
 Legitimacy. Emanates from contracts or agreements
usually in writing. Contracts clearly define the parameters of behavior and action expected from each of the signatories to the contract and gives right for them to enforce the behavior or action in case of a default

Examples: May stipulate that the distributor will cover the markets with ready stocks; May state that for an industrial distributor, he will give a 30-day credit period for collection of payments from all orders above a certain monetary value.

FIVE SOURCES OF POWER
Reference. Stems from sheer association.
A principal may be considered as the industry gold standard and the channel partners associated with this principal feel proud to be part of his distribution organization and may exhibit behavior and actions which in the normal course cannot be expected of them. Helps in companies being selective in the channel partners they would like to work with.

THANK YOU………

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