managing channel conflicts
Post on 21-Apr-2015
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MANAGING CHANNEL CONFLICTS
TOPICS
What is channel conflict?
How do you measure the conflict?
Consequences of conflicts
Sources of conflict in marketing channels
Conflict resolution strategies
What is Channel Conflict
It is a behavior by a channel member that is in the opposition to its channel counterparts.
Occurs when one member view its upstream or downstream as an opponent.
Channel conflict occurs when manufacturers dis intermediate their channel partners, selling their products direct to consumers through general marketing methods.
CHANNEL CONFLICTS?
Perceived conflict
Latent conflict
TYPES OF CONFLICTS
Channel conflict is of three types.
Vertical channel conflicts
Horizontal channel conflicts
Multilevel channel conflicts
MEASURING CONFLICTS
1.Counting up the issue
2.Importance
3.Frequency of disagreement
4.Intensity of dispute
CAUSES OF CONFLICTS
Structural factors
Resource scarcity
Goal incompatibility
Poorly defined roles and responsibilities
Communications difficulties
Poor channel management
Weak channel performance assessment -
CONSEQUENCES OF CONFLICTS
When conflict is desirable
How intense conflict damages channel performance and coordination.
MAJOR SOUCES OF CONFLICT
COMPETING GOALS
DIFFERING PERCEPTION OF REALITY
CLASHES OVER DOMAINS
INTERCHANNEL COMPETETION
MULITPLE CHANNELS
UNWANTED CHANNELS:GRAY MARKETS
COMPETING GOALS
The set of goals and objectives are very different .
Clash between the desires of the principal and the agent.
Example- Nike vs foot locker
DIFFERING PERCEPTION OF REALITY
Indication od differing bases of action in response to the same situation
Perceptions differ on Attributes of the product
Application it serves
Competition
creates fiction -Damages channel performance
Solution –communication
Cultural sensitivity
CLASHES OVER DOMAINS
Channel member has their own domains or functions.
Conflict occurs due to perception of channel member to others when proper care or responsibility is inappropriate.
Common case pre and post sale support-
INTRACHANNEL CONFLICT
Downstream partners representing competition
Downstream partners violates understanding of upstream party
Intensive distribution: Supplier sells through many downstream parties
Multiple channels for the same geographical market
MULTIPLE CHANNELS
Increased competition, Technological advances,
Increase market penetration, raise entry barriers
Downstream channels might lose motivation and withhold support, retaliate or exit
UNWANTED CHANNELS:GRAY MARKETS
It is the sale of unauthorized , brand product through unauthorized distribution channels.
Ex-swatch watches , designer clothing other apparel items.
Gray marketing is legal compared to black marketing or counterfeiting.
FUELLING CONFLICT
CONCLUSION
Channel conflict can have many causes and result in profit erosion. However, not all channel conflict is unhealthy and can be incorrectly confused with channel competition.
Some channel conflict is a consequence of optimizing market reach and market penetration.
To manage channel conflict, it is necessary to assess whether such conflict is leading to a fall in channel, channel partner or principal profitability.
There are many proven strategies to deal with channel conflict based on an evaluation of the root causes rather than the symptoms.
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