how should companies integrate channels and manage channel conflict

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  1. 1. HOW SHOULD COMPANIES INTEGRATE CHANNELS AND MANAGE CHANNEL CONFLICTS ??
  2. 2. CONVENTIONAL MARKETING CHANNEL : Consists of an independent producer, wholesaler(s), and retailer(s). Each is a separate business channel has no substantial control over the others . So thats a problem as every member is looking to maximize its own profit and is not concerned about the system as a whole VERTICAL MARKETING SYSTEM : By contrast, it includes the producer , wholesaler(s), and retailer(s) acting as a unified system To solve this ,, comes the concept of :
  3. 3. : Combines successive stages of production and distribution under single ownership Co-ordinates successive stages of production and distribution through size and power of members . : Independent firms at different levels of production. Types of VMS are : And then there are Independent Retailers too which have not joined any VMS
  4. 4. Another Channel development is a
  5. 5. 1 Increased Market Coverage Increased Customers for the company
  6. 6. 2 Lower Channel Costs
  7. 7. 3 More Customized Selling Adding a Technical Sales force
  8. 8. Channel Conflict is generated when one channel members action prevents other channel member to achieve its Goal
  9. 9. 1. HORIZONTAL CHANNEL CONFLICT :Occurs between channel members at the same level . Some Pizza Inn franchisees complained about other cheating on ingredients, providing poor services and hurting the overall brand image . 2. VERTICAL CHANNEL CONFLICT :Occurs between different level s of channels. Walmart is the buyer for many manufacturers and is able to command reduced prices or quantity discounts from these & other suppliers. 2. MULTI CHANNEL CONFLICT :When two or more channels sell to the same market. Big Bazaar boycotted Cadbury and Kellogs due to the price issues.
  10. 10. But why do we have a Channel Conflict Goal Incompatibility Unclear Roles & Rights Differences in perception Intermediaries dependence on manufacturer
  11. 11. STRATEGIC JUSTIFICATION : Developing special versions of products for different channel members Branded variants . DUAL COMPENSATION : Dual Compensation pays existing channels for sales made through new channels SUPERORDINATE GOALS: Channel members can come to an agreement on the fundamental or sub-ordinate goal that they are jointly seeking . EMPLOYEE EXCHANGE : To exchange persons between two or more channel members. JOINT MEMBERSHIPS : Marketers can encourage joint memberships in trade associations. CO-OPTATIONS : Is an effort by an organization to win the support of the leaders of another by including them in advisory councils , Board of Directors , and the like. .
  12. 12. These slides were Created by Jalaj Garg, IIT Guwahati, during a Marketing internship by Prof. Sameer Mathur, IIM Lucknow. ( see www.IIMInternship.com)

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