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Marketing Channel Conflict

Introduction:

Channel conflict is a state of opposition, or disorder, among the organization comprising a

marketing channel. If the two parties recognize that they are mutually dependent, a healthy

relationship can persist. If the two parties perceive that they are mutually independent, a healthy

relationship can also exist. Problems arise when one entity perceives that they are more

dependent on the other than vice versa. As conflict can have an unfavorable effect on channel

member performance, channel managers must make conscious efforts to detect and resolve it. So

we can say that Channel conflict occurs when one member of a channel views its upstream or

downstream partner as an opponent. The key is interdependency.

Discussion:

It is very important to recognize the true level of conflict that an organization faces in a

channel relationship. The best way is to gather four kinds of information. Those are describing

below.

Step 1: Counting up the issue- A channel manager needs to consider all the major issues that can

create or might be causes of beginning a conflict. For example for a car dealer, one study

uncovers 15 issues of relevance to dealers in their relationship with their manufacturer, including

inventories, delivery of cars, the size of the dealers stuff, promotion etc.

Step-2: Importance- A channel manager needs to identify the importance of each of the issues

that has been counted for. This could be done judgmentally or by asking dealers directly. For

example they may indicate on a scale of zero to ten to recognize that how important each issue is

to the dealership’s profitability.

Step-3: Frequency of Disagreement- It involves assuming or finding out how often the
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Issues are prone to disagreement and why. For example dealer may be asked to recall discussion

with the manufacturer over the issue.

Step-4: Intensity of Dispute- a channel manager needs to identify the intensity of dispute

in regard to an issue within the channel members. For example, how strongly a dealer is

disagreeing about a typical issue.

These four kinds of information should be combined to form an index of manifest conflict for

each issue. Conflict 1 = NΣ Importance i X Frequency i X Intensity i

Adding their products over all the N issues forms an index of conflict. These estimates can be

compared across dealers to see where the most serious conflict occurs and why.

There is three other points which we have to be considered. Thos are

1. The difference of opinion rarely occur(low frequency)

2. The issue is petty(low importance)

3. The two parties are not very far apart on the issue(low intensity)

If any of these elements is low, the issue is not a genuine source of conflict.

There are three kind of conflict. Those are

a. Goal Conflict: conflict that stems from differences between channel members’ goals and

objectives.

b. Domain Conflict: conflict that arises due to the disagreement over the domain of action and

responsibility.

c. Perceptual Conflict: a conflict that arises due to the perceptual difference in regard to the

market place.

Channel conflict is often thought of as dysfunctional and, therefore, it is unwanted. Conflict

can, however, be healthy and desirable in certain situations. Conflict can serve to keep channel
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members from becoming too inactive or lacking in creativity. This same conflict can also

motivate members to adapt, grow, and seize new opportunities. From the manufacturer’s

perspective, multi-channel distribution strategies can be beneficial in a number of ways. Firstly,

it does allow the manufacturer to gain much-needed insight into end-consumer’s needs and

shopping patterns. Secondly, manufacturers with broad product lines can benefit because it is

unlikely that a single channel type will be optimal for all products. Finally, manufacturers with a

multi-channel distribution strategy can focus more on precisely targeting markets and improving

their overall competitiveness. Manufacturers and their channel partners must deepen their

relationships and cooperation. These new types of relationships may take one of three forms

(Matta, Mehta 2001):

Relationship Form Customers Intangibles Financial

Implications
Manufacturer · Retailer owns the · Manufacturer · Retailer keeps the

Support customer provides support margin and

relationship and collateral reduces costs

· Retailer provides with manufacturer

assortment and merchandising

service; promotes and marketing

the brand help

Collaboration · Manufacturer and · Manufacturer and · Manufacturer and

retailer share retailer work retailer share

aggregate together on performance based

customer data merchandising revenue

and marketing

plans
Seamlessness · Manufacturer and  Manufacturer and · Manufacturer and

retailer jointly retailer build one retailer split

manage and brand experience revenues

market to through new

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customers brand or

partnership
It is not surprising that minimizing channel conflict is at the center of many companies’

Internet strategies. Proper analysis and appropriate strategies can go far toward managing the

degree that conflict channel members must overcome.

A number of ways to resolve disputes are effective. Institutionalized mechanisms comprises

of channel conflict management strategies that is mainly designed to resolve conflict at its early

stage including information intensive mechanisms, third party mechanisms, building relational

norms. Of course it can also be resolved via Economic Incentive the most commonly adapted

conflict resolution strategy is to manage conflict by way of economic incentive i.e. financial

incentive.

Conclusions:

Conflict is not only problematic but also it brings opportunities which can be evolved into a

more dependable efficiency and prominent marketing channel system. There are many ways to

resolute conflict but strategy which is used resolve the conflict is more important. There will be

conflict if there is more than one member in any system but at the end of the day how we can

influence the conscious the conflict is what matter.

REFERENCE:
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1. Text Book: “Marketing Channels”(Sixth Edition) by ANNEL T. COUGHLAN.ERIN

ANDERSON, LOUIS W. STERN, ADEL.I EL-ANSARY

2. Class lecture of our honorable faculty Abdullah Al Faruq (AFq). Mkt-450, Marketing

Channels

3. http://www.reshare.com/channelmanagement/understanding_channel_management.htm

4. http://en.wikipedia.org/wiki/Channel_conflict

5. www.yacagroup.com/uploads