Managing Conflict To Increase Channel Coordination
MANAGING CONFLICT TO
Distribution Management – Prof. RakeshSuri
A process that begins when one party perceives
that another party has negatively affected or is
about to negatively affect something that the
first party cares about.
Arises when the behaviour of a channel
member is in opposition to its counterpart.
It is opponent centered and direct ,
in which the goal or object sought is
controlled by the counterpart.
WHAT IS CONFLICT?
TYPES OF CONFLICTS
• Is the norm on the marketing channel.
• Channel members collide as all parties pursue separate goals,
strive to retain their autonomy .
•Occurs when the channel member senses that some sort of opposition
•Is cognitive , emotionless and mental
•When emotions are involved it is Felt conflict – conflictual .
•Member feels a negative emotions
•Usually appears as blocking each others initiative and withdrawing
•One tries to sabotage the other or take revenge
Steps in measuring the conflict
Step 1 : Counting up the issues
Step 2 : Importance
Step 3 : Frequency of Disagreement
Step 4 : Intensity of dispute
Conflict = Importancei X Frequencyi X Intensityi
Difference of opinion rarely occurs . – Low Frequency
The issue is petty. – Low importance
Two parties are not very far apart on the issue.- Low Intensity
Functional conflict: supports the goals of the group and
improves its performance
Dysfunctional conflict: Hinders group performance
CONSEQUENCES OF CONFLICT
Conflict is usually thought to be dysfunctional, to hurt a
Conflict in some cases makes a relationship better on certain
occasions; this is functional conflict.
Functional conflict is common when channel members
recognize each other’s contribution and understand that each
party’s success depends on the other.
FUNCTIONAL VS DYSFUNCTIONAL
The opposition leads them to:
Communicate more frequently and effectively
Establish outlets for expressing their grievances
Critically review past actions
Devise and implement a more equitable split of system resources
Develop more balanced distribution of power in their relationship
Develop standardized ways to deal with future conflict and keep it
Procter & Gamble Challenges French Whole Pricing Practices
FUNCTIONAL VS DYSFUNCTIONAL
MAJOR SOURCES OF CONFLICT
1. Channel member GOALS
2. Their perceptions of REALITY
1. Their clashes over DOMAINS
Each channel members goals & objectives are different from
those of other members.
Goal Divergence & Subsequent Conflict.
“You don’t put enough effort behind my brand. Your prices are
“you don’t support me enough. With your wholesale prices, we
can’t make money.”
DESIRED TARGET ACCOUNTS
“We need more coverage & more effort. Our reseller doesn’t do
enough for us.”
“You don’t respect my marketing strategies. We need to make
“You carry too many lines. You don’t give us enough attention.
You are disloyal.”
“Our customers come first. If we satisfy our customers, you will
DIFFERING PERCEPTIONS OF REALITY
Indicate different bases of action in response to the same
Channel members are often confident that they know
“The FACT of the Situation”
1. What the attributes of the products & service are
2. What applications it serves and for which segments
3. What the competition is
Product and process.
Removed from customers.
Functions and customers.
Removed from manufacturer.
2. Develop greater sensitivity to the business culture of other
CLASHES OVER DOMAINS
Each channel member has its own domain or sphere function.
Conflict occurs when one channel member perceives that other
is not taking proper care of its responsibilities in its appropriate
Doing the job wrong
Not doing the job at all
Trying to do the other channel member’s job
AGAIN SUPPLIER & RESELLER CLASH
Who should do it
How it should be done
How it should be compensated
Retailer selling products of competitors along side the product of the
Supplier using multiple channel for selling product
MULTIPLE CHANNELS : NO LONGER UNUSUAL
Supplier uses multiple channel for market penetration
To provide convenience for the customer to choose Eg: e-commerce,
direct sales, Teleshopping
Retailer losses motivation
CLASH OF MARKETS DOMAINS
Sell products under different brand names in different channels
Sell the main product through one channel and the accessories
through another channel
Domain conflict in marketing channel(financial services).
Perceptual differences (coke)
WHAT SUPPLIER CAN DO?
Gray marketing is the sale of authorized branded product
through unauthorized distribution channels – usually bargain
or discount outlets that provides less customer service than
authorized dealers do
Gray marketing can be contrasted with black marketing, or
counterfeiting, which involves selling fake goods as branded
Counterfeiting remains illegal in almost all world markets; in
contrast, gray marketing is in many cases completely legal
Who is supplying these unauthorized outlets?
Authorized distributors and dealers, often in other markets
Professional arbitragers, which include
Import – Export houses
Individual, professional traders, who but huge amounts at retail where
prices are low, then transport them to where the prices are high. Often,
these people live near borders of states/country
The supplier itself, through foreign division
Conflict Begets More Conflict
An excellent predictor of much channel members will dispute
in the future is how much conflict they have experienced in
Conflict creates more conflicts.
It proliferates is that once a relationship has experienced high
levels of tension and frustration, the players find it difficult to
set their acrimonious history aside and move on.
Foundations of trust are thoroughly eroded by high levels of
Field experienced indicates that high and sustained conflict
once experienced is extremely difficult to overcome
Highly effective and reliable way to increase channel conflict
is to threaten a channel conflict member .e.g., punshisment or
negative sanctions will be applied.
Strategy of repeated threats raises the temperature of a
relationship by increasing conflict and by reducing the
channel members satisfaction with every aspect of
Threats are perceived as coercion that eventually move the
threatened firm’s sense of conflict into zone of tension
,frustration and collision.
WHAT IS CONFLICT MANAGEMENT?
The use of resolution and stimulation
techniques to achieve the desired level of
Conflict Resolution Strategies
Information Intensive Mechanisms
Third party mechanisms, Mediators and Arbitrators
Building relational norms
INFORMATION INTENSIVE MECHANISM
This mechanism is designed to head off conflict by way to
share information. It is risky and expensive each party side
risks divulging sensitive information and must devote
resources to communication.
Trust and cooperation are helpful conditions because they
keep conflict manageable.
These mechanism includes joint memberships in trade
association ,and exchange of personnel programs.
THIRD PARTY MECHANISM
Mediator: A neutral third party who facilitates a negotiated
solution by using reasoning, persuasion and suggestions for
Arbitrator: A third party who has the authority to dictate an
Conciliator: A third party who provides an informal
communication link between the negotiator and the opponent
Consultant: A third party skilled in conflict management who
attempts to facilitate creative problem solving through
communication and analysis
• Channel members expect each other to
adapt readily to changing circumstance with
a minimum of obstruction and negotiation.
• Channel members expect each other to
share any and all pertinent information –no
matter how sensitive .
• Channel expect each other to work for
mutual benefit ,not merely one sided benefit.
BUILDING RELATIONAL NORMS
Competing: Satisfying one’s own interest regardless of the
impact on the other party to the conflict
Collaborating: A situation in which the parties to the conflict
each desire to satisfy fully the concerns of all parties
Accommodating: The willingness of one party in a conflict to
place the opponent’s interests above his or her own
Compromising: A situation in which each party to a conflict is
willing to give up something
Avoiding: The desire to withdraw from or suppress a conflict