Marketing Channels


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Managing Conflict To Increase Channel Coordination

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Marketing Channels

  1. 1. Sheenam Neha Jagmohan Sompal Deepa MANAGING CONFLICT TO INCREASE CHANNEL COORDINATION Distribution Management – Prof. RakeshSuri
  2. 2.  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.  CHANNEL CONFLICT  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?
  3. 3. TYPES OF CONFLICTS Latent conflict • Is the norm on the marketing channel. • Channel members collide as all parties pursue separate goals, strive to retain their autonomy . Perceived Conflict •Occurs when the channel member senses that some sort of opposition exists •Is cognitive , emotionless and mental Felt Conflict •When emotions are involved it is Felt conflict – conflictual . •Member feels a negative emotions Manifest Conflict •Usually appears as blocking each others initiative and withdrawing support. •One tries to sabotage the other or take revenge
  4. 4.  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  Example  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 MEASURING CONFLICT C O N F L I C T
  5. 5.  Functional conflict: supports the goals of the group and improves its performance  Dysfunctional conflict: Hinders group performance CONSEQUENCES OF CONFLICT
  6. 6.  Conflict is usually thought to be dysfunctional, to hurt a relationship  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
  7. 7.  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 within bounds  Procter & Gamble Challenges French Whole Pricing Practices FUNCTIONAL VS DYSFUNCTIONAL
  9. 9. MAJOR SOURCES OF CONFLICT 1. Channel member GOALS 2. Their perceptions of REALITY 1. Their clashes over DOMAINS
  10. 10. COMPETING GOALS  Each channel members goals & objectives are different from those of other members.  Goal Divergence & Subsequent Conflict.
  11. 11. FINANCIAL GOALS  Supplier: “You don’t put enough effort behind my brand. Your prices are too high.”  Reseller: “you don’t support me enough. With your wholesale prices, we can’t make money.”
  12. 12. DESIRED TARGET ACCOUNTS  Supplier: “We need more coverage & more effort. Our reseller doesn’t do enough for us.”  Reseller: “You don’t respect my marketing strategies. We need to make money too.”
  13. 13. DESIRED PRODUCTS  Supplier: “You carry too many lines. You don’t give us enough attention. You are disloyal.”  Reseller: “Our customers come first. If we satisfy our customers, you will benefit.”
  14. 14. DIFFERING PERCEPTIONS OF REALITY  Indicate different bases of action in response to the same situation.  Channel members are often confident that they know “The FACT of the Situation”
  15. 15. PERCEPTIONS DIFFER 1. What the attributes of the products & service are 2. What applications it serves and for which segments 3. What the competition is
  16. 16. FOCUS ON  Supplier: Product and process. Removed from customers.  Reseller: Functions and customers. Removed from manufacturer.
  17. 17. PROBLEM Cross Cultural Channel Clashes
  18. 18. SOLUTION 1. Communication 2. Develop greater sensitivity to the business culture of other channel member
  19. 19. 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 domain.
  20. 20. ISSUES:  Doing the job wrong  Not doing the job at all  Trying to do the other channel member’s job
  21. 21. AGAIN SUPPLIER & RESELLER CLASH  Who should do it  How it should be done  How it should be compensated
  22. 22.  INTRACHANNEL COMPETITION  Retailer selling products of competitors along side the product of the supplier  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
  24. 24.  Sell products under different brand names in different channels  Sell the main product through one channel and the accessories through another channel  Different pricing.  Different product.  Different name.  Domain conflict in marketing channel(financial services).  Perceptual differences (coke) WHAT SUPPLIER CAN DO?
  25. 25.  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 ones  Counterfeiting remains illegal in almost all world markets; in contrast, gray marketing is in many cases completely legal GRAY MARKETS
  26. 26.  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 GRAY MARKETS
  27. 27. Conflict Begets More Conflict  An excellent predictor of much channel members will dispute in the future is how much conflict they have experienced in the past.  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 conflict.  Field experienced indicates that high and sustained conflict once experienced is extremely difficult to overcome FUELING CONFLICT
  28. 28.  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 relationship.  Threats are perceived as coercion that eventually move the threatened firm’s sense of conflict into zone of tension ,frustration and collision. THREATS
  30. 30. WHAT IS CONFLICT MANAGEMENT? The use of resolution and stimulation techniques to achieve the desired level of conflict. 1/30/2015 30
  31. 31. CHANNEL CONFLICT Conflict Resolution Strategies Information Intensive Mechanisms Third party mechanisms, Mediators and Arbitrators Building relational norms
  32. 32.  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. INSTITUTIONALIZED MECHANISMS
  33. 33.  THIRD PARTY MECHANISM  Mediator: A neutral third party who facilitates a negotiated solution by using reasoning, persuasion and suggestions for alternatives  Arbitrator: A third party who has the authority to dictate an agreement  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 INSTITUTIONALIZED MECHANISMS
  34. 34. • Channel members expect each other to adapt readily to changing circumstance with a minimum of obstruction and negotiation. Flexibility • Channel members expect each other to share any and all pertinent information –no matter how sensitive . Information exchange • Channel expect each other to work for mutual benefit ,not merely one sided benefit. Solidarity BUILDING RELATIONAL NORMS
  35. 35. HANDLING CONFLICT  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 1/30/2015 35
  36. 36. THANK YOU