This document discusses managing integrated marketing channels and conflicts between channels. It describes vertical marketing systems where producers, wholesalers and retailers work as a unified system. It also discusses horizontal marketing systems where unrelated companies pool resources for new opportunities. The benefits of integrated channels are increased coverage, lower costs and customized selling, but new channels can introduce conflicts over control and cooperation. It identifies types of channel conflicts and their causes, and provides strategies for managing conflicts, such as strategic justification, dual compensation and employee exchange programs.

1. Marketing Management
A South Asian Perspective
Chapter 14: Designing and Managing Integrated Marketing Channels

2. How should
companies integrate
channels and
manage channel
conflicts?

3. Channel Integration
and Systems

4. Vertical
Marketing
Systems

5. VMS includes the producer, wholesaler(s) and retailer(s)
acting as a unified system
There are three types of VMS:
1. Corporate VMS
2. Administered VMS
3. Contractual VMS

6. New competition in retailing
Many independent retailers have not
joined VMS, but have developed specialty
stores serving special segments. This results
in polarization in retailing causing
problems for the manufacturer.

7. Horizontal
Marketing
Systems

8. Two or more unrelated
companies put together
resources to exploit an
emerging market opportunity.

9. An integrated marketing channel is one in
which the strategies and tactics of selling
through one channel reflect the strategies
and tactics of selling through one or more
other channels
Three benefits from adding more channels:
1. Increased market coverage
2. Lower channel cost
3. More customized selling
But new channels typically introduce
conflict and problems with control and
cooperation.

10. Conflict, Cooperation and Competition

11. The interests of independent business entities do not always
coincide. Channel conflict is generated when one channel member’s
actions prevent another from achieving its goals.

12. Channel coordination occurs when channel members are
brought together to advance the goals of the
channel.

13. Types of Conflicts and Competition
Horizontal
channel conflict
(between
channel
members at the
same level)
Vertical channel
conflict
(between
different levels of
channel)
Multichannel
conflict
(when
manufacturer has
established two
or more channels
that sell to the
same market)

14. Causes of Channel Conflict
•Goal incompatibility
•Unclear roles and rights
•Difference in perception of market environment
•Intermediaries’ dependence on the manufacturer

15. Managing Channel Conflict
•Strategic justification
•Dual compensation
•Superordinate goals
•Employee exchange
•Joint membership
•Co-optation
•Diplomacy, mediation and Arbitration
•Legal recourse

16. Dilution and
Cannibalization
Marketers must be careful
not to dilute their brands
through inappropriate
channels, particularly
luxury brands.

17. Legal and Ethical Issues in Channel
Relations
Excusive arrangements are legal as long as
they do not substantially lessen
competition or tend to monopoly.
Excusive territories, whereby producer
tries to keep a dealer from selling outside
its territory is a legal issue.
Tying agreements also violate the law if
they lessen competition

18. thank you
Priti Verma
LSR