2. INTRODUCTION
Channel Conflict is a situation of discord or disagreement
between channel members from the same marketing channel
system
Conflict could be the result of:
Each channel member wants to pursue its own goals
Each wants to retain his independence
There are limited resources, which all of them wants to utilize in
the pursuit of their goals
4. 1. Vertical Channel Conflict: This type of conflict arises between the different levels in the
same channel.
E.g.The conflict between the manufacturer and the wholesaler regarding price, quantity,
marketing activities, etc.
2. Horizontal Channel Conflict: This type of conflict arises between the same level in the
same channel.
E.g. The conflict between two retailers of the same manufacturer faces disparity in terms
of sales target, area coverage, promotional schemes, etc.
3. Multichannel Conflict: This type of conflict arises between the different market
channels participating in the common sale for the same brand.
E.g. If a manufacturer uses two market channels, first is the official website through
which the products and services are sold. The second channel is the traditional channel
i.e. through wholesaler and retailer. If the product is available at a much lower price on a
website than is available with the retailer, the multichannel conflict arises.
5. STAGES OF CONFLICT
Experts believe that conflicts can occur in four stages in any channel
partnership. Each stage is progressively more severe than the earlier one.
LATENT
PERCEIVED
FELT
MANIFEST
6. LATENT STAGE: Some amount of discord exists but does not seem to be affecting
the working of the channel partners nor affecting the achievement of customer service
objectives
PERCEIVED STAGE: This is the stage where the discord becomes noticeable.
These types of conflicts are also called as:
Attitudinal Conflict- disagreements on roles, expectations, perceptions &
communications with each other
Structural Conflict- Relate to goals not matching, independence & lack of resources
FELT STAGE: This stage is also known as affective conflict as the channel gets
affected by the discord between the players. Stage of worry, concern & alarm. This
stage should be managed effectively and not let to escalate
MANIFEST STAGE: At this stage of conflict, parties openly oppose the initiatives
taken by the other party thereby affecting the performance of the channel system. The
resolution may require an outside intervention. Even after the resolution, it may
permanently alter the chemistry of the channel system.
7. REASONS FOR CHANNEL CONFLICTS
Some of the reasons for conflicts between the channel partners are as follows:
GOAL INCOMPATIBILITY: The objectives of the company & its distributors may
not always match. In situation of intense competitions, the company would like the
distributor to enhance his inputs to his customers like extend more credit, Offer more
discounts, Keep more stocks etc. The inputs may increase the sales but will reduce the
profitability of the distributor.
NEW CHANNEL PARTNER
TARGET FIXING EXERCISE: The company always feels that the distributor can do
much more than he normally does & hence fix optimistic targets. Also, if the incentives
are directly linked to achieving targets, there is an immediate source of conflict.
CREDIT EXTENSION: Sometimes, company puts pressure on the channel partners to
extend credit to an apparently big customer, not knowing his past credit record. The
distributor feels that the company is dictating terms on how to run his business and
resists.
8. DIFFERENCE IN PERCEPTION: The company sometimes persuade the
distributors to stock more of the products whereas the distributor may want to
watch the results before committing more working capital.
UNCLEAR ROLE DEFINITION
10. CONFLICT RESOLUTION
Conflict resolution can be defined as the informal or formal process that two or more parties
use to find a peaceful solution to their dispute.
STYLES OF CONFLICT RESOLUTION
11. ACCOMMODATION: It is a situation of complete surrender. One party helps
the other achieve its goals without being worried about its own goals. This
method strengthens the relationship.
COLLABORATION OR PROBLEM SOLVING: This style tries to
maximize the benefit for both parties while finding a solution to the dispute- a
win-win approach. It requires a lot of time & effort to succeed.
COMPROMISE: A solution where both parties agree to give up some of their
requirements and find a mid-way solution. Can only work with small and not so
serious conflicts.
COMPETITION OR AGGRESSION: This means being concerned about
one’s own goals without any thought for the others- a purely selfish style.
AVOIDANCE: Often used by weak channel members. Can only happen where
the relationship is not of much importance and the problem is postponed or
discussion is avoided.
