Marketing Channel Conflict

Conflict in marketing channels, which has been the focus of numerous channel investigations,refers to goal-impeding behavior by one or more channel members. Channel conflict occurswh e n m a n u f a c t u r e r s ( b r a n d s ) d i s i n t e r me d i a t e t h e i r c h a n n e l p a r t n e r s , s u c h a s d i s t r i b u t o r s , retailers, dealers, and sales representatives, by selling their products direct to consumers throughgeneral marketing methods and/or over the internet through eCommerce. When the behavior of achannel member is in opposition to its counterpart channel conflict arises. When one channelmember takes actions that another channel participant believes will reduce its ability to achieveits objectives, conflict is present. As conflict can have an adverse effect on channel member performance, channel managers must make conscious efforts to detect and resolve it. Identifying Channel Conflict One thing that managers must face is that conflict will always exist to some degree. To eliminateit totally would diminish business opportunities. In other words, in order for a company to growt h e i r b u s i n e s s , t h e r e m u s t b e s o m e c o n f l i c t . T h e k e y i s r e c o g n i z i n g w h e n i t b e c o m e s counterproductive. An obvious sign that your company has taken a miss tep is when sales staff and business partners begin leaving. Another less identifiable sign is when the customer actually becomes aware of the conflict. The bottom line for a company is how to manage the customer relationships with its production strategies, (McDonald 1999). We can consider the GibsonGuitar Company. In 1997, they learned about channel conflict the hard way by offering their guitars for sale on their website at 10 percent below list price. Dealers became irate, and thecompany ended the online sales effort after only a month. They listened hard to the complaintsfrom their network of dealers and decided to compromise. Now, instead of selling guitars online,they only offer strings and other accessories. They have also added their parts catalog to the web site to sell items that were previously available only to dealers and repair shops, which is anexcellent way to meet those customers needs. Walter Carter, the web site manager for Gibson,felt that their biggest mistake was failing to inform the dealers that they were planning to selltheir guitars online (Kalin 1998). Types of channel conflicts 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 andresponsibility.c. Perceptual Conflict: a conflict that arises due to the perceptual difference in regard to themarket place.. Best Practices for Minimizing and Managing Channel Conflict Channel conflict is often thought of as dysfunctional and, therefore, unwanted. Conflict can,h o we ve r , b e h e a l t h y a n d d e s i r a b l e i n c e r t a i n s i t u a t i o n s . C o n f l i c t c a n s e r ve t o k e e p c h a n n e l me mb e r s f r o m b e c o mi n g t o o p a s s i ve o r l a c k i n g i n c r e a t i vi t y. Th i s s a m e c o n f l i c t c a n a l s o mo t i va t e me mb e r s t o a d a p t , g r o w, a n d s e i z e n e w o p p o r t u n i t i e s . Fr o m t h e ma n u f a c t u r e r s perspective, multi-channel distribution strategies can be beneficial in a number of ways. First, itd o e s a l l o w t h e ma n u f a c t u r e r t o g a i n mu c h n e e d e d i n s i g h t i n t o e n d - c o n s u me r s n e e d s a n d shopping patterns. Second, manufacturers with broad product lines can benefit because it isunlikely that a single channel type will be optimal for all products. Third, excess manufacturingcapacity can be better utilized with additional outlets when existing channels are oversupplied.Finally, manufacturers with a multi-channel distribution strategy can focus more on preciselytargeting markets and improving their overall competitiveness (Webb 2002).