Benjamin Grub Channel-Conflicts 09.12.15

8/14/2019 Benjamin Grub Channel-Conflicts 09.12.15

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Channel Conflicts 1 von 4 Benjamin Grub

To answer this question, it is of relevanze to define, who belongs to a marketing channel.

From the semi-products are delivered from varies suppliers to the manufacturer, who then

finalize the product and send it through the “normal” way, next to the wholesailer. This is

the first step of a marketing Channel. The wholesailer sells the product to a brighter group

of retailers, which is the second step and these members sell the product to customers. Also

possible is, that the wholesailer in a first step sells the product to a “Jobber”, who add new

value, service or a packege-bundle to the products and sells these to the customer.

Along with the rising use of Internet this Marketing Channel is added with new shorter

ways to the end-user. At the same time these new oportunities let conflicts in the ChannelCannal rise.

The normal goods-flow works as follows:

Manufacturer wholesailer retailer End-user

One new upcoming good-flow also can work as follows:

Manufacturer End-user

This removel of Channel members is called Disintermediation. Disintermediation appears

upon the industry in different impacts. Most affected is the industry of computer hard- andsoftware, travel agencies, bookstores and music-stores, stock purchasing see e-trades. Not

affected are industries and goods like furniture production, grocery and or also pet-

supplieings.

Conflicts further can accur cause of reasons like role incongruities between the partners

(which is described above), resource scarcities (which actually appears for the reason of

rare raw-metals), perceptual difference (e.g. lack of information about new products),

expectational difference and or decision domain disagreements. A factor for conflicts can

also be the goal incompability (e.g. the manufacturers aim is not to get the highest margin

possible) and last but not least the communication difficulties between channel members to

each other or to the end-user.

– Horizontal Channel Conflicts –

– Causes of Channels Conflicts–




By emergence of new upcoming stores and retailers, hence which have the same type of

firm and same level of distribution network, the horizontal channel conflict increases

between operating organzations. Along with the increasing channel conflict, support of

retailers for a product often deceases. Also often seen are retailers pushing themselves

under an acceptable level of price as a result of indirect or direct competition. The

horizontal channel conflict is the most common conflict between members. To see it as an

advantage, the horizontal Channel Conflict leads to a healthy competition, where the best

members restrain on the market and a locally well devided network develops itself.

– Vertical Channel Conflicts –

A Channel conflict appears between manufacturers which sell their brands not only through

the normal way and with the help of their channel partners like distributors, retailers,

dealers and sales men, but by selling through e.g. the use of an own Internet platform and

thow direct to consumers.

In these cases manufacturers try to avoid the higher costs which come along with more

channel members. The avoidance through the normal and longer way of selling with the

help of channel partners should only be an additional distribution channel, as used without

wholesailers and retailers, the product could decrease because the customer-awareness

decreases. Channel partners are needed to reach a higher group of customers and so to gain

success. To solve the conflict a manufacturer should communicate to the end-user and to

the channel members, that a product bought in a retailers shops could have some special

services, faster connections or an extended advice, which justify a higher price. To support

the face to face selling along the web-sales manufacturers can pay a given percentage of

commission to retailers, so the products will also be shown in the shops and the direct

service is garanted.

– Multi Channel Conflicts –

A Multi Channel Conflict accurs, when more and more channel members try to sell the

same product to a finite number of customers. This happens these days also like the

vertical-conflict with the emergence use of the Internet and e-market places. Multi Channel

Conflicts are conflicts between B2B salers like pefa.com, reverse auctions like




freemarkets.com, B2C operators like Amazon.com, C2B auctions like by Priceline.com or

C2C sellings by Ebay.com. Manufacturers face a huge bandbride of different possibilities

and channel choices to sell product for a specific customers clientel. Each member has a

different range of channel cost-structure which leads to conflicts as more members take part

to sell the same product selling. This is supposed to be the most complicated case where a

lot of varies conflicts accur and where the roots and reasons are hard to figure out.

– Is a bigger amount of Salers healthy? –

Each member of a Channel Canal fears new upcoming members selling the same product

for a cheaper price. To say it in other words: With new and more Channel members a

channel competition appears, which dumps the price of the product and so is an advantage

for the end user. It forces channel members to be innovative and to serve the best service

coming along with the best price and quality to the costumer. Members who can’t compete,

have higher costs and a longer structure will automatically disappear. A higher productivity

in the channel is the result. Therefore it is an objective to manage the channel conflicts on a

certain status, that it won’t escalate to a destructive level, but lead to a competition

situation.

Destructivity may accur, when members cut the service to a zero-point or won’t give any

shelf space for products in showrooms. This leads in the end to less product sellings and a

less awared and positioned brand on the market place. To avoid this, a well organized

communication conducted by the manufacturer may prevent the worst case.

Manufacturers normaly seek to expand the number of members and distribution points

where they sell their products while each retailer hopes to be the only one who sells a

special product. However, having too many channel chase too few consumers results in

channel dropping the level of support to the brand. This can have a deleterious impact on

sales as well as brand image. On the other hand changing customer preferences through

different channels can modify industry structures. All in all a delicate balance must be

maintained between moving too quickly and unleashing destructive channel conflict versus

clinging too long to declining distribution networks.

– Is Channel Conflict a good thing? –




The most endangered victims of a channel conflict may be the distributors group. They are

faced with the challenge to show that they add more value to the product and therefore give

a reason to buy the product not directly through the new e-market shops. The biggest

channel is to turn a channel conflict into channel harmony, where a synergy out of the

conflict arise. For instance an physical store might take the advantage on having at the same

moment an online store and vice versa. If Manufacturers sell their product in a vertical

manner direct to the customers, retailers should try the same and can in this manner provide

less higher costs for the end user. The members have to establish a creative way to supply

the products through an efficiency and profitability channel for the end user. The linear and

traditional model is added by some new channels which have to be well integrated. Finally

is to be said, that channel conflicts are always leading to competition and therefore to a

better service, a better end-user price and last but not least to new products, better quality

and new brands which then will be sold in the beginning by again a few retailers.

– Four types of effects –

For better understandings and to conclude the discussion about channel conflicts, see the

belowed four diagrams. The first diagram shows a negativ effect, where more conflicts

leads to an dicreasing channel efficiency. In this case the manufacturer should try to lead

and optimize his distribution channels for a better outcome.

In the second diagram shows that a higher conflict level has no effect on the channel

efficieny. The third diagram shows an interesting case, where a conflict in the first step

leads to a higher efficiency, but reaching a special point of escalation it leads to an

decreased efficiency. Last but not least more conflicts can also result to more efficiency, as

it is good to always justify the own existancy on the market by becoming better in service

and quality.

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Benjamin Grub Channel-Conflicts 09.12.15