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Channel Conflict – Definition, Causes, Consequences and Example

Channel Conflict occurs when two or more channel partners are competing against each other for the same business. Channel conflicts can arise when there are multiple sales channels, or when channel partners are selling competing products.

Channel conflict can also occur when one channel partner is selling a product that is similar to another channel partner’s product. Channel conflict can be resolved by managing the channel conflict, or by resolving the underlying sales issue. Channel conflict can also be prevented by carefully choosing channel partners, and by providing them with training and support.

What is channel conflict?

A channel conflict is an argument, disagreement, dispute, or any other similar issue that may develop among two or more channel partners owing to the decisions and behaviors of one or more of the partners.

Channel conflict generally happens in sales and distribution when two or more channel partners are selling the same product or service, or when channel partners are selling products or services that are in competition with each other.

What are the different forms of channel conflicts?

When different channel partners are involved in different distribution channels, several forms of channel conflicts arise. Let us have a look at some of those here-

1. Vertical level conflict

Vertical channel conflict that takes place between two or more channel partners at the same level of the distribution channel. For example, a conflict between two wholesalers, or between two retailers.

2. Horizontal level conflict

The horizontal conflict takes place between two or more channel partners at different levels of the distribution channel. For example, a conflict between a manufacturer and a wholesaler, or between a wholesaler and a retailer.

3. Multi-channel conflict

The multi-channel level conflict takes place between two or more channel partners who are using multiple channels to sell the same product. For example, a conflict between a direct sales force and a distributor.

4. Inter-type Channel Conflict

Channel conflict takes place between two or more channel partners who are using the same channel to sell different products. For example, a conflict between a retailer who sells both branded and private label products.

What are the causes of channel conflict?

There are many different causes of channel conflict, but some of the most common include:

1. Channel partner decisions

Channel conflict can be caused by the decisions of one or more channel partners. For example, a retailer may decide to sell a competing product, or a wholesaler may decide to sell directly to customers.

2. Different goals

Channel conflict can also be caused by different goals between channel partners. For example, a manufacturer may want to increase market share, while a retailer may want to maximize profits.

3. Role ambiguity

Channel conflict can also be caused by role ambiguity, which is when the roles and responsibilities of channel partners are not clearly defined. This can lead to confusion and disagreements about who should be doing what.

4. Lack of communication

Channel conflict can also be caused by a lack of communication between channel partners. This can lead to misunderstandings and miscommunication about goals, roles, and responsibilities.

5. Different views of the market

Channel conflict can also be caused by different views of the market. For example, a manufacturer may view the market as a whole, while a retailer may view the market as segmented.

6. Marketing or Strategic Mis-Alignment

Channel conflict can also be caused by marketing or strategic misalignment. This occurs when the goals, strategies, and tactics of channel partners are not aligned with each other.

7. Change Resistant

Channel conflict can also be caused by change-resistant, which is when one or more channel partners are resistant to change. This can lead to disagreements about how to best adapt to changing market conditions

What are the consequences of channel conflict?

Channel conflict can have a number of different consequences, both for the channel partners involved and for the businesses that they are representing. Some of the most common consequences include:

1. Reduced sales

Channel conflict can lead to reduced sales for the businesses involved. This is because channel conflict can lead to confusion and misunderstanding among channel partners, which can make it difficult for them to sell products and services.

2. Lower profits

Channel conflict can also lead to lower profits for the businesses involved. This is because channel conflict can lead to reduced sales and increased costs.

3. Reduced market share

Channel conflict can also lead to reduced market share for the businesses involved. This is because channel conflict can make it difficult for businesses to compete in the market.

4. Increased costs

Channel conflict can also lead to increased costs for the businesses involved. This is because channel conflict can lead to increased communication and coordination costs, as well as legal costs.

Here is a video by Marketing91 on Channel Conflict.

How to manage Channel Conflicts?

Channel management to resolve conflicts can be done in a number of ways, including:

1. Establish clear roles and responsibilities

One of the most important things that businesses can do to manage channel conflict is to establish clear roles and responsibilities for all of the channel partners involved. This will help to ensure that everyone is clear about their role in the channel and what they are responsible for.

2. Communicate regularly

Another important thing that businesses can do to manage channel conflict is to communicate regularly with all of the channel partners involved. This will help to ensure that everyone is on the same page and that there is no miscommunication.

3. Be flexible

Another important thing that businesses can do to manage channel conflict is to be flexible. This means being willing to change the way that things are done in order to accommodate the needs of the channel partners involved.

4. Resolve conflicts quickly

Another important thing that businesses can do to manage channel conflict is to resolve conflicts quickly. This will help to prevent the conflict from escalating and causing more damage.

5. Mediation, Arbitration, and Diplomacy

Channel conflict can sometimes be resolved through mediation, arbitration, or diplomacy. This means that businesses can hire a third party to help resolve the conflict.

6. Dealer Councils and Trade Associations

Channel conflict can also be managed through dealer councils and trade associations. These groups can provide support and advice to businesses that are dealing with channel conflict.

7. Strengthen your brand by offering exclusive products

Channel conflict can also be managed by strengthening your brand. This can be done by offering exclusive products or services that are not available through other channels.

8. Control your supply chain

Channel conflict can also be managed by controlling your supply chain. This means that you can control who has access to your products and services and how they are distributed.

9. Use technology to your advantage

Channel conflict can also be managed by using technology to your advantage. This means that you can use online tools to communicate with channel partners and track their activity.

Example of Channel Conflict

Samsung faced a channel conflict when it decided to sell its products directly to consumers through its own website. This caused a conflict with its retail partners, who felt that they were being cut out of the loop. Samsung eventually resolved the conflict by allowing its retail partners to sell its products on its website.

Conclusion!

Channel conflict is a common problem that can occur when businesses are trying to sell products or services through a channel. Channel conflict can lead to reduced sales, lower profits, and reduced market share for the businesses

Channel conflict can be a major problem for businesses, but it can be managed if the right steps are taken. By establishing clear roles and responsibilities, communicating regularly, being flexible, and resolving conflicts quickly, businesses can minimize the impact of channel conflict on their operations. Channel conflict can also be managed by using technology to your advantage, controlling your supply chain, and by offering exclusive products.

The post Channel Conflict – Definition, Causes, Consequences and Example appeared first on Marketing91



This post first appeared on Marketing Blog For Students And Professionals, please read the originial post: here

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Channel Conflict – Definition, Causes, Consequences and Example

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