Introduction
In the final chapter, I will talk about the 3C's of marketing channels. The channel conflicts, the cooperation between the channels, and the competition between channels are the 3 c's of a marketing channel, leading us to the final c, the conclusion of the chapter.
Marketing Channel Conflicts
Channel conflicts occur when one channel of the organization prevents the intended outcome of another channel of the same organization. Channels sometimes act as independent business entities, and there might be a clash of interests among them.
For example, e-commerce channels eat up the sales at brick-and-mortar stores.
Types of Channel Conflicts
We will now see the various types of channel conflict which can occur in the marketing channel systems
Vertical Channel Conflict: Occurs between the various levels of the channel. We have seen in the second chapter about the intermediaries in the channel. Conflict occurring between intermediaries at different levels is known as vertical channel conflict.
Example: between retailers and wholesaler.
Horizontal Channel Conflict: This occurs between intermediaries at the same level. For example, between two retailers in the same channel. This will portray the brand in a negative light and have dire economic consequences.
To better understand the above two, it is recommended to look at the diagram in chapter 2.
Multi-channel conflict: this type of conflict occurs between different channels of the same brand. Example: online channel v/s brick and mortar channel
Causes of various types of channel conflicts
Some of the main types of channel conflicts include:
- Goal Incompatibility: two-channel members might want different things from the enterprise. One might be looking to increase market share, and the other might be to make a quick buck
- Lack of clarity of roles: Simple miscommunication between channel members can cause a channel conflict
- Dependence on the producer: Dealers are sometimes left to the producer's mercy and cause friction when expectations are not met.
How to manage Channel Conflicts?
There are specific ways in which channel conflicts can be managed:
Strategic Justification: developing strategically different products for different channels can reduce conflicts between various channels. For example, Licious sells its longer-lasting bread spreads via supermarket chains but holds the majority of the portion of meat sales with its direct to customer channel
Goal Seeking behaviour: Channel members can agree upon a fundamental superordinate goal and work towards realizing that goal
Employee Exchange: Frequent employee shifts among various channels. However, this also has a negative effect on newness in moving to the new channel
Joint Membership: Encourage an association between the various channel members so that the producer is isolated from any minor discrepancies of agreement among members
Mediation: A third party dispute settlement firm can be appointed to get an understanding between the members
Arbitration: Two parties present their arguments to an arbitrator and accept the decision given by the arbitrator.
Diplomacy: Talks always seem to work to resolve the issues between members
Legal Recourse: Legal lawsuit can be taken if the promised service is not provided.
Channel Coordination- the synergy between channels
Coordination happens when members of various channels come together to advance the organisation's cause as a whole. Instead of concentrating on delivering their own goal, the members realize the big picture and work towards it.
In marketing, channel coordination combines a variety of distribution and promotional channels into a single, cohesive approach for attracting customers.
When marketers develop a strategy that integrates campaigns across different platforms, they open the door to more powerful messages that reflect the consumer journey. Channel coordination is crucial to meet the fiscal imperatives of the enterprise.
Channel Competition- Race between two channels
The situation in the market where different members of the same distribution channel compete for the same customer is known as inter-channel competition. Efforts by marketers inside a channel, or by channels as a whole, to gain supremacy over the others is channel competition.
Let's demonstrate this by an example. Apple stores of different locations give offers wanting to attract customers. One store might be providing an additional Diwali offer compared to others, which will drive customers to store with respect to others.
Conclusion to Channel Conflict, Co-operation and Competition
This brings us to the conclusion of the block. We have seen everything about marketing channels and the very important role they play in making the market.