Channel Conflict Topic 8

There are many ways or channels by which information, products or services reach customers.

From a business point of view the world could be seen as a number of different channels to reach customers

The use of the Internet as a channel to reach consumers has lead to potential channel conflict

Example
Doc Martins Dell Lonely Planet

 Who owns the customer relationship? Potential confusion with customers themselves in terms of how they were interacting with businesses. e.g. Franchises

There are synergies between channels such as catalogues and the Internet

Catalogues, interact through the Postal Service, call centres, TV etc Companies can also set up web sites as another channel for distributing a product

Email is still the major channel of the Internet. Issues include SPAM, and overfull in-baskets Main focus today the web

Its not a simple matter to open up this major new channel because it creates a lot of questions about; well, who owns that channel to the consumer? Is it the upstream manufacturer?

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Types of Conflict
Direct Manufacturers launch new channel Internal Conflict new online competes with existing offline External manufacturer doesnt own online or offline channel least threatening

Strategic Factors
Does the consumer have a relationship with the manufacturer or the retailer? Does selling online make sense? Is industry as a whole moving online?

Degree of dependency or interdependency

Manufacturers market position
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Even though consumers may buy the product from somewhere else, theyre heading to the manufacturer if there is a problem (or blaming the brand at least).

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There has always been a need to control a company name and the brand names around its products and services
The Internet may change these things.

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Ultimately, when the Internet comes into the mix, it causes conflict between the different channels. e.g. Brand name camera, laptop etc purchased online Example buying your own brand.. (P&G Head and Shoulders)
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 Businesses have to meet the needs of the consumer in terms of where the consumer wants to interact and when and how, and so they cant simply say; well, the Internet is just too difficult for us. Were not going to do it. Example: Delta and Expedia. Virgin Vs Commonwealth
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Definition
Channel conflict can be defined as any situation where two different marketing or distribution channels are competing for the same sale with the same brand,

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Where does conflict show itself?

Pricing Order handling Delivery Service and repair Customer service Resistance to change

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Is channel conflict good?

Is channel conflict healthy or inevitable? Levels Sources
Vertical (manufacturer vs. retailer) Horizontal (dept. store goods sold at Costco) Different goals (e.g., build brand vs. immediate profits) Loss of sales (commissions) Mattels website

How to manage channel conflict

1. Understand channel members interests and anticipate of conflicts 2. Set clear goal 3. Communicate your intentions clearly and provide information and training

4. Take strategy decisions which limit conflict

Cliniques web price Apples stores

Minimising Conflict
Customer first and the channel second Involve channel partners Capture value

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Conclusion
Channel conflict will not go away by itself Needs active management There are many positive examples today such as multi-channel strategies

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