Channel Conflicts

1. Channel Conflicts
Dr. Gopal Thapa
Nepal Commerce Campus

2. Channel Conflicts
 Channel conflict can be explained as any dispute,
difference or discord arising between two or more
channel partners, where one partner’s activities or
operations affect the business, sales, profitability,
market share or similar goal accomplishment of
the other channel partner.

3. Channel Conflicts
 As we know that every manufacturing
company needs to plan its distribution
and marketing channel appropriately, to
ensure market captivity and customer
satisfaction along with growth and profitability.

4. Channel Conflicts
 In the process of the constant supply of products
in the market, several channel partners and
intermediaries join the supply chain of the brand.
Any clash and disturbance among these trading
partners can be considered as a channel conflict.

5. Types of Channel Conflict

6. Vertical Level Conflict
 In the vertical level conflict, the channel partner
belonging to a higher level enters into a dispute
with the channel member of a lower level or vice-
versa.
 For instance, channel conflict between dealers and
retailers or wholesalers and retailers.

7. Horizontal Level Conflict
 The conflict among the channel partners belonging
to the same level, i.e., issues between two or more
stockists or retailers of different territories, on the
grounds of pricing or manufacturer’s biases, is
termed as horizontal level conflict.

8. Inter-type Channel Conflict
 These type of conflicts commonly arise in
scrambled merchandising, where the large retailers
go out of their way to enter a product line different
from their usual product range, to challenge the
small and concentrated retailers.

9. Multi-channel Level Conflict
 When the manufacturer uses multiple channels for
selling the products, it may face multi-channel
level conflict where the channel partners involved
in a particular distribution channel encounters an
issue with the other channel.

10. Reasons for Channel Conflicts
 Goal incompatibility
 Unclear roles
 Perceptual differences
 Over-dependence
 Ideological differences
 Poor communication

11. Managing Channel Conflicts
 Conciliation
 Channel restructuring
 Goal modification
 Expansion of resources
 Politics
 Improved communication
 Manpower exchange program

12. Case of Samsung in India
 The world-renowned brand ‘Samsung
Electronics‘, faced a multi-channel level conflict
in its Indian market in the year 2014. The
company was selling its products (especially
mobiles) through multiple channels, i.e., via
offline mode and online mode.
 The offline channel partners raised the issue that
the e-retailers are providing high discounts to
attract more and more customers, which had
ultimately affected the offline sale of the product.

13. Case of Samsung in India
 Due to this, many retailers and distributors in the
offline market, distance themselves from the brand
and its products.
 To address this issue and retain its offline
distributors and retailers, Samsung provided the
right to sell forty-eight models of its brand
exclusively through the offline distribution
channel, thus, re-energizing the brick and mortar
channel partners.

14. Channel Cooperation
 When channel members are brought together to
advance the goals of the channel, as opposed to
their own potentially incompatible goals it is
called channel cooperation
 Kotler

15. Channel Coordination
 Channel coordination is also known as supply
chain coordination which aims at improving
supply chain performance by systematically plan
the mission of an individual company.
 It usually emphasis more on inventory
management and purchase order decisions with
distribution channel of the company.
 Flawless distribution management system
describes overall company's performance.

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Thank You