BUS 113 Week 3 - Channel Conflict and Power

Marketing channel is a social system

Interactions among actors occurs in channel

Interactions are not just economic, but have behavioral dimensions (conflict, roles, power, communication)

Conflict emerges when

A channel member perceives that another member’s actions impede attainment of its goals

Value-added Reseller (VAR)

Buys products from variety of vendors, assemble them into package, sells to market

Common in tech markets

Some causes of channel conflict

Role incongruity, perceptual differences, goal incompatibility, communication difficulty

Role Incongruity

A franchise is supposed to operate in accordance with franchisor’s procedures

Franchise making its own policies will result in conflict

Perceptual Differences

Manufacturer may give brochures to retailers to pass onto customers

But they may perceive it as a waste of time and space

Managing Channel Conflict (3 steps)

Detecting conflict, appraising effect of conflict, resolving conflict

Detecting conflict

Regularly survey member’s perceptions

Do channel audits (periodic evaluation of key areas)

Form committee of channel members

Appraising effect of conflict

Relies on manager’s judgement

Resolving Conflict

Form channel committees and set goals jointly

Arbitration (third party)

If conflict is left along, it may get worse

Arbitration

Fast, secret, less expensive than litigation

Arbitrators have industry expertise

Channel Power

The capacity of a channel member to control or influence the behavior of another channel member

Bases of Power

A function of size, channel organization, circumstances

Apply correctly to improve channel relationship

Reward, coercion, legitimate, referent, expert power

Some research findings

Use expert and referent power over incentives and threats

Sometimes use rewards and punishment

Do not use coercive power

Communication problems in channels

Make explicit the goals of manufacturers and retailers

Reduce differences in language used to convey info

Improve frequency of communication