Managing Conflict: Discussion Questions Question 1 To begin with, conflict in channels may be caused by a number of things including but not limited to manufacturer decisions which may lead to channel members disintermediation. This could be through the adoption of ecommerce and the profitability possibilities may motivate some manufacturers to take this direction. However, other than channel members disintermediation, competition may bring about channel conflict. Competition by its very nature is unavoidable in business and as far as players in channel are seeking profitability (as any other business would do), then channel conflict is largely unavoidable. Vertical integration cannot be expected to do away with conflict completely mainly because this approach would essentially be a way to effect channel partners disintermediation. Hence, the stakeholder group eliminated; be it the sales representatives, dealers, retailers as well as distributors will always seek to destabilize the channel and this would go a long way to bring about conflict in the channel. Question 2 There are many reasons why suppliers tolerate gray marketing. This may include inability of the suppliers to secure a supply deal with the producer of the goods being sold in the grey market. Hence in such an instance, the supplier may resort to the gray market where there is no formal relationship between the supplier and the manufacturer of the products in question. Further the profitability involved as far as gray marketing involved may motivate some suppliers to tolerate the same. It is important to note that grey marketing may in one way or the other be motivated by a lower product price in one country as compared to another and in that regard, suppliers may take advantage of this situation to avail the product in question into the target market. They then embark on availing the product at a price that is essentially below the prevailing market price hence making reasonable returns. 1 / 8
Question 3 While there may exist a need for multiple channels as markets grow, it is important to note that multiple channels may be challenging as well as complex to manage. Further, the multi-channel implementation may end up being quite difficult because as it is many businesses are traditionally channel organized. With multiple channels, the possibility of channel conflicts cannot be ruled out i.e. between indirect channels and direct sales. When it comes to the responsibility of suppliers as far as managing conflict between multiple channels is concerned, it is worthwhile to note that in one way or the other, multiple channels may come in handy to avert growth stagnation as well as facilitating sales and market coverage. With that in mind, the survival of a product at a marketplace that is becoming increasingly competitive largely depends on how suppliers manage conflict between multiple channels. Suppliers can go about this important task by first of all ensuring that they don t try to do away with conflict because if the same is managed effectively, it can be used as a timely indicator of not only market penetration that is significantly effective but also demand that is relatively strong. It may be noted that in the absence of conflict, value reassessment by distributors as well as suppliers would be prudent. Question 4 In regard to Channel Sketch of Meccano, I would have opposed the Toys R Us deal at the negotiation stage had I been in the management team. This is essentially because there were a number of approaches that would have been undertaken to avoid the undesirable result and hence the outcome cannot be said to have been informed by bad luck. The best channel I would utilize as far as the launching of a new product line is concerned must be short. Essentially, a short distribution channel does not have a big number of intermediaries and in such a way; it would be easier to enhance channel personal relationships. Further, I might consider the nature of the good being launched and in the event that such a product is perishable, it may be appropriate to use a shorter distribution channel. However, over time, the channels would be expected to grow and in such a way, the effective management of the same would be appropriate. 2 / 8
To begin with, instead of doing away with channel conflict, I would seek to manage the same in a way that is largely effective. Proper management of conflict channel could include coming up with marketing programs that are largely thoughtful and that ensure all the channel participants have their share. Also, there may be need to maximize every channel participant optimally and ob a continuous basis. Question 5 In my opinion, the move by Warehouse has informed the emergence of channel conflict where new policies, approaches as well as programs have been proposed by the insistence on selling old CDs alongside new ones. It is important to note that the approaches adopted by Warehouse may be largely cosmetic but that has not stopped channel participants that are seen as seasoned from becoming uncomfortable though the whole approach does not mirror reality in any way. In this case, there are several approaches that may be undertaken to manage the conflicts. For example, the major record label companies could consider ensuring that all channel participants are not only fairly compensated but also well trained. This would be through coming up with programs of certification as well as the issuance of discounts to only those channel participants who enhance a level playing field for all. Compensation programs may also be brought into the picture by the major record label companies. Question 6 It is important to note that coercive power is one of the channel control power bases. Other channel control power bases include but are not limited to expert power, referent power, legitimate power and last but not last, reward power. Coercion is most appropriate when a channel participant wants to ensure that another participant yields to influence attempts by the former. However, it can be noted that conflict tends to be fostered by the utilization of coercive power. Indeed, coercion may end up enhancing as well as facilitating disaffection in a greater degree than any other power base. It has also been noted that the use of the same may go a long way towards the promotion of instability of a channel as well as its very viability and it may force 3 / 8
channel participants to consider accepting assistance from outside so as to avert the instances of coercion. Coercion as it however most appropriate for channel members who want to ensure that another participants yields to their attempts to dominate as well as influence issues. Question 7 When it comes to preventing conflicts from becoming dangerous, there are a number of things channel members may consider doing. To begin with, they should not o on an overdrive in an attempt to eliminate conflict. This is essentially because conflict is inevitable and when managed well, it can indeed be healthy and can be utilized as an effective market penetration indicator. Secondly, channel members must support marketing programs that ensure that every channel participants gets something at the end of the day. it is important to note that channel members that are well compensated and informed are less likely to seek ways of upstaging their competitors and in such a way channel members may consider coming up with each partners certification programs as well as enhanced training. There should be also guidelines and self regulation mechanisms aimed at discouraging foul play within the channel. This way, conflict can be made less dangerous. When it comes to the control of conflict in its early stages, it is important to note that institutalisation mechanisms must be adopted early enough. Question 8 While aggressive negotiation cannot be overstated, there exists no need to overemphasize its relevance and applicability. However, as Rosenbloom (2011) notes, approaching negotiation softly cannot be of any help when dealing with channel members. He however goes ahead to note that apart from negotiating hard, it may be prudent to apply other strategies or approaches including but not in any way limited to enhancing the understanding of the aspects of channel operations. When it comes to conflict resolution styles, there are a number of approaches which can be undertaken including but not limited to enhancement of communication, establishment of dealer councils as well as arbitration and mediation. Arbitration and mediation may be resolved if the conflict is essentially between channel members while the establishment of dealer councils may 4 / 8
come in more handy when there is vertical or horizontal conflict. Enhancement of communication is most effective when the conflict is amongst channel members. Question 9 Though economic incentives are effective ways of resolving conflict, offering better terms of trade may not work effectively because they make no difference to the competition and hence can easily be matched. It therefore follows that the visibility of better terms of trade makes them less likely to work. When it comes to resolving conflict by making a resolution economically appealing, it is important to note that super ordinate goals can be invoked as far as the management of conflict is concerned. This goes a long way to enhance the satisfaction of customers and according to Rosenbloom (2011), conflict resolution can be made easier if customer satisfaction is perceived by channel members as the main goal. In regard to incentives and communication, it can be noted that communication has the superior ability to bring channel members and manufacturers together. Thus bringing together incentives and communication serves as a platform to demonstrate what stands to be gained rather than lost as far as the resolution of the conflict is concerned. Discussion Questions: Part B By definition intra-brand competition is essentially the competition between same product or brand retailers or distributors. Inter-brand competition is essentially the competition between companies whose product as well as brand development is tailored to enable the customer to distinguish them from same market segment brands. A perfect example of this could be the competition between Pepsi and coca cola. Inter-brand competition is much better as it facilitates continuous improvement. Essentially, there can be one without the other i.e. in a situation of perfect competition. On my stand in regard to intra-brand competition, the same does not facilitate general competition from a macro perspective as is the case with inter-brand competition. 5 / 8
Question 2 There are several reasons why the industrial supply house could seek to carry only a single brand. To begin with, the company could be concentration on product differentiation in a bid to gain market dominance. By perusing product differentiation, the company shall be seeking to endear their product more to a larger segment of the market and in so doing, come up with a competitive advantage. The company could also be seeking to be a low cost producer by specializing which goes a long way to ensure it gains from economies of scale. Though this is not normal behavior, it may go a long way in giving the company a competitive edge if well executed. The relationship between the manufacturer and the channel participants in this case would be enhanced as close personal links are maintained. When it comes to the degree of coverage I this distributor s market area, I would expect it to be quite extensive as it can effectively manage channel relationships as well as monitor conflicts. Question 3 Greater sales and greater coverage go together because of a number of actors including but not limited to the competition between channel participants as well as the combined coverage of the market by participants in the marketplace. As market participants compete, more of the unit products are bound to be sold which is the same case when it comes to a grater regional coverage. It hence follows that manufacturers should seek greater coverage as it may end up enhancing the bottom-line. However, when it comes to resellers, carrying more brands in their assortment may enhance their profitability but care must be taken to ensure that the brands do not exceed what they are capable of effectively handling. It may be noted that by carrying more brands in their assortment for a given product category, resellers give clients a wide range of products to choose from and hence have an enhanced probability of executing a sale. Question 4 6 / 8
In my opinion, it s possible for a brand to be available in many places. The premise here is that the manufacturer has engaged a good number of resellers and these are the same people who go a step ahead to enhance the intensity as well as coverage of the market area. However, this largely depends on the distribution ability of resellers where a smaller distribution scope may mean a significantly lesser market coverage whereby an extensive distribution scope may signify equally extensive market coverage. In my own opinion therefore, a brand can be available in quite a number of places depending on the decisions made by the manufacturer in regard to reseller choices. Question 5 The statement that a distributor should stock as many brands as possible for each product category demanded by its clients is partly true. It is important to note that before stocking a product, the distributor must make a number of considerations including but not limited to the market demand (in terms of units sold) as well as its (the distributor s) ability to manage the multiple products. When it comes to market demand, there is no way a distributor can stock products based on insufficient demand in terms of units. Hence the demand must be sufficient to justify stocking the product. Question 6 As a new brand entering the market for a consumer durable, I would seek minimal coverage and grow as time goes by. This I would do by first concentrating on a specific underserved or underserved niche. When it comes to convincing channel entities to carry my brand, I would insist on two things that is, how different my brand is from the others offered at the marketplace (product differentiation) as well as how they stand to gain by stocking my product i.e. prospects of product growth. Some of the questions as well as objections and reservations they might have include the returns the brand will assure them, ability of the product to sell in the marketplace as well as my own ability to continue producing the particular product. In my opinion, I do not thing a branded variants strategy would do much to convince them on the competitiveness of my product. Instead, I would insist on the various attributes my product has in contrast to those in the marketplace as well as why it is most likely to appeal to clients be it across the market or within 7 / 8
a particular market segment. This in my own opinion would go a long way as far as convincing channel entities is concerned. References Coughlan, A.T. (2001). Marketing channels. Prentice Hall Rosenbloom, B. (2011). Marketing Channels. Cengage Learning 8 / 8