Managing the Channel Conflict

With the advent of e-commerce, winning and preserving the relationship with the channel partners has become a more challenging task for the mar­keters. Most of the companies are using multi-channel strategies to market their products. According to Darrell Rigby, retailing is quickly morphing into omnichannel retailing.¹ Omnichannel retailing means that retailers can interact with customers through countless channels—websites, phys­ical stores, kiosks, direct mail and catalogues, call centres, social media, mobile devices, gaming consoles, televisions, networked appliances, home services, and more. The design specifications of omnichannel retailing are growing clearer by the day. Ideally, different distribution channels should work in harmony with other channels, with a minimum channel conflict. But it necessitates careful management and planning to avoid channel conflict.

Channel members are profit-seeking entities, and whenever a com­pany uses a new marketing channel, it has the potential to generate channel conflict with their channel partners. While it is not possible to have total goal congruence among all channel members because each member has its own business strategy, it is important to have a certain degree of convergence among the channel members. Therefore, it is crit­ical for the sales managers to understand, identify, and classify the vari­ous goals that may be pursued by the different channel members.^[1] Most of the companies have established policies for their channel partners. These policies specify the geographic areas of operation, pricing pol­icies, discount structures, and it is expected that all channel members follow these policies to ensure smooth flow of distribution of the prod­ucts to the end consumers. Also, sales managers need to build strong relationships with the channel partners to minimize the possibility of channel conflicts. Many companies are using information technology sys­tems to track the movement of products from one territory to another territory. Some policies that can be adopted by the companies to reduce the channel conflict are similar selling price for different channel mem­bers whether online or offline, sell only economical/commodity products online, redirect fulfilment to a partner/reseller, and actively drive cus­tomers to retail channel partners.

Managing channel conflict is vital as channel conflict is not always dysfunctional. Sometimes, channel conflict may benefit the overall perfor­mance of the distribution channel if

1. reasonable levels of conflict are not considered a cost by channel members
2. conflicting views produce ideas of better quality
3. any aggression in the situation is not irrational or destructive.

Sales managers need to understand and appreciate the relationship between internal and external multi-channel conflicts. When making channel-management decisions that are likely to affect the channel mem­bers, they must strive to proactively anticipate potential implications on the other.

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.