Channel Conflict

What is Channel Conflict?

In channel distribution, conflict is not

negative, rather, some conflict actually
strengthen and improves a channel.
Channel conflict arises when the behavior of
a channel member is in opposition, to its
channel counterpart. It is opponent centered
and direct, in which the goal or object sought
is controlled by the counterpart.
Coughlan, Anderson, Stern, Adel, p. 238

Types of Conflict

Latent conflict norm in marketing channels

conditions are right for contention by the
organization is unaware of it (lacking perception).
Perceived conflict cognitive, emotionless and
mental channel member senses some sort of
conflict exists; all in a days work.
Felt conflict affective conflict, when emotions do
enter the equation.
Manifest conflict visible, expressed in behaviour.
Usually seen as blocking each others initiative or
withdrawing support.

Measuring Conflict

Count counting # of Issues

Importance weighting or scale
Frequency frequency of disagreement
Intensity of dispute (how disparate)
N

CONFLICT = Importancei X Frequencyi X Intensityi

i=1

Index of Conflict can be used to compare members

in a channel

Calculating Conflict Practice Exercise

(take home answers will be on class website)

Analyzing 3 issues in conflict with 8 car dealers and the manufacturer:

Disagreement about volume discount programs for carrying your own inventory (small
car dealers see no advantage, big dealers see lots)

Requirement to participate in National Advertising program

Importance of issue 4 small = 4/10

and the 4 big = 8/10
Frequency is monthly (every shipment)
Intensity is very disparate 9/10
Importance = 2/10 Most dealers prefer their own program (especially the larger ones,
however, it is seen as a necessary evil of being part of being a franchise)
Frequency = 2 times a year
Intensity is not too disparate 4/10 comparatively

Warranty return administration requires quintuplicate forms and can take up to 90 days
to receive payment on labour and parts expended.

Importance = 10/10 for all dealers

Frequency = every meeting (16 times a year) and in additional at least 2 complaints per
month per 8 dealers
Intensity is the same as for the National Advertising program

Desirable Conflict
Conflict can induce:
1. More frequent and effective communication
2. Create outlets for grievances
3. Members to critically review past actions
4. The more equitable split of resources
5. The balance of power to shift more equitably
6. Standardization for dealing with future
conflict and boundary delineation

Damage from Intense Conflict

High channel conflict can create costs

as shown in fig. 9.1 on Page 245.
Trust diminished
Commitment to relationship in jeopardy
Reduction in financial rewards
Reduction in psychosocial benefits and
gratification from relationship

Sources of Conflict

Competing goals

Perceptions of reality

Margins, unit sales, expense control, inventory,

incentives, promotions, allowances, volumes and
thresholds, market penetration objectives
Attributes of product or service are
Application served and segments served
What is the competition

Domain of control

More often a perception that the other channel member is

not pulling their weight for a domain that should be theirs.

Fueling Conflict

The Conflict propensity is strongly correlated

to the quantity of historical incidence
Threats induction by punishments and/or
sanctions (Coercion can lead to escalating
conflict and ultimate channel damage)
Unbalanced power is indicative of short-term
relationship expectations propensity for
conflict is increased

Conflict RESOLUTION STRATEGIES

Information-Intensive Mechanism

Third-Party Mechanism

Risk sharing sensitive information with trust and cooperation or via a

diplomat
Joint membership in Trade Associations
Personage exchange
Co-aptation (involving channel members in corporate decisions)
Mediation
Institutionalized Arbitration process

Building Relational Norms

Flexibility, Info Exchange, and Solidarity

Styles of Conflict Resolution

See Fig. 9.2 on Page 269.

Accommodation
Avoidance
Competition or Aggression
Compromise
Collaboration or Problem Solving

Thanks

Work through the Conflict Measurement

Exercise and check your answers with the
web
Mid-Term questions?