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Distribution Channels
Channel Design Channel Management

Setting up the channel

Running the channel

Motivation, Commitment , Managing Conflicts Evaluation.

Behavioral Processes
Conflict Power

Roles Communication

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How does conflict emerge?

When a channel member perceives that another members actions impede the attainment of his or her goals

Types of conflicts
Horizontal occurs between firms at the same level in the distribution channel, ex- retailer vs retailer, wholesaler vs wholesaler Intertype between different intermediaries at the same level, organized vs kirana..

Vertical between different levels within a given channel, company Vs retailers..

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Common Reasons for Conflict

Number of sales persons employed Focus on company, and certain product categories POP and display material used Transparency in operations, reporting and systems % Sale to wholesale, retail reach. Margins , credit and ROI

Reasons
Stocking and inventory policies Schemes, structure, regularity and communication New Products, launch and support Stock return and accounting issues

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Causes of Conflict
Role Incongruities, Franchisee Operations Resource Scarcities, Retailer allotment,
territory

Perceptual Differences, POPs Expectational Differences Decision Domain Disagreements, Pricing Goal Incompatibilities, diff goals Communication Difficulties

Basic Issues with channel conflict

Are the channels really trying to serve the same end users? Vending Machine vs Retailers Are they in reality getting benefited because of certain kind of stores Is conflict the reason for reduction in efficiency or decline in channels competitiveness? Will the channels decline actually harm manufacturers profits?

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Conflict & Channel Efficiency

Does conflict decrease efficiency?

Can conflict increase efficiency?

How does conflict affect channel efficiency?

Does conflict have any affect?

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Effects of Channel Conflict

Negative Effect: Reduced Efficiency

As the level of conflict increases, Channel efficiency declines

Ex- Wanting all your distributors to carry stocks of new pdts

Effects of Channel Conflict

No Effect: Efficiency Remains Constant

Exists in channels characterized by high level of dependency among members Channel efficiency is not affected

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Effects of Channel Conflict

Positive Effect: Efficiency Increased

Conflict might be impetus for either or both members to reappraise their policies Channel efficiency increases

Managing Channel Conflict

Detecting conflict

Appraising the effect of conflict

Managing Conflict

Resolving conflict

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Conflict Resolution

Power in Channels

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Power in the Marketing Channel

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

Keys to understanding Power: Power Bases Use of Power Bases

Bases of Power for Channel Control

Reward Power Coercive Power High Sales & profits Ability to punish By virtue of size / position, alignment Goal Congruency

Legitimate Power

Referent Power

Expert Power Technical /Knowledge