Companies use many channel partners to market and distribute their products to consumers. It is necessary for the companyâ€™s marketing and distribution function to work efficiently that its different channel partners work harmoniously towards a common goal – to promote its product.
However, some situations arise due to actions or inactions by one of the channel partners that the business of other channel partners is affected. This situation is known as marketing channel conflict. For example, there may be a difference or dispute between the wholesaler and retailer or a dispute or difference between two retailers. Companies need to ensure that such conflicts are amicably resolved and the frequency of such conflicts is minimum
Reasons for Marketing Channel Conflict
Marketing channel conflict may arise due to the following reasons:
When there is no clarity of roles among different marketing channel partners, there is a higher possibility of conflicts arising between different channel partners.
When the objectives of different channel partners are not aligned properly, conflicts arise more often than not.
When the companyâ€™s perception of potential market and profitability differs from its channel partners, conflicts between the company and different channel partners arise.
When the company wants to change the pricing structure or incentive structure of some or all of the channel partners, this may be led to conflict between different marketing channels.
When the market territories are not defined properly, this can lead to conflicts between different marketing channel partners.
Marketing channel conflict can lead to the following consequences:
When there is a conflict between channel partners, they may start a pricing war, leading to a loss of profit for some of the channel partners.
Channel conflict may lead to indifference on some of the channel members, leading to defective customer service and customer dissatisfaction.
Conflicts between channel partners can affect the sales of the companyâ€™s products adversely, and it would have the effect of reducing sales and profits of the company.
Conflicts can lead to exit by one or more of the channel partners and affect the distribution of the companyâ€™s products.
Conflicts between different channel partners may lead to negative publicity and affect the image of the company negatively.
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