Channel Conflict Framework: The channel conflict framework applies 2 parameters which are (i) the extent of value added by the channel is significant or not
Channel Conflict Framework: The channel conflict framework applies 2 parameters which are (i) the extent of value added by the channel is significant or not (ii) who has a greater control over theend consumer – channel partner or principal company. Depending on these two parameters 4 different action points are possible. These are Forward Integration, Co-operation, Competition, andLeading. Channel Value-add controls customer • Identify new value propositions• Act fast/independently• Fill gap in channel coverage • Look for win-win • Seek compromise• Look to sell new products through new channels Supplier controls customer Compete • Create internet- enabled direct link to customers • Shift volume to new channel through promotions Lead • Define appropriate approaches for the channel • Make initial investments Now apply this framework in the short case given below and suggest the actions to be taken for resolving the channel conflict scenario. Case of Manufacturer Selling Through Some Channels that do Operate their own on-line Stores and Some that do not: Dual Distribution with On-line Selling and the Causes of Channel Conflict Figure 1: Manufacturer selling through some standard channels that do operate their own on-line stores and some that do not The channel design of the manufacturer, which is Simon & Schuster publisher, is given in Figure 1. In this case online sales occur, but here it is one of the manufacturer’s resellers that operates both online and through bricks-and-mortar stores. It might seem as if this is a common on-line versus offline conflict situation but there is a major difference. In this case the online reseller internalises, at least in part, the negative effects of aggressive online competition on the bricks-and-mortar channel, because it too will suffer from cannibalisation of the physical store sales by the Internet channel. That is, charging much lower prices online will lead customers to transfer from the stores to the Internet channel, whereby the combination reseller cannibalises itself. In addition, the combination reseller will risk confusing its customers if it offers different conditions in the different channels. A combination reseller is therefore more likely to offer a relatively fair price and conditions for its online offerings, in comparison to the offering it gives in its physical store. Thus, a bricks-and-mortar retailer faces fewer potential conflicts from a combination retailer than a pure Internet retailer. Based on the case details suggest the conflict resolution strategy by applying the given framework.
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