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What is Channel Conflict?

Chapter-9: Managing Conflict to

Increase Channel Coordination

Channel Conflict arises when the behavior of a channel member

is in opposition to its counterpart.

It is opponent centered and direct in which the goal or object

Course: Marketing Channels

((MKT 450))

Channel conflict occurs when one member of a channel views its

Faculty: Abdullah Al Faruq (AFq)

Types of channel conflict a channel manager needs to be aware

Lecture-7 and 8

sought is controlled by its counterpart.

upstream or downstream partner as an adversary or opponent
opponent.
of:

North South University (NSU)

a. Goal
b. Domain
c. Perceptual

Measuring Conflict
-

Measuring Conflict (Cont.)

A channel manager needs to consider four sets of information in

d. Step-4: Intensity of Dispute

order to measure or diagnose the true level of a conflict in a

Next a channel manager needs to identify the intensity of dispute

All these four information needs to be combined to form an index

in regard to an issue within the channel members.

channel relationship, they are:

a. Step-1: Counting up the Issues
-

relevance within an channel that has or might cause a conflict

conflict.
b. Step-2: Importance
-

of manifest conflict for each issue i.e.:

A channel manager needs to account all the major issues of

-

Conflict 1 = N Importancei X Frequencyi X Intensityi

Therefore, the estimates arising from each issue can be

A channel manager can however, come to conclusion if

compared to measure the level of conflict.

A channel manager needs to identify the importance of each of

the issues that has been counted for.

c. Step-3: Frequency of Disagreement

importance, frequency and intensity is very low then there is no

conflict present in the channel.

The next task involves assuming or finding out how often the
issues are prone to disagreement and why.

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The Consequences of Conflict

a. Economic Dissatisfaction
-

Major Sources of Conflict in Marketing Channel

-

marketing channel is economic dissatisfaction i.e. loss of revenue

a. Competing Goals

generation capacity within the marketing channels.

operation of a marketing channel.

The loss of trust or confidence between the channel members

can result into further disintegration of the marketing channels.

unit sales; decreasing inventory; reduction of expenses; receiving

The channel manager will observe decrease in the level of

commitment by a channel member experiencing or fighting a
conflict within.

The goal of a retailer is to maximize their profit and they can

achieve this by achieving higher gross margins per unit; increasing

c. Commitment
-

The most source of conflict arises from the goal or objectives that is
required to be achieved for the successful implementation and

b. Trust
-

The major sources of channel conflict arises from channel members

goals, perceptions about the market, and domain of responsibility.

The most common consequence of conflicts presence in a

higher allowance from manufacturer.

-

The goal of the manufacturer is also to maximize profit but with

reverse order of practices followed by a retailer.

Major Sources of Conflict in Marketing Channel (Cont.)

Major Sources of Conflict in Marketing Channel (Cont.)

a. Competing Goals (Cont.)

c. Clashes over Domain

The classic source of conflict has been regarded arising from the

The reason of conflict in this case is because channel member

So in order to reach each others objective two channel member is

domain of control that each channel member possess.

following separate sets of practices so conflict is prominent.

b. Difference in Perceptions
-

believes the counter-part is not taking of his/her domain and yet

Another source of conflict is difference in perception channel

maximizing benefit.

members holds in regard to the market

market, product or service
being distributed, service outputs or the overall operation of
the marketing channel.
-

The main reason of such misperceptions is due to the

difference in focus, personality and sometimes culture.

Conflict Resolution Strategies

Institutionalized Mechanisms
-

Institutionalized mechanisms comprises of channel conflict

management strategies that is mainly designed to resolve
conflict at its early stage.

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Conflict Resolution Strategies (Cont.)

Conflict Resolution Strategies (Cont.)

Institutionalized Mechanisms

Institutionalized Mechanisms (Cont.)

The underlying principle of institutionalized mechanisms is to develop

b. Third Party Mechanisms

some policies and norms that the channel members must follow for the

successful implementation of marketing channel.

-

a marketing as an observer who in times of need would raise their voice

There are three types of institutionalized mechanisms they are:

a. Information intensive mechanisms

Another conflict resolution strategy whereby a third party is involved with

and aware the channel members.

The principle of information intensive mechanisms is to head-off conflict

The third party ranges from an auditor to a government institutions,

banks etc.

by creating a way of sharing information freely among the channel

c. Building Relational Norms

members.

The practice of relational norms in conflict management of marketing

A channel norms is expectation about the behavior of channel members

Useful information intensive mechanisms includes joint membership in

trade associations; exchange of persons; co-optation.

channels has proven very useful over the periods of time.

that makes the relationship congenial and includes the likes of flexibility,
information exchange, and solidarity.

Conflict Resolution Strategies (Cont.)

Conflict Resolution Strategies (Cont.)

Style of Conflict Resolution

Style of Conflict Resolution (Cont.)

A type of conflict resolution strategy whereby, channel manager or the

c. Compromise

manufacturer can adapt a behavioral style to manage and make the

conflict dormant.
-

The different styles are:

a. Avoidance
-

A style that encourages channel members to concede issues to resolve a

conflicting issues.

d. Collaboration
-

Also known as problem solving strategy is a style that suggests channel

A style that suggests the channel members to prevent conflict by not

members to discuss on issues pertaining conflict and actively search and

pressing for much for any issue.

implement a solution that creates a win-win situation.

b. Accommodation

Conflict Resolution via Economic Incentive

The most commonly adapted conflict resolution strategy is to manage

For example providing the channel members lower sales target, higher

This is a proactive style of conflict resolution whereby a channel member

is required to cultivate other channel members by way of support, advice
etc.

conflict by way of economic incentive i.e. financial incentive.

commission/revenue sharing scope, easy finance etc.