How should companies integrate channels and manage channel conflict?

Channel Integration and Systems

Conventional Marketing Channel

A conventional marketing channel comprises an independent producer, wholesaler(s), and retailer(s)

Vertical Marketing System

Comprises the producer, wholesaler(s) and retailer(s) acting as a unified system. One channel member, the channel captain, owns the others or franchises them or has so much power that they all corporate.

Corporate VMS
Combines stages of production, and distribution under single ownership.

Administered VMS
Coordinates successive stages of production and distribution through the size and power of one the members

Administered VMS
Coordinates successive stages of production and distribution through the size and power of one the members

Distribution programming
Building a planned, professionally managed vertical marketing system that meet the needs of both the manufacturer and the distributors.

Contractual VMS
Consist of independend firms at different levels of production and distribution integrating their programs on a contractual basis to obtain more economies or salesimpact than they could achieve alone.

 Wholesaler-sponsored voluntary Chains Retailer Cooperatives Franchise Organizations

Horizontal Marketing System

2 or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity.

Multiichannel Marketing Systmes

Occurs when a single firm uses 2 or more marketing channels to mreach customer segments.

Strategic Marketing channel system

Strategies and tactics of selling through one channel reflect the strategies of selling through other channels.

 By adding more channels, companies can gain 3 important benefits. Increase market coverage Lower channel cost More customized selling

Conflict, Cooperation, and Competition

Channel conflict

Generated when one channel members actions prevent the channel from achieving its goal

Channel cooridnation

Occurs when channel memebers are brought together to adbvance the goals of the channel, as opposed to their own potentially incompatible goals

Types of conflict and competition

Vertical Channel conflict - between different levelswith in the same channel Horizontal Channel conflict - between members at the same level with in the channel Multichannel conflict - Exist when manufacturers has established 2 or more channels that sell to the same market.

Causes of Channel Conflict

Goal Incomapatibility Unclear roles and rights Deferences in perception Intermediaries dependence on the manufacturer

Managing Channel Conflict

Adoption of superordinate goals Exchange persons between 2 or more channel levels Co-optation Diplomacy, mediatiorn or arbitration