Industrial Marketing Lecture Series
Professor Paul Herbig
Lecture #8: Channel Conflict
Distribution channel members—the manufacturer, the wholesaler (or industrial distributor), the retailer, and the customer are interdependent and their relationships are a key to the successful operation of the channel. Conflict is virtually inevitable throughout the marketing channel. Most researchers agree that this condition is due primarily to the functional interdependence between channel members .
Between the channel members, a dynamic field of conflicting and cooperating objectives exists; if the conflicting objectives outweigh the cooperating ones, the effectiveness of the channel will be reduced . Long-term viability requires a high degree of cooperation between members of a channel. All channels are based upon the recognition by individual channel members that they can benefit from joining channel systems and operating in a team; at the same time, the possibility of intrachannel rivalry in a marketing channel is all prevalent . Marketing channels are particularly prone to experience conflicts because of the constant interaction among manufacturers, wholesalers and retailers, and their interdependence. Channel members can therefore, identify and estimate the impact of the behavior of their trade partners on their own marketing strategies and associate successes or failures with the activities of particular channel members.
Distribution channels, as a whole can be conceived of as a competitive unit in and of itself, for the success of a product carried by a channel is largely determined by the effectiveness with which resources have been mobilized throughout the entire interfirm network. A distribution channel can be meaningfully perceived as a set of components interacting with each other to achieve common objectives. The designation of the distribution channel as a system has a number of implications: (1) each member of a distribution channel is dependent upon the behavior of other channel members, (2) a behavior change at any point in the channel causes change throughout the channel, and (3) the whole channel must operate effectively if the desires of any one member are to be realized. These three implications derive from the central characteristic of all systems—mutual dependency among components. This dependency relationship represents the root of conflict in the channels of distribution.
TYPES OF CONFLICT
A conflict exists whenever incompatible activities occur. Conflict can be viewed as a process of change—changes in the task environment and/or in the relationships between the element of the environment Conflict has been defined as, "tension between two or more social entities (individuals, groups, or larger organizations) which arises from incompatibility of actual or desired responses". Conflict can also exist at different levels (e.g interpersonal, intraorganizational) within or between organizations.
When the actions of two or more persons are incompatible, interpersonal conflict results. Thus an action which is incompatible with another action prevents, obstructs, interferes with, injures or in some way makes the second action less likely or less effective. Interpersonal conflict may arise from differences in information or belief. It may reflect differences in interests, desires or values between the parties involved. It may occur as a result of a scarcity of resources such as money, time, space or position. Or it may reflect a rivalry in which one person tries to outdo or undo another .
Conflict can exist within an organization and is best defined as a dynamic process underlying a wide variety of organizational behaviors. Organizational conflict can arise due to the degree of differentiation in the organization i.e., the number of administratively distinct but functionally interdependent subunit....
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