There are three types of channel conflit: Vertical channel conflict, Horizontal channel conflict, and Multichannel conflict. Vertical refers to conflict between two different types of members within a channel (i.e. manufacturer, wholesaler, or retailier). An example of this can occur with BarnesandNoble.com and its sister store chain Barnes and Nobel Booksellers. A vertical conflict can occur when the entities offer different prices for the same product or different return policies. Horizontal channel conflict occurs between members at the same level within a channel, i.e. Pizza Hut & Dominoes Pizza, or Barnes and Nobel & Borders. An example of a horizontal conflict would be if one entity begins to aggressively advertise. One of these entities might feel that the other is infringing on its territory.
Multichannel conflict exists when two or more different marketing channels destructively compete against each other when selling in the same market. For example, MAC cosmetics are only sold at Nordstoms or Macys. Multichannel conflict may ensue if it decides to sell its product through other retailers. What are some of the ethical considerations in channel relations? For the most part, companies are free to pursue competition. However, ethical issues could arise in the use of exclusivity in deals and territories. As in the example of MAC cosmetics above. An ethical question could arise if in part of the negotiations that MAC made with the retailers was the fact that they would not be allowed to sell any other product. Or that the product could only be sold in Beverly Hills and not in the Los Angeles suburbs.
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