Channel Conflict
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
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