Channel Strategy Consultants
USA - EUROPE - AUSTRALIA - BRAZIL - HONG KONG
orig., to fight; battle; contend
to be antagonistic, incompatible, or contradictory; be in opposition;
Marketing channel conflict can take the following forms:
conflict - occurs when two or more different marketing channels
destructively compete against each other when selling to the same
channel conflict - occurs when two or more partners of the same
marketing channel destructively compete against each other.
Channel conflict is an extremely difficult and potentially destructive
marketing channel strategy and management issue.
Causes of channel conflict include:
factors - badly designed channel structure and alignment to customer
segments. The use of multiple channels (direct and indirect) and
the inclusion of new or emerging channels without appropriate
scarcity - too many channels (or channel partners) compete for
too few customers,
- Goal incompatibility
- the channel principal and channel partners have incompatible
or misaligned goals,
- Poorly defined
roles and responsibilities - the channel principal and channel
partners' roles and responsibilities are unclear or not matched
to their capabilities.
difficulties -goal incompatibility, perceptual differences and
role incongruities may be caused by communications problems,
- Poor channel
management - unstructured channel management processes, such as
partner recruitment, pricing structures, incentive systems and
promotional strategies can all lead to channel conflict,
- Weak channel
performance assessment - channel principals fail to drive the
desired channel-behaviour through clearly defined performance
targets and roles. Enforcement of performance standards is weak.
What are the consequences?
Destructive channel conflict can have serious consequences on channel
efficiency, channel effectiveness and channel partners' and principals'
profits. Such consequences lead to significant channel partner churn and
low partner loyalty to principals.
These consequences will lead to a negative impact on customers' purchasing
However, some channel conflict is desirable, provided it is well managed.
A lack of horizontal channel conflict indicates weak market coverage.
Well managed channel conflict is better defined as channel competition
and is not destructive.
How to manage channel conflict:
conflict is the result of emerging new channels such as the Internet.
While excessive channel conflict can cause destructive behaviour,
the solution is not in simply eliminating all channel conflict, but
market coverage, and
| It is necessary
to determine whether the decline in channel performance is:
- a result
of conflict with other channels,
to overall profitability
|In these circumstances,
strategies to manage channel conflict include:
the channel structure to reflect the products/services being sold,
customers' needs, locations, customers' buying behaviours and
the profitability of each transaction;
mutually agreeable and aligned business goals with the channel
communications - Take every opportunity to communicate with channel
partners, eg include channel partners in business planning events;
- Segment customers
and align channels according to their ability to meet specific
customer segment needs;
specialisation among channel partners, and create customer segment
specific campaigns and align these with specific channels;
- Clearly define
channel roles and responsibilities, and use pricing solutions,
rebates and incentives to encourage desired performance;
- Develop specific
channel products or offers which are not available to all channels;
- Check behavioural
performance through role audits, and regularly monitor channels
for early warning signs of damaging behaviour;
- Ensure that
partner agreements are clear and exercise your rights when necessary.
Channel conflict can have many causes and result in profit erosion. However,
not all channel conflict is unhealthy and can be incorrectly confused
with channel competition.
Some channel conflict is a consequence of optimising market reach and
To manage channel conflict, it is necessary to assess whether such conflict
is leading to a fall in channel, channel partner or principal profitability.
There are many proven strategies to deal with channel conflict based on
an evaluation of the root causes rather than the symptoms.
View may be reproduced
provided IF Consulting is acknowledged.