Channel Power & Conflict

Channel Power
Ability of one channel member (A) to get another channel member (B)
to do something it otherwise would not have done

Dependent upon:
1. Utility that one draws from another
2. Number of alternatives available
Sources of Power
• Rewards power
• Coercive power
• Expert power
• Legitimate power (law or norms)
• Referent power
Influence Strategies

Influence Stratgey Power Source(s)

1. Promise Reward
2. Threat Coercion
3. Legalistic Legitimacy
4. Request Referent, reward, Coercion
5. Information exchange Expertise, Reward
6. Recommendation Expertise, Reward
Channel Conflict
• Horizontal conflict
• Vertical conflict
Indicators of Channel Conflict
• Internal Indicators:
• Low Channel Productivity
• Deterioration of channel relationship
• Poor customer relationship
• External Indicators:
• Low on customer satisfaction
• Reduction in support of product line
• De-emphasis on brand
• Competition for sale in the same geographical area
Sources of Conflict in Marketing Channels
• Competing Goals
• Different perceptions of reality
• Clashes over Domain
Channel Conflict: Issue Involved
• Clarity in Roles and Responsibilities (demarcation of territories)
• Channel partners
• Sales force
• Systems should be well defined and documented
• For any conflict referrals to the manual should be made
• System should be dynamic and flexible yet stable and rigid
Some of the most common conflicts
• Territorial/role conflicts
• Overlapping territories
• Absence of clarity in roles and responsibilities of different channel
partners
• Development of new channels and its impact on existing channels
• Power politics conflict between manufacturer and channel member
• Strategic Conflicts:
• Disbursement of sales promotional schemes
• Differential pricing
• Differential product/promotional strategy
• Developmental conflicts:
• Development of existing channel members
• Growth opportunities
Ways to manage
• Territorial conflicts:
• Documentation
• Proper communication & sharing of information
• Strategic Conflicts:
• Sharing of information
• Goal based behaviour
• Developmental conflicts:
• Goal oriented behaviour
• Greater commitment
Decision Making Framework

Act to avert or address Allow threatened channel to

High
(‘Fire’) conflict decline

Prospect of
destructive
conflict Look for opportunities to Do nothing
reassure threatened channel
and leverage your power

Low
(‘Smoke’)

High Low

Importance of threatened channel in terms of current

or potential volume or profitability