Managing Channel

Member Behaviour
Understanding Marketing Channels as a Social System

• Definition: Key Characteristics

• A marketing channel is not just a • Interconnected Relationships
series of entities involved in the • Mutual Dependence
movement of goods but a
dynamic social system involving • Communication Networks
relationships, interactions, and
interdependencies.
Elements of a Social System Implications for Channel
• Individuals Management
• Interactions • Relationship Building
• Norms and Values • Communication Strategies
• Roles and Positions • Conflict Resolution
 Strategies for Influencing
Channel Member Behavior
• Rewards and Incentives:
• Role: Offering rewards, incentives, and bonuses to encourage desired behavior.
• Examples: Volume discounts, performance bonuses, and recognition programs.
• Training and Education:
• Role: Providing education and training to enhance channel members' skills and understanding.
• Examples: Product training, sales techniques, and market knowledge.
• Clear Communication:
• Role: Open and transparent communication to convey expectations, goals, and changes.
• Examples: Regular meetings, newsletters, and communication platforms.
• Performance Evaluation:
• Role: Establishing clear performance metrics and evaluating channel members against these criteria.
• Examples: Key performance indicators (KPIs), sales targets, and customer satisfaction metrics.
• Mutually Beneficial Partnerships:
• Role: Fostering collaborative relationships where both parties derive value.
CHANNEL CONFLICT
Channel conflict is generated when the actions of
any channel member come in the way of the entire
channel achieving its objectives. A channel conflict
occurs basically for 3 reasons:
• Goal conflict: the understanding of objectives of
various channel members is different
• Domain Conflict: the responsibilities & authorities are
understood differently
• Perception Conflict: the understanding of the market
place by the channel members is different
REASONS FOR CHANNEL CONFLICT
• Incompatibility
• Difference in perception
• Resource scarcity
• Domain disagreements
• Communication difficulties
• Unspecified goals
TYPES OF CHANNEL CONFLICT

• Horizontal Conflict: Conflict between firms

at the
same level of the distribution channel.
E.g. hardware store versus hardware store.

• Vertical Conflict: Conflict between different

levels
of the same channel.
E.g. producer versus wholesaler [most common
type of channel conflict.]
MANAGING CHANNEL CONFLICT
• Exchange between two channels
• Cooperation
• Channel audits
• Advisory councils
• Joint goal setting
• Effective communications
• Role clarity
MANAGING CHANNEL
RELATIONSHIP
This can be done through mutual understanding
and cooperation between the channel partners.
That is by:
• Providing higher trade discounts than competition
• Higher margins for better distribution
• Providing promotional support
• Protect channel member’s territories
• Provide logistical support
• Provide financial support, etc…
 Effective Strategies for Conflict
Resolution:
• Negotiation: Joint Planning and Collaboration:
• Role: Open communication and bargaining to find Role: Encouraging joint decision-making and collaborative
mutually agreeable solutions. planning.
• Process: Identifying common ground, discussing Process: Involving channel members in strategic
concerns, and reaching compromises. discussions and planning sessions.
• Benefits: Preserves relationships and allows for flexible Benefits: Aligns goals, fosters cooperation, and minimizes
solutions. misunderstandings.
• Mediation: Clear Agreements and Contracts:
• Role: Involving a neutral third party to facilitate Role: Establishing clear and detailed agreements regarding
communication and resolution. roles, responsibilities, and expectations.
• Process: The mediator helps channel members explore Process: Documenting terms and conditions in contracts
solutions and find common ground. to avoid ambiguity.
• Benefits: Neutral perspective can lead to fair and Benefits: Provides a reference point for dispute resolution
unbiased resolutions. and reinforces mutual understanding.
• Arbitration: Channel Leadership:
Role: Appointing or recognizing a leader within the
• Role: Submitting the conflict to a third party with the
authority to make a binding decision. channel to guide and coordinate activities.
• Process: The arbitrator listens to both parties and issues Process: The leader facilitates communication, resolves
a decision that must be adhered to. conflicts, and ensures alignment with overall channel
• Benefits: Provides a final resolution and can expedite goals.
the process. Benefits: Promotes unity and direction within the channel.
 Understanding Power in the Marketing Channel

Definition of Power:
 Power: The ability of one channel member to influence the behavior or outcomes
of another channel member.

Bases of Power: Power Dynamics in the Sources of Power

Expert Power Marketing Channel Manufacturer Power
Referent Power Imbalances Retailer Power
Legitimate Power Shifts Wholesaler Power
Reward Power Influence Consumer Power
Coercive Power
Effective Strategies for Managing Power
Dynamics

• Negotiation and Collaboration

• Information Sharing
• Creating Interdependencies
• Building Trust
• Contracts and Agreements
• Balancing Reward and Coercive Power
Communication Processes in the
Marketing Channel
• Understanding Communication Processes in the Marketing Channel
• Importance of Effective Communication
• Key Elements of Communication Processes
• Communication Networks in the Marketing Channel
• Barriers to Effective Communication
 Enhancing Communication
Effectiveness
Strategies for Enhancing • Role of Technology in Enhancing
Communication Effectiveness in Communication in the Marketing
the Marketing Channel Channel
• Clear and Concise Messaging • Electronic Data Interchange (EDI):
• Use of Multiple Communication • Collaboration Platforms
Channels • Customer Relationship Management
• Active Listening (CRM) Systems
• Regular Feedback Mechanisms • Order Management Systems
• Training and Education
• Conflict Resolution Strategies