- Channel conflict
Channel conflict occurs when manufacturers (brands) disintermediate their channel partners, such as distributors, retailers, dealers, and sales representatives, by selling their products direct to consumers through general marketing methods and/or over the internet through eCommerce.
Some manufacturers want their brands to capture the power of the internet but do not want to create conflict with their other distribution channels, as these partners are necessary and viable for any manufacturer to maintain and gain success. The Census Bureau of the U.S. Department of Commerce reported that online sales in 2005 grew 24.6 percent over 2004 to reach 86.3 billion dollars. By comparison, total retail sales in 2005 grew 7.2 percent from 2004. These impressive numbers are attractive to manufacturers, however they have not been able to participate in these sales without harming their channel relationships.
According to Forrester Research and Gartner, despite the rapid growth of online commerce, an estimated 90 percent of manufacturers do not sell online and 66 percent identified channel conflict as their single biggest issue hindering online sales efforts.However, results from a survey show that click-and-mortar businesses have an 80% greater chance of sustaining a business model during a three-year period than those operating just in one of the two channels. Among others, the reach will be enhanced by creating another selling channel. Nowadays, E-commerce wins in popularity as second distribution channel, because of the low overhead expenses and communication costs. Their advantage is at the same time their disadvantage, since consumers can communicate less expensive and more easily with each other too. Therefore, price and product differentiation is getting tougher than ever.
Channel conflict can also occur when there has been over production. This results in a surplus of products in the market place. Newer versions of products, changes in trends, insolvency of wholesalers and retailers and the distribution of damages goods also affect channel conflict. In this connection, a company's stock clearance strategy is of importance. To avoid a channel conflict in a click-and-mortar, it is of great importance that both channels are fully integrated from all points of view. Herewith, possible confusion with customers is excluded and an extra channel can create business advantages.
Type of channel conflicts
Channel conflict is of three types.
- Vertical channel conflicts,
- Horizontal channel conflicts,
- Multilevel channel conflicts.
- ^ a b Microsoft Word - 2004Report0523.doc
- ^ Marmorstein, H., Rossomme, J., Sarel, D., (2003) “Unleashing the power of yield management in the internet era”, California Management Review, vol. 45, No 3, pp 1-22
- ^ Simons, L.P.A., Bouwman, H., (2006) “Designing a marketing channel mix”, International Journal of Information Technology and Management, vol. 5, No 4, pp 229-248 Kaplan, S., Sawnhey, M., (2000) “E-Hubs: the new B2B marketplaces”, Harvard Business
- ^ Markides, C., D. Charitou, C., (2004) “Competing with dual business models: A contingency approach”, Academy of Management Executive, vol.18, No3, pp 22-36
- ^ Kaplan, S., Sawnhey, M., (2000) “E-Hubs: the new B2B marketplaces”, Harvard Business Review, May–June, pp. 97-103
- ^ Chiang, W.K., Chhajed, D., Hess, J.D., (2002) “Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design”, Management Science, vol 00, No. 00, pp. 1–20
- ^ Jagdish Ch. Joshi KUMBA
Wikimedia Foundation. 2010.
Look at other dictionaries:
channel conflict — UK US noun [C or U] ► COMMERCE, E COMMERCE, MARKETING a situation in which there are difficulties because a company does not sell through the usual distribution channels, for example by selling direct to customers on the internet: »We need to be… … Financial and business terms
channel conflict — A disagreement between members of a distribution channel Horizontal channel conflict can occur among retailers, if one retailer feels another is competing too vigorously through pricing or is using advertising to invade unauthorized sales… … Big dictionary of business and management
channel captain — channel leader The most powerful member in the distribution channel of goods. The channel consists of the manufacturer, wholesaler, and retailer, the channel captain usually being the manufacturer. There are, however, exceptions, most notably… … Big dictionary of business and management
Channel 37 — is an unused television channel in countries using the M and N broadcast television system standards. Channel 37 occupies a band of UHF frequencies from 608 to 614 MHz, frequencies that are particularly important to radio astronomy. In 1963,… … Wikipedia
Conflict (TV series) — Conflict Genre anthology Language(s) English No. of seasons 2 No. of episodes 20 Production Executive … Wikipedia
Conflict (1978 TV series) — Conflict 奮鬥 Genre Modern Drama Starring Chow Yun fat Angie Chiu Bill Chan Stanley Fung Opening theme 奮鬥 (Conflict) by Jenny Tseng Composer(s) … Wikipedia
Conflict of Interest (film) — Conflict of Interest Directed by Gary Davis Produced by Tony Amatullo Written by Gregory Miller Michael Angeli Starring Chri … Wikipedia
conflict of laws — 1. dissimilarity or discrepancy between the laws of different legal orders, such as states or nations, with regard to the applicable legal rules and principles in a matter that each legal order wishes to regulate. 2. Also called private… … Universalium
Channel access method — In telecommunications and computer networks, a channel access method or multiple access method allows several terminals connected to the same multi point transmission medium to transmit over it and to share its capacity. Examples of shared… … Wikipedia
Beagle conflict — The Beagle Conflict was a border dispute between Chile and Argentina over the possession of Picton, Lennox and Nueva islands and the scope of the maritime jurisdiction associated with those islands.The islands are strategicly located off the… … Wikipedia