C H A P T E R 5

C O N F L I C T
C H A N N EL

Information Classification: General

 AGENDA
• LEARNING OBJECTIVES
• INTRODUCTION TO CHANNEL CONFLICT
• THE NATURE OF CHANNEL CONFLICT
• CONSEQUENCES OF CONFLICT
• MAJOR SOURCES OF CONFLICTS IN CHANNELS
• CONFLICT RESOLUTION STRATEGIES
• TAKE-AWAYS

Information Classification: General

 LEARNING OBJECTIVES

• OUTLINE INHERENT SOURCES OF CONFLICT IN CHANNEL RELATIONSHIP AND

DEFINE ITS THREE MAIN CAUSES: GOALS, PERCEPTIONS, AND DOMAINS.
• RECOGNIZE THE DIFFERENT TYPES OF CONFLICT
• DEVELOP AN UNDERSTANDING OF HOW CONFLICT CAN BE MEASURED
• UNDERSTAND THE WAYS IN WHICH PARTNER CONFLICT CAN BE RESOLVED.
• DESCRIBE THE NEGATIVE EFFECTS OF HIGH CONFLICT ON CHANNEL
PERFORMANCE BUT ALSO IDENTIFY CIRCUMSTANCES IN WHICH CONFLICT IS
NEUTRAL OR EVEN POSITIVE.
• RECOGNIZE WHY MULTIPLE CHANNELS REPRESENT THE NORM AND
DESCRIBE WAYS TO ADDRESS THE CONFLICT THEY CREATE.
• EXPLAIN WHY MANY SUPPLIERS LIKE GRAY MARKETS (WHILE PROTESTING
TO THE CONTRARY).

Information Classification: General

 AGENDA
• LEARNING OBJECTIVES
• INTRODUCTION TO CHANNEL CONFLICT
• THE NATURE OF CHANNEL CONFLICT
• CONSEQUENCES OF CONFLICT
• MAJOR SOURCES OF CONFLICTS IN CHANNELS
• CONFLICT RESOLUTION STRATEGIES
• TAKE-AWAYS

Information Classification: General

 INTRODUCTION TO
CHANNEL CONFLICT

• CHANNEL CONFLICT ARISES WHEN BEHAVIOR BY ONE CHANNEL MEMBER IS IN

OPPOSITION TO THE WISHES OR BEHAVIORS OF ITS CHANNEL COUNTERPARTS.
• CHANNEL ACTOR SEEKS A GOAL OR OBJECT THAT ITS COUNTERPART CURRENTLY CONTROLS.
• ONE MEMBER OF A CHANNEL VIEWS ITS UPSTREAM OR DOWNSTREAM PARTNER AS AN
ADVERSARY OR OPPONENT.

• THESE INTERDEPENDENT PARTIES, AT DIFFERENT LEVELS OF THE CHANNEL (UPSTREAM

AND DOWNSTREAM), CONTEST WITH EACH OTHER FOR CONTROL.

• OMNI-CHANNEL CONTEXT
• CONFLICT CAN BE EXACERBATED IF THE FIRMS TREAT EACH CHANNEL SEPARATELY (RATHER
THAN ENSURING SYNERGY)
• THIS CAN CREATE NEW FORMS OF CONFLICT
• E.G. WHEN ONLINE CHANNELS CANNIBALIZE THE SALES OF IN-STORE CHANNELS

Information Classification: General

 AGENDA
• LEARNING OBJECTIVES
• INTRODUCTION TO CHANNEL CONFLICT
• THE NATURE OF CHANNEL CONFLICT
• CONSEQUENCES OF CONFLICT
• MAJOR SOURCES OF CONFLICTS IN CHANNELS
• CONFLICT RESOLUTION STRATEGIES
• TAKE-AWAYS

Information Classification: General

 THE NATURE OF CHANNEL
CONFLICT

Some conflict can actually strengthen and

improve the channel – as long as the channel
manager deals with it effectively and
appropriately.

Information Classification: General

 TYPES OF CONFLICT
CONFLICT IMPLIES INCOMPATIBILITY AT SOME LEVEL.

• LATENT CONFLICT DESCRIBES THE INEVITABLE COLLISION BETWEEN CHANNEL MEMBERS THAT
PURSUE THEIR OWN SEPARATE GOALS, STRIVE TO MAINTAIN THEIR AUTONOMY, AND COMPETE
FOR LIMITED RESOURCES.

• PERCEIVED CONFLICT ARISES AS SOON AS A MEMBER SENSES ANY OPPOSITION: VIEWPOINTS,

PERCEPTIONS, SENTIMENTS, INTERESTS, OR INTENTIONS.

• FELT (OR AFFECTIVE) CONFLICT ARISES AS WHEN EMOTIONS ENTER THE PICTURE AND CAN
ESCALATE INTO MANIFEST CONFLICT.
• INDIVIDUAL PLAYERS START MENTIONING CONFLICT IN THE CHANNEL, AS A RESULT OF
NEGATIVE EMOTIONS THEY EXPERIENCE (TENSION, ANXIETY, ANGER, FRUSTRATION, AND
HOSTILITY).
• ORGANIZATIONAL MEMBERS PERSONALIZE THEIR DIFFERENCES (I.E. “THAT COMPANY IS SO
RUDE. IT DOES NOT CARE HOW I FEEL.”)

• MANIFEST CONFLICT IS EXPRESSED VISIBLY THROUGH BEHAVIORS (I.E. BLOCKING EACH

OTHER’S INITIATIVES OR GOAL ACHIEVEMENT, WITHDRAWING SUPPORT)

Information Classification: General

 TYPES OF CONFLICT – LATENT
CONFLICT

• LATENT CONFLICT DESCRIBES THE INEVITABLE COLLISION BETWEEN CHANNEL

MEMBERS THAT PURSUE THEIR OWN SEPARATE GOALS, STRIVE TO MAINTAIN THEIR
AUTONOMY, AND COMPETE FOR LIMITED RESOURCES.

• COMPANIES LINKED IN A CHANNEL ARE FUNDAMENTALLY INDEPENDENT.

• SO IGNORING ONE ANOTHER DOES NOT GET RID OF LATENT CONFLICT.
• ORGANIZATIONS WILL FOCUS ON FEW LATENT CONFLICTS AT A TIME WHILE
LOOKING OVER OTHERS.

• THE FAILURE TO ACCOUNT FOR LATENT CONFLICT MAY BECOME A PROBLEM IF THE
PARTNERS DEVELOP NEW CHANNEL INITIATIVES THAT TRANSFORM THE LATENT
CONFLICT AND SPARK OPPOSITION FROM CHANNEL PARTNERS.

Information Classification: General

 TYPES OF CONFLICT –
PERCEIVED CONFLICT

• PERCEIVED CONFLICT ARISES AS SOON AS A MEMBER SENSES ANY

OPPOSITION: VIEWPOINTS, PERCEPTIONS, SENTIMENTS, INTERESTS, OR
INTENTIONS.

• IT IS COGNITIVE, EMOTIONLESS, AND MENTAL, RESULTING FROM THE

RECOGNITION OF A CONTENTIOUS SITUATION.
• MEMBERS EXPERIENCE LITTLE EMOTION OR FRUSTRATION
• FOCUSED ON KEEPING IT “PROFESSIONAL”
• MAINTAINS A PREFERRED, “NORMAL” STATE IN MARKETING CHANNELS

• THUS, MEMBERS MAY NOT CONSIDER THE SITUATION CONFLICT-LADEN,

DESPITE OPPOSITION.

Information Classification: General

 TYPES OF CONFLICT – FELT (OR
AFFECTIVE) CONFLICT
• FELT (OR AFFECTIVE) CONFLICT ARISES AS WHEN EMOTIONS ENTER THE
PICTURE.
• INDIVIDUAL PLAYERS START MENTIONING CONFLICT IN THE CHANNEL, AS
A RESULT OF NEGATIVE EMOTIONS THEY EXPERIENCE (TENSION, ANXIETY,
ANGER, FRUSTRATION, AND HOSTILITY).
• ORGANIZATIONAL MEMBERS PERSONALIZE THEIR DIFFERENCES (I.E.
“THAT COMPANY IS SO RUDE. IT DOES NOT CARE HOW I FEEL.”)

• THE OUTCOMES ARE SIMILAR:

• ECONOMIC CONSIDERATIONS FADE INTO THE BACKGROUND
• ANTAGONISTS IMPUTE HUMAN FEATURES AND PERSONAL MOTIVES TO
CHANNEL PARTNERS
• ECONOMIC, SENSIBLE CHOICES ARE REFUSED TO PUNISH OTHER
CHANNEL MEMBERS.

Information Classification: General

 12
Information Classification: General
 MEASURING CONFLICT (4 STEPS)

• COUNT THE ISSUES

• ASSESS IMPORTANCE
• DETERMINE DISAGREEMENT FREQUENCY
• MEASURE DISPUTE INTENSITY

INDEX OF MANIFEST CONFLICT:

Information Classification: General

 INDEX OF MANIFEST CONFLICT:

• NO REAL ARGUMENT EXISTS OVER ANY ISSUE IF IT:

• IS PETTY (LOW IMPORTANCE)
• RARELY SPARKS A DIFFERENCE OF OPINION (LOW FREQUENCY)
• DOES NOT CREATE SUBSTANTIAL DISTANCE BETWEEN TWO
PARTIES (LOW INTENSITY)

• IF ANY OF THESE ELEMENTS ARE LOW, THE ISSUE IS NOT A

GENUINE SOURCE OF CONFLICT (I.E. MULTIPLYING BY 0
CREATES A PRODUCT OF 0)

Information Classification: General

 AGENDA
• LEARNING OBJECTIVES
• INTRODUCTION TO CHANNEL CONFLICT
• THE NATURE OF CHANNEL CONFLICT
• CONSEQUENCES OF CONFLICT
• MAJOR SOURCES OF CONFLICTS IN CHANNELS
• CONFLICT RESOLUTION STRATEGIES
• TAKE-AWAYS

Information Classification: General

 CONSEQUENCES OF CONFLICT

Despite a widespread (and sometimes

accurate) view of conflict as dysfunctional,
such that it harms relationship coordination
and performance, on some occasions,
opposition actually makes a relationship better.

Information Classification: General

 FUNCTIONAL CONFLICT
• FUNCTIONAL CONFLICT IMPLIES THAT MEMBERS RECOGNIZE EACH OTHER’S
CONTRIBUTIONS AND UNDERSTAND THAT THEIR SUCCESS DEPENDS ON OTHERS, SO
THEY CAN OPPOSE EACH OTHER WITHOUT DAMAGING THEIR ARRANGEMENT. AS A
RESULT OF THEIR OPPOSITION, THEY:
• COMMUNICATE MORE FREQUENTLY AND EFFECTIVELY,
• ESTABLISH OUTLETS FOR EXPRESSING THEIR GRIEVANCES,
• CRITICALLY REVIEW THEIR PAST ACTIONS,
• DEVISE AND IMPLEMENT A MORE EQUITABLE SPLIT OF SYSTEM RESOURCES,
• DEVELOP A MORE BALANCED DISTRIBUTION OF POWER IN THEIR RELATIONSHIP,
AND
• DEVELOP STANDARDIZED WAYS TO DEAL WITH FUTURE CONFLICT AND KEEP IT
WITHIN REASONABLE BOUNDS.

• CONFLICT IS FUNCTIONAL WHEN IT DRIVES CHANNEL MEMBERS TO IMPROVE THEIR

PERFORMANCE.

Information Classification: General

 MANIFEST CONFLICT: REDUCING
CHANNEL PERFORMANCE

MANIFEST CONFLICT IS EXPRESSED VISIBLY THROUGH BEHAVIORS (I.E. BLOCKING EACH

OTHER’S INITIATIVES OR GOAL ACHIEVEMENT, WITHDRAWING SUPPORT)

• HIGH LEVELS OF MANIFEST CONFLICT CAN REDUCE AN ORGANIZATION’S SATISFACTION

AND DAMAGE THE CHANNEL’S LONG-TERM ABILITY TO FUNCTION AS A CLOSE
PARTNERSHIP

• PERCEIVED, FELT (AFFECTIVE), AND MANIFEST CONFLICT WILL INCREASE

• CONFLICT WILL INCREASE ITS ANTICIPATED DISAPPOINTMENT BY INFLATING THE FOCAL

FIRM’S BELIEF THAT THERE ARE BETTER ALTERNATIVES AVAILABLE

• TRUST IS A CRITICAL FOUNDATION FOR DURABLE, WELL-COORDINATED RELATIONSHIPS

• CHANNEL MANAGERS NEED TO DETERMINE IF THE COSTS OF CONFLICT ARE WORTH THE
BENEFITS THAT CONFLICT MIGHT INDUCE

• CONFLICT NEEDS TO BE MANAGED RATHER THAN MINIMIZED

18

Information Classification: General

 AGENDA
• LEARNING OBJECTIVES
• INTRODUCTION TO CHANNEL CONFLICT
• THE NATURE OF CHANNEL CONFLICT
• CONSEQUENCES OF CONFLICT
• MAJOR SOURCES OF CONFLICTS IN CHANNELS
• CONFLICT RESOLUTION STRATEGIES
• TAKE-AWAYS

Information Classification: General

 MAJOR SOURCES OF
CONFLICTS IN CHANNELS

ROOTED IN DIFFERENCES IN
• CHANNEL MEMBERS’ GOALS
• PERCEPTIONS OF REALITY
• PERCEIVED DOMAINS, OR AREAS IN WHICH THEY SHOULD BE
ABLE TO OPERATE WITH AUTONOMY

Information Classification: General

 SOURCES OF CONFLICT -
COMPETING GOALS

• EACH CHANNEL MEMBER HAS A SET OF GOALS AND

OBJECTIVES THAT DIFFER FROM THE GOALS AND OBJECTIVES OF
OTHER CHANNEL MEMBERS
• THE INHERENT DIFFERENCE IN WHAT THEY WANT TO ACHIEVE
AND WHAT THEY VALUE CAUSES PRINCIPALS TO SEEK WAYS
TO MONITOR AND MOTIVATE AGENTS

• AGENCY THEORY UNDERSCORES HOW COMPETING GOALS

CREATE CONFLICT IN ANY PRINCIPAL-AGENT RELATIONSHIP

• TENSION ARISES FROM PERCEPTIONS OF GOAL DIVERGENCE

• EXAMPLE: NIKE AND FOOT LOCKER
21

Information Classification: General

 NIKE & FOOTLOCKER – COMPETING GOALS

BOTH WANT TO MAXIMIZE THEIR OWN PROFITS BY INCREASING UNIT SALES.

(Supplier) (Reseller)
Ex: Nike Ex: Foot Locker
Wants supplier to: Wants to:
• Accept lower gross • Achieve higher gross
margins margins per unit
• Hold more inventory • Decrease inventory
• Spend more to • Reduces expenses
support the product • Receive higher
line allowances
• Get by without
allowances
Information Classification: General
 SOURCES OF CONFLICT –
DIFFERING PERCEPTIONS OF REALITY
• DISTINCT PERCEPTIONS OF REALITY INDUCE CONFLICT, BECAUSE THEY IMPLY THE
LIKELIHOOD OF DIVERGENT RESPONSES TO THE SAME SITUATION.

• PERCEPTIONS DIFFER EVEN IN RELATION TO SEEMINGLY BASIC QUESTIONS SUCH AS

• WHAT ARE THE ATTRIBUTES OF THE PRODUCT/SERVICE?
• WHAT APPLICATIONS DOES THE PRODUCT/SERVICE SUPPORT, AND FOR WHICH
SEGMENTS?
• WHO IS THE COMPETITION?

• MISPERCEPTIONS ARE SO COMMON DUE TO FOCUS

• THE SUPPLIER FOCUSES ON ITS PRODUCTS AND ITS PROCESSES
• DOWNSTREAM CHANNEL MEMBERS FOCUS ON ITS FUNCTIONS AND CUSTOMERS

• IN DOMESTIC MARKETS, CHANNEL MEMBERS DISAGREE IN THEIR VIEWS OF THE

SITUATION; IN INTERNATIONAL SETTINGS, CULTURAL DIFFERENCES EXACERBATE THE
PROBLEM

23
Information Classification: General
 INTRACHANNEL COMPETITION

• SUPPLIERS MAY SENSE CONFLICT IF THEIR DOWNSTREAM PARTNERS

REPRESENT THEIR COMPETITORS
• AGENTS AND RESELLERS RELY ON THIS TACTIC TO PROVIDE HIGH
COVERAGE AND LOWER PRICES

• INTRACHANNEL COMPETITION CAN SPARK DISPUTES, ESPECIALLY IF THE

DOWNSTREAM AGENT APPEARS INSUFFICIENTLY DEDICATED TO MEETING ITS
RESPONSIBILITIES TO THE SUPPLIER

• INTRACHANNEL COMPETITION IMPLIES THAT THE SUPPLIER RELIES ON

VARIOUS DIRECT COMPETITORS TO SELL ITS PRODUCTS TO THE MARKET

Information Classification: General

 INTRACHANNEL COMPETITION
EXAMPLE: CISCO
(USA/GLOBAL)
• ~85% OF INTERNET TRAFFIC FLOWS THROUGH CISCO’S SYSTEMS

• CISCO RELIES ON THIRD-PARTY DISTRIBUTORS

• DIRECT SALES MODEL FOCUSES ON ITS 30 LARGEST, ENTERPRISE

CUSTOMERS AND 60,000 DISTRIBUTORS THAT SELL TO SMALLER
BUYERS (WHICH ACCOUNTS FOR 85% OF ITS REVENUES)

• TIER PARTNER PROGRAM - OFFERS EXTENSIVE TRAINING AND

CERTIFICATIONS TO PARTNERS WHO GAIN FAMILIARITY WITH CISCO
PRODUCTS

• CISCO IS ON AN ACQUISITION SPREE

• IT ACQUIRED BROADSOFT TO GAIN A FOOTHOLD IN THE VOICE
MARKETPLACE
• SOME PARTNERS ARE CONCERNED THAT CISCO WILL BEGIN TO
COMPETE DIRECTLY WITH ITS PARTNERS THAT HAVE ALREADY
INVESTED HEAVILY IN THEIR OWN VOICE OFFERINGS

25
Information Classification: General
 OMNI-CHANNELS
• OMNI CHANNEL STRATEGY CAN BE A BREEDING GROUND FOR CONFLICT

• THE USE OF MULTIPLE CHANNELS IS NOW THE NORM

• SUPPLIERS AND CUSTOMERS LIKE MULTIPLE CHANNELS AS THEY CAN EASILY FIND EACH
OTHER AND FULFILL NEEDS USING THE MOST APPROPRIATE CHANNEL.
• SUPPLIERS
• INCREASES MARKET PENETRATION
• BETTER VIEW OF MULTIPLE MARKETS
• RAISING ENTRY BARRIERS TO POTENTIAL CUSTOMERS
• CUSTOMERS
• INCREASES CHANCES OF FINDING A CHANNEL THAT MEETS THEIR CONSUMER
DEMANDS
• CUSTOMERS CAN PIT ONE CHANNEL AGAINST ANOTHER (TO SEEK LOWER
PRICES)

Information Classification: General

 OMNI-CHANNELS (CONTINUED)

• DANGERS OF MULTIPLE CHANNELS

• DOWN STREAM MEMBERS
• DOWNSTREAM MEMBERS MAY LOSE MOTIVATION AND WITHHOLD SUPPORT
(PASSIVE RESPONSE)
• RETALIATE
• EXIT SUPPLIER CHANNEL STRUCTURE (ACTIVE RESPONSE)
• CUSTOMERS
• FREE-RIDING – GAINING SERVICES FROM ONE CHANNEL (AND THEN USING
ANOTHER)
• REDUCTION IN BREADTH AND VIGOR OF MARKET REPRESENTATION

• SUPPLIERS ASSUME THAT ADDING CHANNELS HELPS TO SERVE DISTINCT SEGMENTS

• YET CUSTOMERS CAN MOVE ACROSS CATEGORIES, BEHAVIORS CAN CHANGE OR
OVERLAP

Information Classification: General

 OMNI-CHANNELS - IDEAL
ENVIRONMENTS

Growing markets, which offer opportunities to many players

Markets in which customers perceive the product category as differentiated

(so channel members can distinguish their offerings)

Markets in which buyers’ consistent purchasing style involves one type of

channel (so customers are less likely to seek competing channels)

Markets that are not dominated by buying groups

Information Classification: General

 IDENTIFYING MULTI CHANNEL
CONFLICT

• MULTIPLE CHANNELS DO NOT AUTOMATICALLY COMPETE. DIFFERENT CHANNELS CAN

SERVE DISTINCT SEGMENTS AND PERFORM DIFFERENT TASKS.
• CHANNEL MEMBERS MAY ASSUME THEY ARE SERVING THE SAME CUSTOMERS
• EXAMPLE – COCA COLA
FACED OPPOSITION IN JAPAN AFTER INSTALLING VENDING MACHINES, YET
MARKET RESEARCH REVEALED THAT CONSUMERS USED VENDING MACHINES
ON DIFFERENT OCCASIONS AND OBTAINED DIFFERENT VALUE THAN THEY
WOULD FROM A RETAIL SETTING.
• MULTIPLE CHANNELS CAN BUILD PRIMARY DEMAND FOR THE PRODUCT CATEGORY
• E.G. A STORE AND DIRECT MARKETING OPERATION SUCH AS CATALOGUES AND
WEBSITES
• CUSTOMERS ENCOUNTER BRAND IN BOTH CHANNELS AND CHOOSE WHICH
ONE TO USE

Information Classification: General

 IDENTIFYING MULTI CHANNEL
CONFLICT (CONTINUED)

• MANY COMBINATION SELLERS REPRESENT THE SAME OWNER

• E.G. VICTORIA'S SECRET FOR LINGERIE, LAND’S END FOR CLOTHING
• THESE OWNERS WILL BUNDLE BUSINESS OPERATIONS TO REDUCE CHANNEL CONFLICT SUCH AS A CORPORATE
ACCOUNTANT TO ALLOCATE COSTS OR REVENUES AND A HUMAN RESOURCES MANAGER TO ADMINISTER
COMPENSATION.
• WHEN CHANNELS ARE NOT INDEPENDENT, IT IS NOT AS EASY TO SETTLE DISPUTES
• IDENTIFYING MULTI-CHANNEL CONFLICT REQUIRES A CLEAR RECOGNITION OF THE VARIOUS BENEFITS OF THE MULTIPLE
CHANNELS TO THE SUPPLIER
• BETTER COVERAGE IS AN OBVIOUS BENEFIT
• ONE CHANNEL MIGHT HELP THE SUPPLIER MANAGE ANOTHER
• DUAL DISTRIBUTION (VERTICALLY INTEGRATED AND OUTSOURCED PRACTICE) RARELY CAUSES CONFLICT, BUT
IT CAN BE HARD TO RECOGNIZE
E.G. SERVING INDUSTRIAL CUSTOMERS BY SENDING MANUFACTURER REPRESENTATIVES WHILE RESERVING SOME
CUSTOMERS (HOUSE ACCOUNTS) TO BE SERVED BY CUSTOMER EMPLOYEES
• AMBIGUOUS (PERFORMANCE AMBIGUITY PROBLEM)
• COMPLEX (LOCK-IN PROBLEM)

Information Classification: General

 EXAMPLE:
SAMSUNG/LENOVO/CANON
(INDIA)

• IN INDIA, CONSUMER ELECTRONICS ARE MOSTLY DISTRIBUTED THROUGH BRICK-AND-

MORTAR STORES, WHICH ACCOUNT FOR 80% OF RETAIL SALES VOLUME

• INDIA’S E-COMMERCE GIANTS (SUCH AS FLIPKART, SNAPDEAL, AND AMAZON) ARE

CHALLENGING THESE OFFLINE-STORES BY OFFERING COMPETITIVE PRICING

• SMALLER RETAILERS ARE ATTRACTED TO THE GROWTH OF E-COMMERCE AND ARE

TAKING TO THESE E-COMMERCE CHANNELS TO SELL THEIR PRODUCTS AT A MUCH
LOWER PRICE POINT THAN THEIR OFFLINE STORES

• MANUFACTURERS SUCH AS CANON AND LENOVO SOUGHT TO UNDERCUT ETAILERS

BY OFFERING LONGER WARRANTIES FOR PURCHASES THROUGH TRADITIONAL
“AUTHORIZED “CHANNELS

• MANUFACTURERS MUST EMBRACE THE INEVITABLE GROWTH OF E-COMMERCE

CHANNELS (RATHER THAN TRYING TO QUICKLY BUILD OFFLINE CHANNELS)

31
Information Classification: General
 MANAGING MULTIPLE CHANNELS

SUPPLIERS MUST CONSIDER WHAT RESPONSIBILITY THEY HAVE TO

PROTECT THEIR MULTIPLE CHANNELS FROM ONE ANOTHER (AFTER
IDENTIFYING THE PRESENCE AND THREAT OF A CONFLICT).

• SUPPLIERS MAY ASSUME NO RESPONSIBILITY, TRY TO KEEP CHANNELS FROM

COMPETING (E.G. TERMINATING DISCOURSE), OR DEVISE PRICING SCHEMES
FOR DIFFERENT CHANNELS

• TO DIFFERENTIATE THEMSELVES, SUPPLIERS CAN OFFER MORE SUPPORT,

SERVICE, PRODUCTS, OR EVEN DIFFERENT PRODUCTS

• IF THEY CAN SUPPLY DIFFERENTIATED PRODUCT LINES (FROM THE END-USER

PERSPECTIVE), SUPPLIERS GAIN MORE COOPERATION FROM THEIR MULTIPLE
CHANNELS IN TERMS OF PRICING, STOCKING, AND DISPLAY
• E.G. OFFERING THE “SAME” PRODUCT UNDER DIFFERENT BRAND NAMES TO
DIFFERENT CHANNELS (COMMON IN AUTOMOBILE AND APPLIANCE MARKETS)

Information Classification: General

 MANAGING MULTIPLE CHANNELS
(CONTINUED)
• DIFFERENTIATION THROUGH DIFFERENT BRANDS/PRODUCTS IN DIFFERENT
CHANNELS NO LONGER ENTAILS A MULTI-CHANNEL STRATEGY
• E.G. WHEN THE SUPPLIER SELLS A “FLAGSHIP” SEGMENT OF ITS PRODUCT LINE
THROUGH ONE CHANNEL AND PROVIDES SECONDARY OR PERIPHERAL PRODUCTS IN A
SEPARATE CHANNEL

• SOME CHANNELS DEMAND ACTIVE INTERVENTION

• E.G. DURABLE PRODUCTS ARE DISTINCTIVE IN THAT THEY CAN BE RENTED OR SOLD,
AND THEN RESOLD BY VARIOUS MEMBERS OF THE CHANNEL
IN THE 90’S, US AUTOMAKERS KEPT FACTORIES RUNNING BY SELLING HIGH VOLUMES AT
LOW PRICES TO RENTAL AGENCIES (MANY OF WHICH THEY PARTIALLY OWNED).
THESE AGENCIES STARTED TO RESELL THE CARS AT ATTRACTIVE PRICES, HURTING AUTO
DEALERS THAT EVENTUALLY TOOK TO THE COURT SYSTEM TO ADDRESS THE ISSUE.
CARMAKERS LESSENED THE CONFLICT BY BUYING BACK THESE GENTLY USED CARS AND
RESELLING TO DEALERS, ALLOWING THEM TO MAINTAIN PRODUCTION VOLUME AND
PREVENT A WAR BETWEEN THESE TWO CHANNELS, BUT AT THE DETRIMENT OF THE
CHANNELS AND THE SUPPLIERS THEMSELVES

Information Classification: General

 UNWANTED CHANNELS: GRAY
MARKETS
ONE OF THE MOST PRESSING ISSUES FOR CHANNEL MANAGERS, ESPECIALLY
IN GLOBAL MARKETS, IS THE EXISTENCE AND PERSISTENCE OF GRAY
MARKETS

• GRAY MARKETING IS THE SALE OF AUTHORIZED, BRANDED PRODUCTS

THROUGH UNAUTHORIZED CHANNELS
• NOT TO BE MISTAKEN WITH BLACK MARKETING OR COUNTERFEITING
• GRAY MARKETS ARE TYPICALLY LEGAL IN MOST SITUATIONS

• COUNTERFEITING REFERS TO THE SELLING OF FAKE GOODS/KNOCK-OFFS,

WHICH IS ILLEGAL AROUND MOST PARTS OF THE WORLD

• THE USUAL SUPPLIERS FOR GRAY MARKETS ARE AS FOLLOWS:

1. AUTHORIZED DISTRIBUTORS AND DEALERS (OFTEN FROM OTHER MARKETS)
2. PROFESSIONAL ARBITRAGERS, INCLUDING IMPORT/EXPORT HOUSES
3. PROFESSIONAL TRADERS, MANY OF WHOM LIVE NEAR MARKET BORDERS AND
TRANSPORT LOWER PRICED GOODS TO SELL IN A HIGHER PRICED MARKET

Information Classification: General

 GRAY MARKETS – EXAMPLE:
COSTCO (USA/GLOBAL)
Costco offers its consumers a great place to obtain deals
on designer clothing and goods, but it obtains many of
these products through gray marketing, prompting some
manufacturers to bring suit against this.
• Costco obtained Omega Seamaster watches from an
authorized Omega distributor in Europe to resell in the
US, buying the watches at a much lower price than sold
by US Omega retailers.
• After some legal setbacks brought by Omega, Costco
eventually prevailed in the case based on the doctrine
that a firm can resell anything acquired legally.
• Yakima has expressed frustration with Costco for selling
gray market items in its stores, but the justification by
the retailer remains the same.

Information Classification: General

 RIPE ENVIRONMENTS FOR GRAY
MARKETS
• DIFFERENTIAL PRICING TO DIFFERENT CHANNEL MEMBERS
• ONE CHANNEL OVER-ORDERS TO GET A DISCOUNT, THEN SELLS OFF THE EXCESS TO
UNAUTHORIZED CHANNELS AT A NON-DISCOUNTED PRICE
• DIFFERENT PRICES CHARGED IN SEPARATE GEOGRAPHIC MARKETS, WHETHER
BECAUSE OF TAXATION, EXCHANGE RATE DIFFERENCES, OR VARYING PRICE
SENSITIVITIES

• WHEN DOMESTIC PRODUCTS ARE SOLD THROUGH HIGH-SERVICE, HIGH-PRICE

CHANNELS IT CAN ENCOURAGE GRAY-MARKETED GOOD THROUGH DISCOUNT
RETAILERS

• ECONOMIC FUNDAMENTALS - THE DEVELOPMENT OF EMERGING MARKETS

AND WORLDWIDE LIBERALIZATION OF TRADE
• CREATES INCENTIVES FOR FIRMS TO CAPITALIZE ON BRAND EQUITY AND VOLUME
POTENTIAL BY OFFERING SIMILAR PRODUCTS ACROSS COUNTRIES

• THE MOMENT PRICE DIFFERENCES ARISE BETWEEN TERRITORIES, SUBSTANTIAL

GAINS BECOME AVAILABLE THROUGH ARBITRAGE (BUYING/SELLING OF ASSETS)

Information Classification: General

 PLAYERS IN THE GRAY
MARKET
• due to low prices, they gain the most value from a wide
Purchasers availability of gray goods, but others members of the channel
may suffer from them

• complain that gray goods impair their ability to charge

Producers varying prices across markets

• brand equity suffers if service levels at gray market retailers
are lower

Authorized • Gray markets erode potential volume for authorized dealers

and places severe pressure on after-sales service functions
dealers

37
Information Classification: General
 MANUFACTURERS IN GRAY
MARKETS
• DESPITE MANUFACTURERS’ LEGAL RECOURSE TO LIMIT THE PROLIFERATION OF GRAY
GOODS, THEY RARELY DO SO, ESPECIALLY WHEN:
• VIOLATIONS ARE DIFFICULT TO DETECT OR DOCUMENT (E.G., IN DISTANT MARKETS,
WHEN CUSTOMERS ARE GEOGRAPHICALLY DISPERSED)
• THE POTENTIAL FOR ONE CHANNEL TO FREE RIDE ON ANOTHER IS LOW ANYWAY
(E.G. RESELLERS PROVIDE LITTLE SERVICE OR CHARGE SEPARATELY FOR SERVICES
RENDERED).
• THE PRODUCT IS MORE MATURE
• THE DISTRIBUTOR SUPPLYING THE GRAY MARKET DOES NOT CARRY COMPETING
BRANDS IN THE FOCAL PRODUCT CATEGORY

• MANUFACTURERS OFTEN LOOK THE OTHER WAY

• SEEKING ENFORCEMENT COMES WITH HIGH COSTS AND LOW BENEFITS

• SOME MAY HAVE POSITIVE DISPOSITIONS TOWARDS GRAY MARKETS

• INCREASES THEIR MARKET COVERAGE (THEY CAN SERVE TWO SEGMENTS)
• PUTS PRESSURE ON AUTHORIZED DEALERS TO WORK HARDER

Information Classification: General

 BALANCED
RELATIONSHIPS
• IN A BALANCED RELATIONSHIP, EACH SIDE TENDS TO BE DIFFERENTIATED AND HAS
MANY ALTERNATIVES TO THE CURRENT CHANNEL PARTNER. THUS, UPSTREAM AND
DOWNSTREAM CHANNEL MEMBERS ARE BOTH POWERFUL (BALANCED POWER), SO
THEY TEND TO BE INTOLERANT OF COERCIVE TACTICS. (E.G. INDUSTRIAL MARKETING
CHANNELS IN DEVELOPED ECONOMIES)

• ACTIONS THAT TRIGGER CONFLICT IN BALANCED RELATIONSHIPS MIGHT INCLUDE:

• ADDING A MASS MERCHANDISER
• ADDING A NEW DEALER TO THE EXISTING DEALERS TERRITORY
• WITHDRAWING A PRODUCT LINE
• IMPOSING AN OUTSIDE CREDIT AGENCY TO APPROVE THE DEALER’S CREDIT APPLICATIONS

• DEALERS MAY REACT TO SUCH DESTRUCTIVE ACTIONS BY:

• PASSIVE ACCEPTANCE (SAYING OR DOING VERY LITTLE IN RESPONSE)
• VENTING BY COMPLAINING VIGOROUSLY WITHOUT TAKING ACTION
• NEGLECTING THE SUPPLIER BY RELEGATING THE LINE A LOWER PRIORITY AND CUTTING
BACK ON RESOURCES
•
•
39
THREATENING TO STOP SELLING THE LINE (EVEN IF IT MEANS CLOSING THE BUSINESS)
ENGAGING THE SUPPLIER IN CONSTRUCTIVE DISCUSSION TO TRY TO WORK THINGS OUT
AND IMPROVE THE SITUATION
Information Classification: General
 AGGRAVATING THE EFFECTS OF
CONFLICTS
PERCEIVED UNFAIRNESS EXERTS THE GREATEST NEGATIVE IMPACT
ON CHANNEL MEMBER COOPERATION AND FLEXIBILITY.
WHEN CHANNEL MEMBERS PERCEIVE GREATER UNFAIRNESS, THEY
OFTEN ATTRIBUTE NEGATIVE MOTIVES TO THE SELLER

HOW DO CHANNEL MEMBERS COPE WITH CONFLICT?

• TRY TO KEEP CONFLICT FROM ESCALATING INTO A DYSFUNCTIONAL
ZONE BY DEVELOPING INSTITUTIONALIZED MECHANISMS (E.G.
ARBITRATION BOARDS, NORMS OF BEHAVIOR) TO DIFFUSE DISPUTES
BEFORE THEY HARDEN INTO HOSTILE ATTITUDES
• ADOPT PATTERNS OF BEHAVIOR FOR RESOLVING CONFLICTS AFTER
THEY MANIFEST

Information Classification: General

 CONFLICT RESOLUTION
STRATEGIES

KEY IDEAS:
FORESTALLING CONFLICT THROUGH
INSTITUTIONALIZATION

• INFORMATION- INTENSIVE MECHANISMS

• THIRD-PARTY MECHANISMS

• BUILDING RELATIONAL NORMS

• USING INCENTIVES TO RESOLVE

CONFLICTS

Information Classification: General

 FORESTALLING CONFLICT THROUGH
INSTITUTIONALIZATION
POLICIES BECOME INSTITUTIONALIZED WHEN CHANNEL
MEMBERS INSTITUTE POLICIES TO ADDRESS CONFLICTS IN
EARLY STAGES, OR EVEN BEFORE IT ARISES
• E.G. JOINT MEMBERSHIPS IN TRADE ASSOCIATIONS, DISTRIBUTOR
COUNCILS, EXCHANGE-OF-PERSONNEL PROGRAMS
• SOME CHANNELS RELY ON BUILT-IN APPEALS TO THIRD PARTIES
SUCH AS BOARDS OF ARBITRATION OR MEDIATION (AS IS
PARTICULARLY POPULAR IN EUROPE)
• THESE CHANNELS SERVE SUBTLE CONFLICT MANAGEMENT
FUNCTIONS

Information Classification: General

 FOUR APPROACHES TO CONFLICT
RESOLUTION

Information Classification: General

 THE FOUR APPROACHES

• INFORMATION-INTENSIVE MECHANISMS

• THIRD-PARTY MECHANISMS

• BUILDING RELATIONAL NORMS

• USING INCENTIVES

44

Information Classification: General

 1. INFORMATION-INTENSIVE
MECHANISMS
HEADS OFF CONFLICT BY CREATING A BETTER MEANS TO SHARE INFORMATION
CAN BE RISKY AND EXPENSIVE SINCE BOTH SIDES DIVULGE SENSITIVE INFORMATION
AND MUST DEVOTE RESOURCES TO COMMUNICATING
TRUST AND COOPERATION HELP TO MAKE CONFLICT MANAGEABLE

JOINT MEMBERSHIP IN TRADE ASSOCIATIONS ALLOWS MEMBERS TO

CONTAIN CONFLICT THROUGH AN INSTITUTIONALIZED APPROACH
E.G. A COMMITTEE FOUNDED BY THE GROCERY MANUFACTURERS OF AMERICAN AND
THE FOOD MARKETING INSTITUTE DEVELOPED THE UNIVERSAL PRODUCT CODE

PERSONNEL EXCHANGES AS AN INSTITUTIONAL VEHICLE SEEK TO TURN

CHANNEL MEMBERS’ FOCUS TOWARD DEVISING SOLUTIONS RATHER THAN
ENGAGING IN CONFLICT
E.G. WALMART AND PROCTER AND GAMBLE’S CLOSE CONNECTIONS ARE FACILITATED
THEIR PERSONNEL EXCHANGES, WHICH REQUIRE CLEAR GUIDELINES. PARTICIPANTS
HAVE THE OPPORTUNITY TO MEET WITH CHANNEL COUNTERPARTS WITH SIMILAR TASKS
RESPONSIBILITIES, PROFESSIONS, AND INTERESTS

Information Classification: General

 2. THIRD PARTY
MECHANISMS
MEDIATION AND ARBITRATION, THE MOST WIDELY USED THIRD-PARTY MECHANISM,
INTRODUCE THIRD PARTIES THAT ARE NOT INVOLVED IN THE CHANNEL

• MEDIATION IS THE PROCESS WHEREBY A THIRD PARTY ATTEMPTS TO SETTLE A

DISPUTE BY PERSUADING THE PARTIES TO CONTINUE THEIR NEGOTIATIONS OR
CONSIDER THE MEDIATOR’S PROCEDURAL OR SUBSTANTIVE RECOMMENDATIONS
• NEITHER PARTY IS OBLIGED TO ACCEPT THE RECOMMENDATIONS

• ARBITRATION ALLOWS THE THIRD PARTY TO MAKE THE DECISION, AND BOTH PARTIES
STATE IN ADVANCE THAT THEY WILL HONOR THE FINAL AND BINDING DECISION.
• IN COMPULSORY ARBITRATION, THE PARTIES ARE REQUIRED BY LAW TO SUBMIT THEIR
DISPUTE TO A THIRD PARTY
• IN VOLUNTARY ARBITRATION, THE PARTIES VOLUNTARILY SUBMIT THEIR DISPUTE, SUCH
THAT RENEGING ON THE DECISION REPRESENTS A MAJOR BREACH OF CONFIDENCE
• ARBITRATION OFFERS ALL THE BENEFITS OF MEDIATION, PLUS THE ADVANTAGE THAT
DISPUTANTS CAN BLAME THE ARBITRATOR IS THEIR CONSTITUENTS OBJECT TO THE
SETTLEMENT

• SOME FIRMS PRACTICE SEQUENCES OF MEDIATION AND ARBITRATION

Information Classification: General

 2. THIRD PARTY MECHANISMS
(CONTINUED)
• MEMBERS WHO USE A SEQUENCE OF MEDIATION-ARBITRATION AGREE
UPFRONT THAT IF THE MEDIATOR CANNOT SETTLE THE DISPUTE, IT WILL
PASS TO AN ARBITRATOR – USUALLY HE SAME PERSON WHO SERVED AS A
MEDIATOR

• IN AN ARBITRATION-MEDIATION SEQUENCE, THE ARBITRATOR INSTEAD

PLACES THEIR SECRET DECISION IN A SEALED ENVELOPE, AND THEN THE
ISSUE PASSES ONTO MEDIATION. IF THE PARTIES CANNOT AGREE, THEY
OPEN THE ENVELOPE, THEY OPEN THE ENVELOPE AND ABIDE BY THAT
DECISION.

• INSTITUTIONALIZING THE PRACTICE OF TAKING DISPUTES TO THIRD

PARTIES CAN ALSO FORESTALL CONFLICT BECAUSE CHANNEL MEMBERS
WORK TO SETTLE THEIR DISPUTES INTERNALLY AS THEY FACE THE
PROSPECT OF OUTSIDE INTERVENTION.
• THE THIRD PARTY SERVES AS A SAFETY NET FOR DEALING WITH CONFLICT
AFTER IT CLIMBS TOO HIGH

Information Classification: General

 3. BUILDING RELATIONAL NORMS

RELATIONAL NORMS THESE PRECEDING MECHANISMS ARE POLICIES THAT

CAN BE PROACTIVELY DEVISED, CONSCIOUSLY PUT INTO PLACE, AND
CONTINUALLY MAINTAINED BY MANAGEMENT TO FORESTALL CONFLICT OR
ADDRESS IT ONCE IT OCCUR.
IN A CHANNEL, NORMS ENTAIL EXPECTATIONS ABOUT BEHAVIOR, SHARED BY
ALL MEMBERS. IN ALLIANCE CHANNELS, COMMON NORMS INCLUDE:
• FLEXIBILITY: CHANNEL MEMBERS EXPECT EACH OTHER TO ADAPT READILY TO
CHANGING CIRCUMSTANCES, WITH A MINIMUM OF OBSTRUCTION AND
NEGOTIATION.
• INFORMATION EXCHANGE: CHANNEL MEMBERS SHARE ALL PERTINENT
INFORMATION – NO MATTER HOW SENSITIVE – FREELY, FREQUENTLY, QUICKLY,
AND THOROUGHLY.
• SOLIDARITY: EVERYONE WORKS FOR MUTUAL, NOT JUST ONE-SIDED, BENEFITS.
Management can’t just decide one day to create relational
norms. Norms emerge from the daily interactions of the people
48 channel.
who constitute the marketing

Information Classification: General

 4. USING INCENTIVES
ECONOMIC INCENTIVES WORK WELL, ALMOST UNIVERSALLY, REGARDLESS OF
THEIR PERSONALITIES, PLAYERS, OR HISTORY OF THE RELATIONSHIP.
• APPEALING TO ECONOMIC SELF-INTEREST IS A HIGHLY EFFECTIVE WAY TO SETTLE
DISPUTES
• GOOD NEGOTIATORS BASE THEIR ARGUMENTS ON ECONOMICS, THEN COMBINE
THEM WITH A STRONG PROGRAM OF COMMUNICATIONS IN A GOOD
INTERPERSONAL WORKING RELATIONSHIP
• E.G. MANUFACTURER-SPONSORED PROMOTIONS AIMED AT RETAILERS
MANUFACTURERS ACCUSE RETAILERS OF TAKING PROMOTION MONEY (FOR POINT-
OF-PURCHASE ADVERTISING AND DISPLAYS FOR IN-STORE USE) AND NOT MOUNTING
IT. RETAILED ACCUSE MANUFACTURERS FOR NOT FULFILLING PROMISED SHARES OF
PROMOTION ALLOWANCE.
THIS CAN BE RESOLVED IF THE MANUFACTURER COMBINES APPEALING ECONOMIC
INCENTIVES THAT ENCOURAGE PARTICIPATION IN A PAY-FOR-PERFORMANCE SYSTEM
THAT PAYS THE RETAILER FOR THE ITEMS SOLD ON PROMOTION.

Information Classification: General

 4. USING INCENTIVES
(CONTINUED)
TO FUNCTION EFFECTIVELY, ECONOMIC INCENTIVES MUST DO MORE THAN
OFFER A BETTER PRICE OR HIGHER ALLOWANCE, OPTIONS THAT ARE
VISIBLE AND EASY FOR COMPETITORS TO MATCH. PERSUASIVE ECONOMIC
ARGUMENTS FEATURE A PORTFOLIO OF ELEMENTS THAT COLLECTIVELY
CREATE POSITIVE RETURNS FOR A CHANNEL PARTNER.
FOR EXAMPLE, INDEPENDENT SALES AGENCIES STRONGLY APPRECIATE A
PRODUCT THAT CAN GENERATE PROFITS BY:
• COMPENSATING FOR LOWER VOLUME SALES WITH A HIGHER COMMISSION
RATE, OR VICE VERSA.
• OVERCOMING LOWER COMMISSION RATES BY BEING EASIER TO SELL, SUCH
THAT IT DEMANDS LESS SALES TIME (I.E. CUT COSTS).
• ESTABLISHING THE SALES AGENT IN A GROWING PRODUCT CATEGORY, TO
CONTRIBUTE TO FUTURE PROFITS.
• INCREASING OVERALL SALES SYNERGY AND SPURRING SALES OF OTHER
PRODUCTS IN THE AGENT’S PORTFOLIO.
Independent agencies respond to indirect, risk-oriented
arguments. A principal should try50
to convince its agents that
sales of products are not unpredictable but rather can be
accurately forecasted.
Information Classification: General
 APPROACHES TO CONFLICT MANAGEMENT
AND RESOLUTION: OMNI-CHANNEL VS.
MULTI-CHANNEL
BECAUSE THE DISTINCT ENTITIES IN AN OMNI-CHANNEL TRY TO COORDINATE
THEIR ACTIVITIES TO DELIVER A SEAMLESS EXPERIENCE TO THE END USER,
CONFLICT IS INEVITABLE. MUCH OF THIS CONFLICT IS LIKELY TO BE FUNCTIONAL.
INTERDEPENDENCE AND COMMITMENT ARE GREATER SINCE COORDINATION AND
TEAMWORK IS NECESSARY FOR A SEAMLESS EXPERIENCE

IN CONTRAST, CONFLICT IN MULTI-CHANNEL SETTINGS MAY BE MORE

DYSFUNCTIONAL; THESE PARTIES ARE CONCERNED ABOUT CANNIBALIZATION AND
CONFRONT FRUSTRATED END-USERS, CONFUSED BY THE SEPARATE OFFERINGS IN
THE VARIOUS CHANNELS (E.G. PROMOTIONS OFFERED IN ONE CHANNEL AND NOT
THE OTHER).
INTERDEPENDENCE AND COMMITMENT DIMINISH BECAUSE PARTIES HAVE LITTLE
MOTIVE TO SYNCHRONIZE THEIR OFFERINGS
EXPECT LESS FUNCTIONAL CONFLICT AND KNOWLEDGE SHARING – DESTRUCTIVE
CONFLICT IS LIKELY

FIGURE 5.3. COMPARES THIS RELATIONAL LANDSCAPE.

Information Classification: General

 Interdependence

Decreases
Increases

Omni- Multi-
Channel Channel

Increases Decreases

Commitment

Increases Decreases

Function
al
Conflict

Figure 5.3 The Relational Landscape in Omni-Channel Versus Multi-Channel Settings

Information Classification: General

 TAKEAWAYS

• A GOOD WAY TO ASSESS THE TRUE DEGREE OF

CONFLICT IS TO INDEX, FOR EACH RELEVANT ISSUE, THE
• FREQUENCY OF DISAGREEMENT
• INTENSITY OF DISAGREEMENT
• IMPORTANCE OF THE ISSUE
IF ANY ELEMENT IS LOW, THE ISSUE IS NOT A REAL SOURCE
OF CONFLICT.

Information Classification: General

 TAKEAWAYS

• CONFLICT IS INEVITABLE IN MARKETING CHANNELS

BECAUSE OF THEIR
• BUILT IN VIEWPOINTS AND GOAL DIFFERENCES
• PERCEPTUAL VARIATIONS, WHICH ARISE BECAUSE CHANNEL
MEMBERS SEE DIFFERENT PIECES OF THE CHANNEL
ENVIRONMENT
• CLASHES OVER DOMAINS (ROLES, RESPONSIBILITIES,
TERRITORIES)

Information Classification: General

 TAKEAWAYS

• DOMAIN CONFLICT IS ESPECIALLY PROMINENT IN MULTI-

CHANNEL SITUATIONS, WHICH DEMAND CREATIVE
SOLUTIONS, SUCH AS COMMUNICATION, CONCESSION,
COMPENSATION, WIN-WIN APPROACHES, PRODUCT
DIFFERENTIATION, OR ACCEPTANCE.

• GRAY MARKETS ARE GROWING RAPIDLY, BECAUSE BOTH

UPSTREAM AND DOWNSTREAM CHANNEL MEMBERS
HAVE REASONS TO PERMIT THEM, REGARDLESS OF
THEIR COMPLAINTS.

Information Classification: General

 TAKEAWAYS

• INSTITUTIONALIZED MECHANISMS TO CONTAIN CONFLICT

EARLY INCLUDE INFORMATION-INTENSIVE STRATEGIES AND
THE USE OF THIRD PARTIES.

• CONFLICT ALSO CAN BE RESOLVED THROUGH ECONOMIC

INCENTIVES, WHICH SHOULD BE LESS VISIBLE, COMBINE
WITH GOOD COMMUNICATION, AND ENCOURAGE CHANNEL
MEMBERS TO MAKE SOME INVESTMENT

• CONFLICT CAN BE MORE FUNCTIONAL IN OMNI-CHANNEL

SITUATIONS

Information Classification: General