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Channel Effects + Managing Relationships in the Channel (Conflict…
Channel Effects + Managing Relationships in the Channel
Channel Effects
Disintermediation
The reduction in the number/strength of intermediaries needed in a marketing channel
EXAMPLE:
Investing directly in the securities market rather than through a bank
Reintermediation
The introduction of additional intermediaries into the distribution channel
EXAMPLE:
Comparison Sites
Farm info for the customer + make it relevant for them
Big increase recently: the internet encourages reintermediation [Anderson + Anderson 2002] + new roles have developed through e-commerce for new/existing intermediaries E.g eBay [Laffey + Gandy 2009]
Imitation Channels
Copies/Fakes of products
Ppl are aware that knock-offs are available + there's a huge market for it
Luxury brands have the dilemma of whether to go after the counterfeits making these fake goods - they usually don't
It's a strong aspirational behaviour to want luxury items - helps them build awareness/advertise for when ppl can afford the proper product
Usually local governments that tackle counterfeiters bc they aren't paying any sales tax
Channel Integration
Refers to strategies aimed at consolidating - either physically or logically - customer info + its use to provide an all-encompassing view of the customer
Channel Conflict
Occurs when one channel member perceives another channel member to be acting in a way that prevents the first member from achieving its channel goals
Bc channels are
open social systems,
some level of conflict between channel members is inevitable [Katz + Kahn 1978]
3 Types:
Horizontal conflict, Vertical conflict + Multichannel conflict
Horizontal Conflict
Conflict involves intermediaries on the
same level of the same type
, E.g Between ASDA + Tesco
Conflict involves
intermediaries on the same level
E.g Between a high street fashion retailer like Miss Selfridge, + a large department store like M+S
Causes of this can be channel members impinging on the market territory of other intermediaries on the same level
Vertical Conflict
Conflict occurs between
members on different levels,
e.g a producer, a wholesaler+ a retailer
Most frequently happens between producer + wholesaler/retailer, E.g Sainsbury's + Unilever
Can be due to: Intense price competition; Cost of services rendered; Disagreement about promotion activities; Tough economic times; Differing policies; Allocation of slotting allowances for premium shelf space; Differing expectations about channel/intermediary performance
Multichannel Conflict
Occurs when 2 or more channels owned by a single manufacturer compete against each other when selling to the same market
Can be in the form of Online vs. Offline: physical + virtual can potentially clash
E.g Might try something on in a shop but then buy it online
EXAMPLE:
Mothercare had the issue of being able to sell products online but not in-store
Can be due to
Grey Marketing:
the distribution of branded goods to unauthorised dealers [Harris 2009]
Unauthorised sale of new branded products diverted from authorised distribution channels or imported into the country for sale w/out the manufacturers knowledge
Often accompanied by a cut in prices
EXAMPLE:
Tesco got in trouble w/ trade regulations when they tried to sell Levi's branded jeans it had purchased through an unauthorised supplier
Conflict Resolution Strategies
Cooperation:
Mutual reconciliation through cooperation
Compromise:
Meet the requirements of others half-way
Avoidance:
Removal from the point of conflict
Argument:
A considered attempt to convince others of the correctness of your position
Accomodation:
Modify expectations to encorporate requirements of others
Instrumentality:
Agree minimal requirements to secure short-term agreement
Self-seeking:
Seek agreement on own terms or refuse further cooperation
Types of Integration
Vertical Integration:
an arrangement in which the supply chain of a company is owned by that company. Usually each member of the supply chain produces a different product or [market-specific] service, + the products combine to satisfy a common need
Horizontal Integration:
A company takes over another that operates at the same level of the value chain in the industry
Forward Integration:
A business strategy that involves a form of vertical integration whereby business activities are expanded to include control of the direct distribution/supply of a company's products
Backward Integration:
The process in which a company purchases or internally produces segments of its supply chain