Behavioral Processes in Marketing Channels

Marketing Channels are not just economic systems

Marketing Channels are also Social Systems

Therefore, the same behavioral processes existing in all Social systems also exist in Marketing Channels

Behavioral Processes in Marketing Channels

The behavioral processes of most relevance to marketing channels are:

Conflict

Power

Role

Communications “noise”

Channel Conflict Is...

When one Party perceives the behavior of another party in the social system to be impeding the attainment of its goals, a state of conflict exists.

Channel ConflictsConflict is generated when actions of any channel member come in the way of the system achieving its objectives.

Three broad categories of channel conflict are:Goal conflict – understanding of objectives by

various channel members is different.Domain conflict – understand responsibilities and

authority differently.Perception conflict – reading of the market place is

different and proposed actions vary.

Conflicts Result From…

Each channel member wanting to pursue his own goals.Each wants to retain his independence.There are limited resources which all of them want to utilize in achieving their goals.Features of conflicts:Initially latent and does not affect the workingIs not normally possible to detect till it becomes

disruptive

Conflict Compared to Competition

Competition Object centered Indirect Impersonal

Conflict ≠ Competition

Conflict > Competition

ConflictDirect

Personal

Opponent centered

Four Stages of conflict

LATENT

MANIFEST

FELT

PERCEIVED

Each stage is progressively more severe than the earlier one.

Stages of ConflictsLatent Conflict:Some amount of discord exists but does not affect the

working or delivery of customer service objectives.Disagreement could be on roles, expectations,

perceptions, communication.

Perceived Conflict:Discords become noticeable – channel partners are

aware of the opposition.Channel members take the situation in their stride and

go about their normal business.No cause for worry but the opposition has to be

recognized.

Stages of ConflictsFelt Conflict:Reaching the stage of worry, concern and

alarm. Also known as ‘affective’ conflict.Parties are trying to outsmart each other.Causes could be economical or personal.Needs to be managed effectively and not

allowed to escalate.

Manifest Conflict:Reflects open antagonistic behaviour of

channel partners. Confrontation results.Initiatives taken are openly opposed

affecting the performance of the channel system.

May require outside intervention to resolve.

Causes of Channel Conflict

Resource Securities Role Incongruities Perceptual Differences Expectational Differences Decision Damping Disagreements Goal Incompatibilities Communicational Difficulties

Vertical Channel Conflict

Horizontal Channel Conflict

Multi channel Conflict

Types of Channel Conflict

Vertical Channel Conflict

Horizontal Channel Conflict:-

Multi Channel Conflict:-

Example:-Online Store Like e-bay

Example:-Exclusive Company Outlet

Effects of Channel Conflict

Positive Effect

Multiple Effects Over Different Ranges

Negative Effect

Managing Channel Conflict Designing the channel structure

Establishing mutually agreeable and aligned business goals

Effective communication

Segment customers

Encourage specialization

Clearly define channel roles and responsibilities

Managing Channel Conflict

Develop specific channel productsChecking behavioral performance

Resolving Conflicts

Understanding nature and intensity

Strategy and plan of action for resolution

Understand the impact of the conflict

Tracing the source of the conflict

A 4 Stage Process

Conflict Resolution Styles

Avoidance

Aggression

Accommodation

Compromise

Collaboration

Least effort and results

Maximum effort and Best results

Styles are a combinationof assertiveness and

co-operation.

Avoidance

Used by weak channel members.

Problem is postponed or discussion avoided.

Relationships are not of much importance.

As there is no serious effort on getting anything done, conflict is avoided.

Aggression

Also known as a competitive or selfish style.

It means being concerned about one’s own goals without any thought for the others.

The dominating channel partner (may be the principal) dictates terms to the others. Long term could be detrimental to the system.

Accommodation

A situation of complete surrender.

One party helps the other achieve its goals without being worried about its own goals.

Emphasis is on full co-operation and flexibility in approach. May generate matching feelings in the receiver.

If not handled properly, can result in exploitation.

Compromise

Obviously both sides have to give up something to meet mid way.

Can only work with small and not so serious conflicts.

Used often in the earlier two stages.

CollaborationAlso known as a problem solving approach.

Tries to maximize the benefit to both parties while solving the dispute.

Most ideal style of conflict resolution – a win-win approach.

Requires a lot of time and effort to succeed.

Sensitive information may have to be shared.

Power in Marketing Channels

Power Defined:The capacity of one channel member to get another channel member to do

something that he otherwise would not have done.

Role in Marketing Channels

Set Prescriptions defining what the behavior of a position

member should be.

Role Defined:

Communication in Marketing Channels

Flow of information that enables channel members to send and receive messages

Communication Defined: