Responsibilities That Suppliers Play to Manage Conflict between Multiple Channels - Assignment Example

Responsibilities that suppliers play to manage conflict between multiple channels The internet has revolutionized the way people all over the globe perceive trade, communication, security, education and entertainment. People can perform a number of business activities like travel planning, banking, interior design from anywhere, at any time from the comfort of their offices or homes. The concept that describes the process of buying and selling through computer networks including the internet is referred to as the electronic commerce; e-commerce. The emergence of electronic commerce has resulted in new business models that proffer marketers with opportunities such as access to diverse markets and reduced business expenses. E-commerce also comes with a bunch of challenges such as channel conflict in many businesses to date (Webb 96). The manner in which a business manages the aforesaid channel conflict is a pertinent aspect in its success. A marketing channel is a set of mutually dependent firms engaged delivering a product or service. Multiple channels arise when a company employs separate channels to sell the same products to markets differing in some important way. A multichannel conflict occurs when the producer/ manufacturer have established two or more different channels to sell the product to the same target market. For illustration, a motor company may have its own retail showroom, authorized dealers, and also sells online. Sometimes, the middlemen come in conflict with the manufacturer, employing both direct and indirect channels of distribution. Such a conflict is known as the multichannel level conflict. A conflict may arise when a producer’s franchise prices its products lower than the middlemen, wholesaler or dealer. Conflicts can also arise when a producer sells a larger range of products through its own outlet than through the wholesaler or retailers (Webb 98). This discussion explores the role that suppliers play in managing conflicts between multiple channels. Suppliers can employ the marketing mix variables to manage multichannel conflict. Pricing Price is one of the prominent factor in which the most channel conflict is generated. Intermediaries closely watch what manufacturers or producers do through the online channel of distribution. Intermediaries express concerns regarding producers’ site and interpret it as a move to lessen their role with the customer. As a result, suppliers have started acknowledging that their channel partners will see and react to everything they put on the internet. In order to reduce conflicts, suppliers have chosen not to place and offer discounts on the internet in a bid to reduce price related conflicts (Brennan, Canning, and McDowell, 316). Distribution An internet channel of distribution has a key limitation in that it does not have the ability to offer physical delivery of tangible products. Suppliers work in conjunction with other channel partners to carry out the fulfillment role of orders placed on the internet. For illustration, HP employs this aspect of involving channel partners to drive its online sales efforts. By involving other channel partners in the sale serves to manage and avoid cannibalization the channel. In addition, by involving channel partners, suppliers build trust and cooperation between the intermediaries and prevent unwarranted channel conflicts (Webb, 100). Promotion Promotion entails persuading customers to purchase a product. An internet channel of distribution gives suppliers a favorable opportunity to promote their product offering directly to the end users. However, in order to avoid conflicts with other channels of distribution, suppliers are cautious on providing detailed product information along with search engines (Saxena 463). However, they choose not to accept orders online. Moreover, suppliers actively promote their channel partners on their websites, as well as permitting them to place their own adverts. Product Suppliers also manage their online product offering in a bid to lessen channel conflict. Some producers are conciliating their intermediaries by reducing their product offering on the internet to products not sold by their conventional channels (Saxena 461). Other manufacturers centre on consumer needs of the customers that prefer to buy through the electronic channel. In order to reduce channel conflict, suppliers employ creative ways of differentiating their online offering from those traded by their channel partners. Additionally, suppliers can use a distinct brand name for products sold through the internet. This reduces the probability of direct comparisons by consumers. Suppliers can also minimize channel conflict by selling products with growing demand via the internet, and leave products that have reached maturity and decline stages to other channels. Communication and coordination Communication and coordination are the core mechanisms through which suppliers can influence the level of channel conflict they encounter both internally and externally. Internal conflicts may arise among the departments responsible for managing various channels. Suppliers can manage the causes of channel conflict through proper coordination of distribution activities in the channels and within the firm. The key causes of conflict in a multiple channel of distribution include but not limited to goal incompatibility, differing perception of reality and domain (Kazmi 461). Distribution activities call for properly coordinated and effective internal and external communication strategies. Channels functions have to be coordinated for the distribution channel to offer utilities of time, place, form and possession. Channel coordination is the synchronization of activities and flows by channel components. Proper communications between a supplier personnel and internal marketing units plays a pertinent role in the channel coordination process. Producers need to communicate their online channel strategies to their channel partners. Suppliers take time to visibly explain their electronic commerce strategies in advance rather than introducing new channels under secrecy (Webb 100). This helps to eliminate probable conflicts as communication helps resellers to comprehend target segments and how supplier’s efforts can aid them rather than hurt them. Companies can avoid multiple channel conflicts by partitioning markets between the several agents based on geographic area, customer size, industry, or product group. In order for partitioning to be successful, channel members must agree on the basis for the partition and carry out business in accordance to their individual allocation. Suppliers can also minimize channel conflict by taking control of the channel relationship (Brennan, Canning, and McDowell 317). The above discussion focuses on how suppliers in an online channel of distribution can help in managing channel conflicts. Nevertheless, there are managerial implications of the same. The internet is despoiling traditional channels of distribution that entail physical handling of products from the time of production to the time of use. The implication is that creating online retailing system may push away traditional retailers, eventually hurting sales. Thus, suppliers should not underestimate the significance and the role played by conventional resellers as they embrace electronic marketing in this digital age era. Works Cited Brennan, Ross, Canning, Louise and McDowell, Raymond. Business-to-Business Marketing. NY: SAGE, 2010. Print. Webb, Kevin. Managing channels of distribution in the age of electronic commerce. Industrial marketing management 31(2002) 95-102. Print. Saxena, Rajan. Marketing Management 4E. London: Tata McGraw-Hill Education, 2010. Print. Kazmi, S HH. Marketing Management Kazmi. New Delhi: Excel Books India. Read More