7.12 : Power and Conflicts in Channels

Power and conflicts within channels refer to the dynamics and struggles among manufacturers, wholesalers, retailers, and distributors.

Power manifests when one channel member influences and controls another, such as manufacturers controlling the supply, impacting pricing and promotions, or large retailers leveraging their extensive reach to negotiate terms and exclusive deals.

Channel conflicts arise from disagreements among members fueled by differences in expectations related to goals, roles, or rewards.

For instance, price disputes arise as retailers seek lower wholesale prices for better margins, conflicting with manufacturers aiming for profitability.

Role ambiguity may result in disputes regarding responsibilities, as distributors may feel retailers are encroaching on their territory.

Inventory issues result from disagreements on order sizes or stocking preferences, with manufacturers favoring larger runs and retailers preferring smaller, frequent deliveries.

Managing power and conflicts is crucial for a smooth and efficient distribution process. It requires effective communication, negotiation for mutually acceptable solutions, and establishing clear agreements, including roles, responsibilities, and terms.