Discuss channel management – motivating channel members, channel conflicts, and modifying or revising channels.

Each member in a channel is an organisation itself with its own marketing objectives. Each of these firms strive to achieve its objectives like increase in revenues, be a market leader, etc. The channel members should be viewed as customers by the manufacturer. This way the manufacturer understands the needs and challenges faced by the intermediaries and accordingly take steps that in the best interest of the manufacturer as well as the intermediaries.

For smooth functioning of operations, clear policies and procedures should be agreed upon and formally signed. If the policies and procedures are not clearly shared and formally agreed to, the possibility of conflicts is high among channel members.

Motivating channel members –An organisation should sell the product to intermediaries as a customer considering their needs and wants. This helps a manufacturer achieve its objectives. It should cooperate and help the intermediaries in every possible way with training programs, market surveys, etc. to improve their performance.

There should always an open and healthy two way communication to share information. An open communication channel helps a channel work effectively when information about the customers, challenges of the intermediaries and strategies of manufacturers are shared. The information received by the manufacturer is used in product modification/ development, packaging strategies, promotion strategies, pricing strategies, etc.  The other strategy that many manufacturers follow is offering the intermediaries higher margins, premiums, allowances, etc.  In the presence of intermediaries, manufacturers seldom come directly in contact with the customers.

Organisations always strive to build a long term relationship with channel members which is beneficial to both the organisation as well as the intermediaries. The organisation should be able to convince the intermediaries that associating or getting into a partnership is in the long term interest for both of them.

Channel Conflict – Channel conflicts crop up when there are disagreements on the functioning or operating practice between any of the channel members. These conflicts may lead to a channel member leaving the channel. There could be many reasons for conflict. It can be a vertical channel conflictwhere a channel members at different levels get into disagreement within the same channel, like retailers and wholesalers. Sometime, wholesalers are not able to meet the sales targets of the manufacturer. Constant pressure from the manufacturer may result into a conflict. In horizontal channel conflict, channel members at the same level get into a conflict. For example, retailers can get into conflict for one offering a poor service than the other, giving services to customers in each other’s territory, etc. When a manufacturer has multiple channels (two or more channels) serving the market, there can be conflicts which are known as multiple channel conflict. When a manufacturer adds a channel to existing channel, most of the intermediaries object as it affects their market share and sales. For example, a manufacturer opening a company store for selling its products in addition to selling at retail stores. Similarly, introduction of ecommerce channel. In such cases, manufacturers try to negotiate with channel members by putting forward two options – increase their profit margins, sell some exclusive rights of selling some products only through the channel member, and taking orders through company website and leaving the responsibility will the retailers to deliver and collect the payments.

These conflicts can only be solved through dialogue. If the channel members are open and clear in sharing their concerns with each other, there are less chancers of them getting into conflicts.

Modifying or Revising Channels –

The manufacturer has to constantly review its channel to ensure it serves the purpose and meets its objectives. There are several reason which force a manufacturer to modify its channel.

• There could be performance gaps in the channels. The organisation should identify these and take corrective action for proper functioning of the channel.
• Introduction of new channel options like ecommerce, vending machines, etc. warrant the need to introduce these channels to stay ahead of competition and serve the customers in best possible way. Change in consumer buying behaviour,
• Entry of rival firms,
• Changes in marketing environment (economical, legal and government policies, demographic changes, etc.),
• Market expansion,
• Introduction of new product in the product line,
• Product moving through different stages of life cycle

Organisations should monitor and revise their channels relative to the changes in the market. These changes could be because on new opportunities or threats in the market, or some weakness with in the channel that needs corrective action. As making changes to the channel is a complex and time consuming activity that involves the efforts as well as costs of experts, organisations have to be careful and clear when formulating strategies for the channel.