Causes of Channel Conflicts

Goal incompatibility the point partners have incompatible or misaligned goals, for illustration the producer perceives his goals to be a food market share and proceeds maximation in the long run, the wholesalers perceive their goals to be gross revenue maximization and in turn profit maximization. The latter even prefer to work at higher margins and short term profitability. This makes the wholesaler accuses the manufacturer of squeezing his margins. This is typically whats happening with all large manufacturers and their broadcast members today.For example, Charcutier Aoun in Lebanon whitethorn have incompatible goals with wholesalers and even manufacturers. Charcutier Aoun wants big discounts and very low prices in order to change magnitude sales and therefore, profit margin and producer of Gillette may want to have a brand image and big market share without decreasing the price in the short-run and therefore, increase profit margin in the long-run. Unclear pieces and rig hts If the route members have unclear affair than there go out be arise conflict. For example, producer, wholesalers and retail merchants role in scattering post should be clear.But one channel member doesnt play his role or interferes on others role than there will be conflict. For example, BMW manufacturer may have such conflict if one of its distributors started directly interchange to the retailers bypassing large wholesalers in the territory. The wholesalers can in return affect BMW sales by pushing the competitors products. A nonher example, if Apple plans to open a fink by itself at the same place where he/she are exchange the products through retailers than conflicts will be created between producer and retailer.Differences in acquaintance There may be perceptual difference among the channel members tough in the distribution channel. Differences in perception cause conflict. For example, producers perceive retailer discount adequate and retailers perceive it inade quate or it may be the opposite. For example, Aishti sells many types of luxury brands and makes occasional discounts of 20 to 30 percent yearly. Manufacturers or distributors of certain Brand may not agree to include their exalted brand in this discount as it is the company strategy.Intermediaries dependence If the channel member is highly dependent on the manufacturer this may increase conflicts between them. For example, exclusive dealers like Kettaneh are highly affected by the pricing strategy of the manufacturers and even the product itself. If the new VW showed a mechanistic defect or low performance, this will directly affect Kettanehs sales and profit as it is the only product he sells. Therefore, immenseness and recurrence of channel conflicts will increase between Manufacturers and dealers.Finally, Destructive channel conflict can have serious consequences on channel efficiency, channel effectiveness and partners profits. Such consequences lead to low partner loyalty t o principals. These consequences will lead to a negative impact on customers purchasing behaviors and therefore, to apiece partners profit. However, some channel conflict is desirable, provided it is well managed. Managed channel conflict is better defined as channel competition and is not destructive.