Managing Conflict

1
Managing Conflict

• Chapter 9 with Duane Weaver

2
What is Channel Conflict?

• In channel distribution, conflict is not
  negative, rather, some conflict actually
  strengthen and improves a channel.
• Channel conflict arises when the behavior of a
  channel member is in opposition, to its channel
  counterpart. It is opponent centered and direct,
  in which the goal or object sought is controlled
  by the counterpart.
• Coughlan, Anderson, Stern, Adel, p. 238

3
Types of Conflict

• Latent conflict norm in marketing channels
  conditions are right for contention by the
  organization is unaware of it (lacking
  perception).
• Perceived conflict cognitive, emotionless and
  mental channel member senses some sort of
  conflict exists all in a days work.
• Felt conflict affective conflict, when emotions
  do enter the equation.
• Manifest conflict visible, expressed in
  behaviour. Usually seen as blocking each others
  initiative or withdrawing support.

4
Measuring Conflict

• Count counting of Issues
• Importance weighting or scale
• Frequency frequency of disagreement
• Intensity of dispute (how disparate)
• CONFLICT Importancei X Frequencyi X
  Intensityi
• Index of Conflict can be used to compare
  members in a channel

N ? i1
5
Calculating Conflict Practice Exercise(take
home answers will be on class website)

• Analyzing 3 issues in conflict with 8 car dealers
  and the manufacturer
• Disagreement about volume discount programs for
  carrying your own inventory (small car dealers
  see no advantage, big dealers see lots)
• Importance of issue 4 small 4/10and the 4 big
  8/10
• Frequency is monthly (every shipment)
• Intensity is very disparate 9/10
• Requirement to participate in National
  Advertising program
• Importance 2/10 Most dealers prefer their own
  program (especially the larger ones, however, it
  is seen as a necessary evil of being part of
  being a franchise)
• Frequency 2 times a year
• Intensity is not too disparate 4/10 comparatively
• Warranty return administration requires
  quintuplicate forms and can take up to 90 days to
  receive payment on labour and parts expended.
• Importance 10/10 for all dealers
• Frequency every meeting (16 times a year) and
  in additional at least 2 complaints per month per
  8 dealers
• Intensity is the same as for the National
  Advertising program

6
Desirable Conflict

• Conflict can induce
• More frequent and effective communication
• Create outlets for grievances
• Members to critically review past actions
• The more equitable split of resources
• The balance of power to shift more equitably
• Standardization for dealing with future conflict
  and boundary delineation

7
Damage from Intense Conflict

• High channel conflict can create costsas shown
  in fig. 9.1 on Page 245.
• Trust diminished
• Commitment to relationship in jeopardy
• Reduction in financial rewards
• Reduction in psychosocial benefits and
  gratification from relationship

8
Sources of Conflict

• Competing goals
• Margins, unit sales, expense control, inventory,
  incentives, promotions, allowances, volumes and
  thresholds, market penetration objectives
• Perceptions of reality
• Attributes of product or service are
• Application served and segments served
• What is the competition
• Domain of control
• More often a perception that the other channel
  member is not pulling their weight for a domain
  that should be theirs.

9
Fueling Conflict

• The Conflict propensity is strongly correlated to
  the quantity of historical incidence
• Threats induction by punishments and/or
  sanctions (Coercion can lead to escalating
  conflict and ultimate channel damage)
• Unbalanced power is indicative of short-term
  relationship expectations propensity for
  conflict is increased

10
Conflict RESOLUTION STRATEGIES

• Information-Intensive Mechanism
• Risk sharing sensitive information with trust and
  cooperation or via a diplomat
• Joint membership in Trade Associations
• Personage exchange
• Co-aptation (involving channel members in
  corporate decisions)
• Third-Party Mechanism
• Mediation
• Institutionalized Arbitration process
• Building Relational Norms
• Flexibility, Info Exchange, and Solidarity

11
Styles of Conflict Resolution

• See Fig. 9.2 on Page 269.
• Accommodation
• Avoidance
• Competition or Aggression
• Compromise
• Collaboration or Problem Solving

12
Thanks

• Work through the Conflict Measurement Exercise
  and check your answers with the web
• Mid-Term questions?