REFLECTION PAPER

Marketing Channel Flows & Channel Conflict

Marketing Channels (MKT 450)

Date of Submission: July 14, 2010

School of Business

North South University

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MARKETING CHANNEL FLOWS

A channel flow is a set of related functions to perform marketing activity through

channel member. The function start from producer and finished by consumers or end users.

There are eight generic flows and they are physical possession, ownership, promotion,

negotiation, financing, risking, ordering and payment. Each of this flows contribute to the

service output generation for the customer so that customer can easily choose or acquire

desired product at a nearest possible place in a shortest possible time.

In the channel flows, we can see some components act as a forward flow, some are

backward, and some are act in both directions. Physical possession, ownership, and

promotion act as forward flow. Ordering and payment play the role of backward flow. Still

others such as negotiations, financing, and risk taking occur in both directions in the

marketing channel flow. All eight channels flow performing a certain task from their own

place. Every flow not only contributes to the production of valued service outputs but also is

associated with a cost.First channel flow is Physical possession, which refers how goods will

store as well as its transportation between two channel members. For example, manufacturer

is delivering the product to the retailer using his own truck.

The second flow is ownership. It refers that this products or goods is one particular

channel member until it has been passed to next channel member. For example before

delivering the product by truck, manufacturer is the owner of the product. But when the

product is received by the retailer, the ownership changes from manufacturer to the retailer.

When a channel member became owner of the goods, it bears the cost of carrying the

inventory and other costs related to it.

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The next flow promotion in marketing channel can called in some name such as

personal selling through an employee or outside sales force, media advertising, sales

promotions, publicity and other public relations activities. The promotion flow tells all kind

of taken by a channel member to promote the products within the channel member and end

users. The underline reason to use promotion is to increase the sell and get a higher profit. It

also accomplished some certain work like designed to increase product, brand awareness,

educated buyers about product usage, and persuade buyers to purchase. They may also have

the goal of increasing the overall brand equity of the product, which would be productive of

sales in the future. Any channel member can involve in promotion. For example personal

selling.

Another flow of marketing is negotiation. Negotiation is like coming into an

agreement. Here both party presents there view and decision is taken by the approval of the

channel member. For example

Next type of channel flow is financing which is dealing all kind of related activity of

finance for example credit, lone etc. The underlying cause of financing to ensure the channel

member remains active in marketing channel. For example because of the current recession

the manufacturer decides to give a discount of 20% for ordering more than 5000 bottle of

500ml Coca-Cola.

Other component of channel flow is risking. The function suggests every channel

member has to bear a certain amount of risk when channel member being involve in a

marketing channel. Many sources of risking exist in the marketing channel. For example

taking a unknown retailer can cause damage to the image of the product.

Last and final channel flow is ordering and payment where channel members order

the products from the prior channel member and make payment accordingly. For example the

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retailer needs more ice cream. Therefore, he orders ice cream to the manufacturers and makes

the payment to the manufacturer’s bank account.

Channel flows are integral part of a marketing channel. All these flows have to be

performed anyhow by the channel members. A channel member can be removed but then

someone else has to take his responsibility. In order to have a successful marketing channel

these flows has to be performed by the channel members with great responsibility.

MARKETING CHANNEL CONFLICTS

In today’s marketing channel, conflict is almost unavoidable. Because if we look at

the channel members activity, we will find that one members action of reaching its target can

create tension in other channel members mind. Channel conflict takes place when one

channel member views any other channel member as their enemy or competitor.

There are 3 types of channel conflict. These are goal, domain and perceptual.

Goal conflict occurs when the target or objective of the channel member is different.

It is quite common because the objective of a whole seller and manufacturer mostly is

different. For example, the goal of a manufacturer is to have as many retailers as possible.

However, few retailers do not like the decision of having many retailers. This will reduce the

profit of the retailer. Therefore, there will be conflict between the channel members.

Domain conflict arises due to the disagreement over the domain of action and

responsibility. This take place when one channel member does not take his responsibility

seriously. For example the manufacturer is paying the retailer display allowances but the

retailer is not displaying the product in appropriate way.

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Another conflict is perceptual conflict. This conflict arises when the perception of

channel members is different. For example, the channel manager wants to introduce a new ice

cream flavor, which is cola. From the market research, he found that there is a demand in the

market for cola flavored ice cream. However, the wholesaler and retailer is happy with the

current situation. They also feel that the consumer will not as this cola flavored ice cream.

Therefore, they do not want to sell the cola flavored ice cream. Conflict like these is known

as perceptual conflict

Conflict in a marketing channel is a very common thing. Because in a marketing

channel so many people are working together and every channel member is different from

others. Everyone’s objective of doing business is also different. But we also have to

remember that the success is also interdependent. If a manufacturer wants to increase his

sales then he has to depend on the success of the retailer. A conflict free channel is very

important in order to have a successful business.

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REFERENCE

Stern, L.W., El-Ansary, A.I. & Coughlan, A.T. (2003). Marketing channels, 6th Ed. Prentice Hall: India.

Stern, L.W., El-Ansary, A.I. & Coughlan, A.T. (1996). Marketing channels, 5th Ed. Prentice Hall: India.

http://www.wikipedia.org/wiki/Channel_conflict

Class lecture of our honorable faculty Abdullah Al Faruq (AFq). Mkt-450, Marketing Channels