Marketingchannels have become complex encompassing not only economic aspects,but also social (Kotler, 2013).As a result, those factors that characterize social systems are nowpresent in marketing channels. These are behavioral characteristicssuch as power, conflict and communication. Therefore, conflicts aresusceptible to happen in marketing channels as consequence ofdifferent perceptions or opinions about distribution channel affairs.The mutual dependence among channel members creates the platform forconflict. Kotler (2013) identified three types of conflicts, whichare horizontal, vertical and multi-channel.
Typesof Channel Conflict
Horizontalconflict usually happens between firms, which are at the same levelof the channel, deal in similar products, purchase materials from aparticular source and are in the same territory(C. Ferrell & L. Ferrell, 2016).The conflict is greatly contributed due to competition. On the otherhand, vertical conflict occurs between firms, which are at differentlevels, but operate in the same marketing channel. The issues mayresult from actions of a producer such as bypassing retailers andwholesalers to reach consumers or when retailers develop products tocompete with producers’ brands or any unfair action from eitherparty (C.Ferrell & L. Ferrell, 2016).Finally, multi-channel conflict emanates from the actions of theproducer to use more established channels to distribute samecommodities to the same market. The consequence will be competitionbetween the distribution channels, which might cause conflict (C.Ferrell & L. Ferrell, 2016).
Thereare various issues that brew conflict. It might arise due to goalincompatibility (C.Ferrell & L. Ferrell, 2016).It is important to note that channels are independent profit-seekers,and their goals might not always concur. For instance, the conflictmight arise in a case where a producer wants to adopt a rapid marketpenetration through low prices while wholesalers want to work with aprofit margin. The conflict might also arise as a result of uncleargoals and rights it happens when the producer sells to largeretailers and its dealers also distribute goods to the same people(C.Ferrell & L. Ferrell, 2016).Additionally, conflicts might stem from different perceptionsoptimism of producers about economic outlook might influence how theyperceive the market and what they expect of their wholesalers (C.Ferrell & L. Ferrell, 2016).On the other hand, wholesalers might be pessimistic about the marketand consequently, they might purchase low quantities of products.Furthermore, poor communication results in conflict misleading anddeceiving information among channel members might lead to dissentvoices (C.Ferrell & L. Ferrell, 2016).
Waysto Detect Channel Conflicts and Solutions
Thereare various indications, which can be used to detect channelconflicts. These include the monitoring of communication behavior, ifit is characterized by more noise than necessary then, there is aproblem in the distribution channel(Watson, Worm, Palmatier & Ganesan, 2015).Moreover, a decline of channel support from members also indicates aproblem. In channel distribution, it is expected that there will beborder wars, but when they become uncontrollable and rampant, theyresult in conflict (Watsonetal., 2015).Finally, controlling emotions in channels of distribution arecrucial. When emotions build up, members react by reducing thesupport of a particular product line or shift to other channels(Watsonet al., 2015).Thus, as a manager, it is wise to always detect issues, which mightcause conflict in the distribution channel.
Thereare various ways through, which channel conflicts might be resolved.Members of a channel can solve the issue of different goals by comingup with superordinate ones, which overrides individual interest (C.Ferrell & L. Ferrell, 2016).These are the goals, which can be achieved by working together as ateam and not as an individual. Furthermore, conflict can also besolved through reducing communication noise (C.Ferrell & L. Ferrell, 2016).It will increase efficiency, which will enable members to findsolutions based on common objectives thus reinforcing channelrelationship. Persuasion and negotiation can also be used to solvechannel conflict through influencing the behavior of members (C.Ferrell & L. Ferrell, 2016).It can similarly be supported by providing sufficient information tomembers of a channel. The process enables members to compromise.Finally, when all resolution approaches have failed, one member canwithdraw from the relationship (C.Ferrell & L. Ferrell, 2016).
Itis a five stage process which involves awareness, interest,evaluation, trial, and adoption(Kumar & Krob, 2005).Organizations work hard to come up with products, but for them tosucceed in the market, they need to walk their customers through thephases of adoption. The phases begin by using a venue to createawareness that the commodity is in the market(Kotler, 2013).It can be through inbound and outbound marketing. If consumers arenot aware that a product is there, then it doesn’t exist. Secondly,an organization needs to feed more information to the clients abouttheir products and services. It can be done through websites,tutorials, or blog posts describing the services and products withinformation that will create more interest to consumers. Thirdly,consumers evaluate products and services through examining andcomparing them with substitutes. It is thus crucial that you outlinecritically those distinct characteristic that make your productstandout (Kotler, 2013).Fourthly, consumers need product and service trails. The stage isvery essential as it helps consumers make purchases. It can be donewith free trail, especially in services and products, which are cheapwhile expensive ones can be elaborated through proof of a conceptcampaign (Kotler, 2013).It is important that organizations at this stage meet consumerexpectations and make their promise about the said product or servicegood. Finally, the process ends with adoption (Kotler, 2013).The stage is characterized by readiness to purchase an organization’sproduct or service. When your consumers are at this stage you need tomake the payment and acquiring process intuitive, simple and painfree.
Theconsumer adoption process shapes how an entity penetrates a market.For instance, the first stage influences channels to be usedeffectively to introduce products in the market. The second stage hasgreatly been used by organizations like Apple to create publicinterest in their products (Sanakulov& Karjaluoto, 2015).It has been done through choosing venues to educate or providetutorials. Furthermore, the evaluation process enables anorganization to use differentiation strategies as they try to maketheir products stand out. Hence, the marketing strategies are gearedtowards creating innovation process. The trial stage greatlyinfluences, which method an organization can use to test the market.An entity can use free samples to penetrate a market or “the buytwo get one” sale promotion (Kumar& Krob, 2005).
Itis the cycle through which a product goes from its invention tosaturation or maturity in the market. The cycle has four stages, “theintroduction, growth, maturity, and the decline stage,”(Kumar & Krob, 2005).There are various ways in which this cycle relates to the consumeradoption process. The “introduction stage” of the product lifecycle relates to product awareness, interest, trial and evaluationstage of the “consumer adoption process.” The “introductionstage” of the product life cycle and “awareness stage” ofconsumer adoption processes involve creation of publicity of aproduct or service to consumers. Furthermore, the “adoption stage”of the consumer adoption process reflects the “growth stage” of aproduct life cycle. These two stages reflect the acceptance andgrowth of a product in a market. They are also characterized byconsumers’ actions of being aware of a product existence in themarket. Though the two concepts are not similar, they share somecharacteristics in some stages.
Priceswithin organizations are influenced by many factors. One of them isthe cost of raw materials, which when increased might result in arise in the final price of a product if the burden is shifted to theconsumer(Stadtler, 2015).The impact of increase in the cost of raw materials is a rise inproduction cost, which reduces the profit margins if the effectcannot be eliminated or borne by consumers. What might worsen thecondition is a binding contract that inhibits the change of supplierwithin a given time in addition to cost. In such a scenario, thereare various options which an organization can exploit. To begin with,three departments need to collaborate to carry the organizationthrough the crisis. These are the human resource, finance andmarketing department. A wise organization needs to know that thereare times when an organization will make a great profit while inother moments, it will not. As a result, it needs to always set asidefunds like reserves, which can be used to boost the organization incase of emergencies like this one. So in this scenario, theorganization needs to use reserves to keep the operation of theorganization normal without altering its operations. Secondly, theorganization can get the help of the human resource department. Thedepartment is very influential in manipulating the direction anorganization moves towards. The department can inform the employeesthe situation at hand. Then motivate them to work harder to achievedesired goals. In some instances, a difficult situation can bemotivating as when people achieve their goals they have a sense offulfillment. Hence, employees will be satisfied if they dedicatetheir resources to work hard and know that they made it. Furthermore,the organization can start to work overtime to compensate for theincrease in cost through overproduction. Consequently, if theorganization can cut cost through other processes it should considerdoing it. It usually happens when an organization uses low-wagedemployees to produce its goods, the process of minimizing cost andmaximizing output. Finally, an organization can result in morespending through marketing with an intention to generate more revenue(Stadtler,2015).Some great organizations do not make a lot of profits per product,but they concentrate on making more revenue through maximizing sales.The process enables organizations to maximize profit despite highmanufacturing costs. There is need to reshape how the organizationis perceived and its products by consumers (Stadtler,2015).Thus, the entity needs to give funds to the marketing department,which has some options to exploit. It can decide to market theproduct or service extensively trying to have a wide market share anddominance. It will in turn create more awareness of the product andif the market reacts positively, products will be purchasedincreasing sales hence revenues. Also, the organization has anotheroption, which it can exploit. It can opt to pursue the path of honestand communicate the change in its raw material cost to its consumerto attract sympathy or make people understand that they are receivinga quality product at a cheap price. The result would be increase insales as people might purchase more as they anticipate an increase inprice, which might never happen. The organization will thus survivethrough the trying time. Finally, an organization can opt to cut downcosts by reducing some activities like advertising and promotion.
Competitionhas become intense customers are demanding, and product life cycleshave become short. Those corporations that fail to come up with newideas are facing a dim future. Companies are overhauling theirproduct innovation process, integrating critical success factors thathave been developed in the form of stage gate process(Sommer, Hedegaard, Dukovska-Popovska & Steger-Jensen, 2015).The process is an operational and conceptual road map that is beingused to propel a new product project from a simple idea to marketlaunch. It divides the processes into various phases that areseparated by decision management gates. Teams must fruitfully finishan activity in each stage before getting the management approval toproceed to the next phase of product development(Sommer et al., 2015).
Theprocess of stage gate begins with the development of an idea andterminates with a fruitful launch of a product. The name “stagegate” comes from a chain of events (stages) and decisions made(gates)(Sommer et al., 2015).The action occurs in the stages where players carry out majoractivities to gather information needed to move the idea to the nextpoint. The stage gate process begins by discovery here everything isdesigned to generate the new product, and opportunities (Sommeret al., 2015).After the idea has been screen it passes the first gate. As teamsmove from one stage to another, the cost increases calling for morecommitments. Discovery initiates the first stage which is scopingwhere inexpensive and quick evaluation of the technical advantagesand market prospect are done. If the project idea satisfies thisstage, it passes the second gate which is the second screen to stage2 building a business case. In stage two a lot of critical work isdone. In this phase an idea can be discarded or supported business,technical and marketing practicability are examined, which whenproven to be successful leads to the development of thes businesscase that has three features. These are “productand project definition, justification and plan.”After the project satisfies this stage, it passes the third gate tostage 3 development stage. Everything that was in the plan is turnedinto concrete deliverables. It is the implementation process of theplan as the development of the new product takes place at this stage.Manufacturing, marketing, and test plans are mapped out and definedin this phase. After this phase, the process passes the fourth gateto stage 4. Here the product is tested in the market, and its idea isvalidated through customer acceptance and economics of the project.If it successfully satisfies this stage it passes the fifth gate tostage 5 where big scale commercialization of the product and itsproduction takes place (Sommeret al., 2015).
Theprocess has been very useful it reduces the time that is takenbefore an idea is generated and actualized. It also brings disciplinein a procedure that has been chaotic ensuring completeness in theprocess, therefore increasing efficiency and effective allocation ofresources as there is a little process of re-work and wastes as aresult of increased focus (Sommeret al., 2015).As a consequence, there will be increase in the probability ofsuccess of the product. The process also has its challenges. For theprocess to succeed, it needs to be critically carried out withoutoverlooking minor details as a mistake in the developing businesscase can be costly to the organization. The implementation plan alsoneeds full support of organization stakeholders and management andclear leadership as otherwise would demotivate the cross functionalgroups leading to failed product development (Sommeret al., 2015).Hence, it is vital that the process is well designed and crediblewith a well-defined leadership because the process of implementationcan be marred by mix up in roles and responsibilities. Moreover, theprocess of implementation is a social one which can be affected bypoor communication (Sommeret al., 2015).
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