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Channel Management

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Channel Management

• Is in three broad phases:– Use of power bases– Identifying and resolving channel conflicts– Channel co-ordination

Use of power….

Use of Power Bases• Use of the 5 power bases brings diverse

channel partners in line for effective implementation

– 5 power bases are: reward, coercion, legitimate, expert and referent (French & Raven)

– Two more power bases in the Indian context are support and competition

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“Power” of Motivation• Reward – incentives for good performance• Coercion – threat of punishment for non-

performance• Referent – benefit of sheer association with a

strong company• Legitimate – arising out of a contract• Expert – specialized knowledge• Support – additional benefits for better

performers only• Competition – created between channel

partners

French & Raven

Countervailing power……

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Channel Conflicts• Conflict is generated when actions of any

channel member come in the way of the system achieving its objectives

• Three broad categories of channel conflict are:– Goal conflict – understanding of objectives by

various channel members is different– Domain conflict – understand responsibilities and

authority differently– Perception conflict – reading of the market place is

different and proposed actions vary

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Conflicts Result From…

• Each channel member wanting to pursue his own goals

• Each wants to retain his independence• There are limited resources which all of them

want to utilise in achieving their goals• Features of conflicts:

– Initially latent and does not affect the working– Is not normally possible to detect till it becomes

disruptive

Four stages….

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Four Stages

LATENT

MANIFEST

FELT

PERCEIVED

Each stage is progressively more severe than the earlier one

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Types of Conflicts• Latent Conflict:

– Some amount of discord exists but does not affect the working or delivery of customer service objectives.

– Disagreement could be on roles, expectations, perceptions, communication.

• Perceived Conflict:– Discords become noticeable – channel partners

are aware of the opposition.– Channel members take the situation in their stride

and go about their normal business – No cause for worry but the opposition has to be

recognized

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Types of Conflicts• Felt Conflict:

– Reaching the stage of worry, concern and alarm. Also known as ‘affective’ conflict.

– Parties are trying to outsmart each other.– Causes could be economical or personal– Needs to be managed effectively and not allowed

to escalate.• Manifest Conflict:

– Reflects open antagonistic behaviour of channel partners. Confrontation results.

– Initiatives taken are openly opposed affecting the performance of the channel system.

– May require outside intervention to resolve

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Reasons for Channel Conflict

• Roles not defined properly• Allocation of scarce resources between

members seem unfair to some• Differences in perception of the

business environment

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Reasons for Channel Conflict

• Future expectations not likely to materialize• Decision domain disagreements – who has to

decide on what (key account pricing)• Channel members do not agree on objectives• Misunderstanding or mis-interpretation of

routine business communication

Resolving….

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Resolving Conflicts

Understanding nature and intensity

Strategy and plan of action for resolution

Understand the impact of the conflict

Tracing the source of the conflict

A 4 Stage Process

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Conflict Resolution Styles

Avoidance

Aggression

Accommodation

Compromise

Collaboration

Least effort and results

Maximum effort and Best results

Styles are a combinationof assertiveness and

co-operation.

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Avoidance

• Used by weak channel members.• Problem is postponed or discussion

avoided. • Relationships are not of much

importance.• As there is no serious effort on getting

anything done, conflict is avoided.

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Aggression

• Also known as a competitive or selfish style.• It means being concerned about one’s own

goals without any thought for the others.• The dominating channel partner (may be the

principal) dictates terms to the others. Long term could be detrimental to the system.

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Accommodation

• A situation of complete surrender.• One party helps the other achieve its goals

without being worried about its own goals.• Emphasis is on full co-operation and flexibility

in approach. May generate matching feelings in the receiver.

• If not handled properly, can result in exploitation

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Compromise

• Obviously both sides have to give up something to meet mid way.

• Can only work with small and not so serious conflicts.

• Used often in the earlier two stages.

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Collaboration

• Also known as a problem solving approach• Tries to maximize the benefit to both parties

while solving the dispute.• Most ideal style of conflict resolution – a win-

win approach• Requires a lot of time and effort to succeed.• Sensitive information may have to be shared