Questions 1. For each of 3 channel conflicts outlined in the case studies explai
ID: 365572 • Letter: Q
Question
Questions
1. For each of 3 channel conflicts outlined in the case studies explain how you would approach and resolve each of the situations.
For each case study answer
a. What is the source of the conflict?
b.Who are the players?channel involved in the conflict?
c. What solutions can you suggest?
d. What would you do to resolve the conflict?
2. How often do you think, that channel conflict occurs in real business life?
3. If it is common, then is it worthwhile for firms to consider minimising the number of channels that they use.?Explain why or why not?
4. What type of firms/products would benefit from using many different distribution channels?
Explanation / Answer
1. a. The source of conflict in the case of Pharmaceutical company is to go closer to the customers. Which effectively means that ideally the company can parellelly set-up a distribution channel through supermarkets which have a wider reach and are well entrenched in the market. This channel is thus in a way more accessible to the consumers as compared to chemists. But with this the chemists would be a loss as the customers are used to visit them for purchasing these items. The main conflict is 2 competiting channels - one traditional channel and the other one being a new and in demand channel - that of supermarkets. In the case of Insurance companies- it that of going direct to the customers. Again a fight of traditional v/s the new one i.e: going direct to customers via internet. In the 3rd case of Franchisee conflict when there are no printed prices / standard price contract across franchisees. b. Players invloved : Pharamceutical - 2 competing distribution channels ( i would say that this is a classic example of how and why of either maintaining a traditional distribution channel with the obvious clause of offering exclusive sales rights versus setting up a conflicting channel of selling in super markets and slashing prices/ offering price beneits to the end customer. This is because super markets have economies of scale as they purchase in bulk and have a large no. of footfalls as compared to chemists. In the case of selling Insurance, it has been widely seen that alot of customers are sceptical of buying certain type of insurance policies online. They will want to stick to the agent model. This is because they need a face to an insurance company. It needs to be customized and lot of face to face selling is required. And in the case of Franchisee conflitcs it is a clear case of price conformity and standardisation of prices. c. The solution that I would suggest would be that of analyzing the cost - benefit ( sales turnover and profits) for each channel as well as co-existence of 1 or more channels. If the insurance companies are ready to shell out incentives for an agent model if it can bring in more sales so that those customers who are technologically savvy , especially the younger generation can purchase an insurance policy online but the older generation would still appoach an agent for it. Besides, in the Franchisee model a price band agreement is manadatory as it can get extremely get misleading for customers if the same product is available at different franchisees at different prices. In can impact the image and brand perception.And in the case of Pharma Companies, it is a simple case of may the strongest and the fittest win. So they must develop 2 competiting distribution channels. If the super markets are able to ring in sales nos. then why would any company not look at it as an option. The new age channel of supermarkets needs to be firmly established while selling via chemists which is a traditional channel may be restricted or shrunk to certain specific medicines. d. To reslove the conflict i will look at the following points in all 3 cases: i. Am i going closer to the customer. ii. Am i making maximum use of new technology iii. Do i need to continue to focus on my traditional distribution channels to reach to my target market. iv. Where is my target customer shopping and what are the benefits that he is looking for ? Product, Price , Place , Promotion : For eg: While purchasing an insurance policy is my target customer only focused on the price or is he focussed on the product? 2. Channel conflict is not something new. It will continue to exist with the advent of newer technologies. It does exist in real business life as the environment is changing fast. 3. Since the intenet does offer huge cost savings and easier for customers, it has now become a trend across industries to study and analyze ways to cut costs. One method is to look at the option of minimising the no. of channels. For eg: Most Fast moving Consumer goods (FMCG) opt for super markets. Many niche products like lacoste etc. still work on stand only shops. With better and more efficient and productive supply chains, it has become easier to maintain, develop and grow and focus on limited distirbution channels. It has become a transparent process. Additionally, the type of product under consideration needs to be looked at. For eg: FMCG need to be available almost everywhere - eg: At chemists, at super makets, through e-commerce sites, direct company outlets, retail stores etc. So a detailed study through the 6 Ps of Marketing need to be conducted to arrive at the no. of channels required to achieve sales targets. 4. Like alrey mentioned above, FMCG products need to have different distribution channels as they do not want to lose customers and the key criteria of a fast moving consumer item is availability and price. Almost all products are now available to most leading ecommerce sites as consmers want to shop for convinience. Again, depending on the target audience, insurance companies also prefer to maintain and grow both sales through internet - direct to customers as well as invest in the agent model. I am of the opinion that if the target audience is not a young one, then most companies will continue to invest and grow in the traditional channels while maintaining an online presence to cash in on the customers who will always prefer to shop online. In case, of a younger target audience and again depending on the type and nature of product, companies will sell agreesively through ecommerce sites thus consolidationg and reducing the no. of distribution channels. Nowawadys, all type of products like farm produce, electronic items, clothes and FMCGs are available online.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.