Page 233 - DMGT510_SERVICES_MARKETING

Services Marketing

Notes 12.1.6 Managing Channel Conflicts

Channel conflicts arise amongst channel members when one starts perceiving that the other is
a roadblock to his progress. Channel conflicts can also take place when some members perceive
differential benefits being given by the service firm to other members.

Horizontal and Vertical Conflicts

There are horizontal and vertical channel conflicts. Horizontal conflicts occur among service
firms in the same channel. Thus there might be conflicts between one package-tour Company
and another through its channel members. One agent of the travel firm will be in conflict with
another agent of another travel firm. This could be due to multiple travel business associations
of one agent in conflict with the prevalent understanding.

Example: The associations of travel agents might boycott a certain travel management
company for some non-compliance of association ground rules; one travel agent might defy the
unwritten ban and might garner business for the travel company.
This resultant conflict amongst agents would be a horizontal conflict.
Vertical conflict occurs amongst members of the same channel across different levels. This kind
is the most frequently occurring conflict in channels. It occurs mostly amongst service producers,
agents, franchisees and brokers. The conflict could be due to differing perceptions of roles,
duties, responsibilities, expenditures, etc. The intermediaries might expect the service firm to
foot most, if not all, of the promotional expenses, while the service firm expects the reverse.
Conflict can also arise when the service firm uses multiple distribution channels (direct as well
as agents and franchisees) or bypass the middlemen in any other ways. Too much control on the
channel by the service firm is another source of conflict.
A service firm should take extreme care in the distribution of his service offers. The perception
of the consumer about the firm and the quality of offer is based entirely on the type and quality
of service encounter that takes place at the point of distribution. All channel conflicts should be
resolved and the distribution should be a cohesive whole to the service delivery.

Self Assessment

State whether the following statements are true or false:
1. It is not necessary that intermediaries work directly under the control of service firms.
2. Intermediaries in insurance sectors also provide word-of-mouth publicity to the customers
about a particular brand of insurance.
3. All courier services use distribution to garner competitive advantage.
4. An education counsellor getting into a conflict with an education controller is a vertical
conflict.
5. Internet distribution is cost effective.
6. Indian railways follow direct distribution strategy.

7. Educational institutions generally follow indirect distribution network.
8. The place of offer of services is referred to as outlet.
9. The retailer has the best knowledge of consumer requirements, so can influence the
manufacturers to produce those goods. The process is known as pre-sales flow.

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