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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 manufacturers 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 todays 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. Everyones 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). Mkt450, Marketing Channels

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