Question

What kind of channel conflict is the company "Bob’s Red Mill" likely to encounter? Provide a realistic example and explain how they can manage this conflict. Explain and justify the answer.

Answer 1

"Bob’s Red Mill" is likely to encounter the following channel conflicts:

1. Price Wars: Due to channel conflict, the partners compete with each other on the grounds of price, and therefore, the consumer may defer the purchase searching for the best deal.

2. Distributors Exit: For the manufacturers, it is essential to retain the distributors or partners to increase product sales. When there is a channel conflict, the chances of various distributors leaving the channel increases.

What is Channel Conflict?

It can be defined as any dispute, difference or discord arising between two or more channel partners, where one partner’s activities or operations affect the business, sales, profitability, market share or similar goal accomplishment of the other channel partner.

Channel Conflict Example

Bob’s Red Mill sells its products through multiple channels, i.e., via offline mode and online mode.

The offline channel partners may raise the issue that the e-retailers are providing high discounts to attract more and more customers, which ultimately affects the offline sale of the product.

Due to this, many retailers and distributors in the offline market, may distance themselves from the brand and its products.

It is a universal fact that the conflicts cannot be eliminated, however, can be managed effectively to negate its impact on business. Following are some of the ways Bob’s Red Mill may adopt to manage possible channel conflicts:

1. Superior Goals

Establishing a supreme goal (Good Food For All) of the organization and aligning it with the individual goals (Employee Owned) or objectives of the channel partners (Fair Pricing), may reduce the channel conflicts.

2. Fair Pricing

Most of the channel conflicts are a result of the price war, and therefore, these can be resolved by ensuring that products are equally priced in all the territories and a fair margin is provided to the channel partners. Employees of Bob’s Red Mill are also committed to sourcing, milling, testing, packaging, labeling and selling their finest products.

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