1. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 1 Channel Management and Power zVertical integration zChannel power zChannel conflict yCauses ySolutions

2. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 2 Vertical Integration zCompany structures ySole business unit (e.g., manufacturing, wholesaling, retailing, services) yConglomerates yJapanese keiretsus zMake or buy? yLeverage yExpertise yControl xProduct quality and design xSteady supply

3. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 3 Layers of Performance: An Example RETAILING WHOLESALING/CHANNEL MOVING MARKETING PRODUCT MANUFACTURING COMPONENT MANUFACTURING

4. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 4 Vertical Integration: Costs and Benefits zCosts yOpportunity cost of personnel yDifficulty in hiring appropriate managers yPotential over- capacity yLabor situation--may find lower costs in xNon-union environment xLower cost area zBenefits yDependability ySynergy (?) yBrand extensions yControl

5. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 5 Reasons for Outsourcing zMotivation zSpecialization z“Survival of the fittest” zEconomies of scale zMarket coverage zIndependence from specific manufacturer

6. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 6 Channel Power: Sources zReward zCoercive zExpert z“Legitimate” zReferent (“brand name”)

7. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 7 Channel Conflict zChannel members have different objectives--e.g., yBrand unit sales vs. category unit sales yPricing yService output yTerms of sale: price, payment, quantities, returns

8. BSAD 113 CHANNEL MANAGEMENT AND CONFLICT Lars Perner, Instructor 8 Conflict Resolution Approaches zInformation intensive approaches: Sharing of information yExpensive(-) yRisky (-) yMay build trust (+) zThird party (mediation) zEstablishment of norms (“rules of the game”) zAccommodation zConfrontation zAvoidance zCompromise