Question

Explain what channel conflict under various forms it can take

Answer 1

Channel conflict occurs when manufacturers (brands) disintermediate their channel partners, such as distributors, retailers, dealers, and sales representatives, by selling their products directly to consumers through general marketing methods and/or over the Internet.

Some manufacturers want to capture online markets for their brands but do not want to create conflicts with their other distribution channels. The Census Bureau of the U.S. Department of Commerce reported that online sales in 2005 grew 24.6 percent over 2004 to reach US$86.3 billion.[1] By comparison, total retail sales in 2005 grew 7.2 percent from 2004.[1] These numbers made the online marketplace attractive to manufacturers, but raised the question of how to participate without harming existing channel relationships.