Channel Conflict
The objective of this exercise is to aid understanding of the dimensions of channel selection and their possible relationships with channel conflict. For instance, many manufacturers sell products in outlet stores at 25 to 70 percent off retail prices. Retailers do not like the added competition from their own suppliers despite manufacturers’ claims that they are only selling last season’s merchandise.
1. How could business objectives, buyer behavior, product attributes, or environmental forces affect a manufacturer’s decision to distribute through outlet stores?
2. By selling in outlet stores, how have these manufacturers changed their intensity of market coverage? How is customer service different at an outlet store? What are the strategic options available for retailers when manufacturers become retailers through their own outlet stores?
3. Facing the threat from outlet stores, should retailers develop store brands, refuse to stock certain items, or focus their buying power on one supplier or group of suppliers? How should the conflict be resolved?