Question

3. What type of channel conflict is likely to be caused by dual distribution, and what type of conflict can be reduced by direct distribution

Answer 1

Answer:

There are two main types of channel conflicts:

1. vertical conflicts.- occur between different levels of the distribution channel, e.g. a wholesaler starts to sell directly to customers bypassing retailers, wholesales and retailers argue about profit margins, the manufacturer believes that the wholesalers or retailers are not working properly.
2. horizontal conflicts.- conflicts that arise between same level intermediaries, e.g. two different retailers selling at different prices or offering different promotions.

If a company is able to directly reach its final customers, e.g. by selling online, all vertical and horizontal conflicts disappear, and profits should increase. The problem is that it is always easier said than done. If it was easy for companies to reach their final customers, then retailers and wholesalers wouldn't exist at all.