Eliminate conflicts in distribution channels
Because distribution channels consist of several subjects, always available, unfortunately, potential conflicts between them regarding their functions, distribution of income and profit, product range and services, the right decisions and so on. Because of this, one of the important aspects of distribution channels is a potential conflict detection and prevention of such.
In distribution channels as possible horizontal and vertical conflicts. Vertical conflicts arise between different levels of channels (producer - wholesaler, wholesaler - retailer). The causes of conflict can be:
- "Bypass" channel entity other party and the sale or purchase of goods it yourself;
- Disagreement on the distribution of income between the levels of the channel;
-dumka commodity that merchants do not pay sufficient attention to its products;
- Mediator attempts to control the market, pushing this process producer.
The horizontal conflicts arise between the mediators of the same level of, mainly, because:
- Exit intermediary outside his district;
- Sale of various mediators of the same types and brands of products.
Identification of objective causes of conflict in distribution channels, the elimination of the development of cooperation between actors channels can be achieved by appointing the head of the channel, which coordinates, directs and assists others. The head of the channel can be any of his subject. Pidpryyemstvo- commodity may also be the head of the channel, but it is possible if it is able to influence others. This ability is determined by that company, first, can effectively reward best or to help those who require such assistance provided by the strong financial position of producers or strong business contacts with customers; Secondly, identified with the other members of the channel, providing them with appropriate benefits.
Cooperation in the distribution channels can ensure the creation of vertical marketing systems.
Vertical marketing system - is managed by professionals and well-programmed links between the subjects distribution channels designed for maximum economy and market effect in the movement of goods from places of production to places of consumption or use. Vertical marketing systems consist of horizontal relations, coordinated with a single vertical management system.
There are three types of vertical marketing systems - administrative, contractual and corporate (Fig. 57).
Administrative vertical marketing system coordinate their activities through the administrative management of one of the distribution channel (usually an experienced and strong commodity). This is what makes it possible to control the resources, save time, specifically to conduct research and use these results to improve communication channels between actors, ultimately reducing their conflicts and tensions. Such systems tend to perform best under extreme economic conditions (crisis, war, etc.). With the dynamic development of the economy administrative unlimited power of one of the channel is usually a hindrance to other economic activity and leads to more conflict.
Corporate vertical marketing system consists of entities that are owned by a particular company or corporation (enterprise - producer, wholesaler or retailer). If the owner is an enterprise system - a commodity, it is called pryamointehrovanoyu if the wholesaler or retailer - integrated inversely. These systems provide effective, competing with other distribution systems, rapid adaptation to market conditions, cost savings in production and sales, fast zalahodzhuvannya conflict in distribution channels.
Management in corporate vertical distribution systems organized on the following principles:
- The central directorate headed by the well-known person;
- There is a formal subordination of members of the system;
-diye clear system of rewards and punishments;
- Planning and coordination of actions carried out centrally;
- There is a unified system goals.
Control of such systems extends to the actions of members of the channel to enter the desired market, sales process, price levels, to protect the reputation of the company and its products.
Contractual vertical marketing system - an association which formalized the relationship of the relevant legal contracts. There are three types of systems.
1) of retailers led wholesaler. The initiative of creation belongs to wholesalers. These systems are built on the principles of cooperation. Typically, retailers agree to carry out the bulk of its purchases from a wholesaler and consent to sell their products at a price equal for all members of the system;
2) cooperative retailers. They are organized when a group of retailers trying to combine their purchasing capabilities to maintain the volume of retail group as a whole. This type of cooperation has existed since the early 30-ies of XX century. Currently, the number of such groups has increased significantly, especially with respect to such product groups as food, pharmaceuticals, office equipment, etc. ;
3) The franchise system (on milling. Franchise - franchise). They are based on long contractual relations between producer and trader, the producer gives the latter privilege (license) for the right to sell its product offer assistance in the preparation and sales, as well as other related matters (depending on the contract).
The first franchise system - Sewing Machine Company - was organized in the United States just after the Civil War (1861-1865). Special development of such systems acquired since the beginning of the XX century.
The benefits of franchising are as follows:
- The system of franchise contracts does not prevent the use of their property now provides careful treatment of the franchisor (license holder) to credit opens up a new source of creation of active capital;
- Eliminating the need to spend money to create the necessary distribution systems;
- Owners of franchise licenses, which are independent businessmen more interested in joint work on the development of the market;
- Members of these systems are much more confident than others because market offer products and services to become a good reputation and are able to receive financial assistance franchisor.
However, vertical market and inherent shortcomings such as:
- A large number of staff required to serve all levels of distribution and, therefore, increase the level of current expenses;
- Possible problems of control of inventory in the distribution system due to insufficient provision of appropriate equipment and premises channel members;
- Possible legal restrictions on establishing a system of vertical integration, especially when it is made through sale-angle pivlyu enterprises of distribution.
Nevertheless, vertical marketing systems are used very often, because it is a well-proven way of integration of distribution for the effective implementation of the joint task of minimizing conflict problems.
In the management of distribution channels important place belongs to motivate and activities of the channel. Such motivation through the establishment of appropriate systems of labor remuneration of intermediaries (see. 9.3).
However, the motivation of intermediaries should be understood more broadly than adequate remuneration. Thus, according to the theory of Herzberg (1966) good wages typically reduces demotyva- tion, but not necessarily improves motivation. For Hertsber- tion, the motivations of many people weigh incentives two groups - external and internal. Accordingly, there are two groups of factors aimed at creating feelings of pleasure and displeasure:
- Factors of satisfaction and motivation: internal character symbols that are associated with work (eg, recognition of achievement, responsibility, professional growth, the very activity that requires creative tension forces, etc.);
- Dissatisfaction and demotivation factors: wages, working conditions, company policy (a small negative level of these factors and minimize dissatisfaction).
The components of an effective motivation is:
- A clear definition of the required performance, which will provide remuneration;
- Realistic and possible to implement time-bound program objectives motivation;
- Obligatory compensation for achievement of high results;
- Forms of remuneration that are of great interest to workers and not just be convenient for management;
- The use of both internal and external stimuli;
- Focus on motivating specific program activities of;
- Understandable for all employees validity and appropriateness of the terms of motivation.
One of the important aspects of distribution channels is to educate intermediaries in loyalty to the manufacturer. This ensured the development of long-term relationships with them, just and reasonable attitude to their work, instilling a sense of belonging to the enterprise-producers. It is also desirable establish a joint advisory board intermediaries, visiting senior management of the enterprise commodity intermediaries, the relevant calls with bonuses, awarding best workers prizes, medals and more.