Connecting BSNL Employees / Subscribers 4 Growth of BSNL: MultiChannel Marketing System- Conflicts, Cooperation & Competition

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MultiChannel Marketing System- Conflicts, Cooperation & Competition

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As you are all aware that BSNL has started MultiChannel Marketing System to
reach one or more customer segments by appointing Franchisee, Direct Selling
Agents for Door to Door Selling, Rural Distributors (RDs), E-Pin Distributors etc. Besides
these BSNL has made Sale Teams for Sale of BSNL Products to Retailers which are not
supplied by the franchisees and also depute other staffs for sale of BSNL products in
Rural Area on every Friday & Saturday.

By doing so, Marketer like BSNL, MTNL etc will gain following three important
 Increased Market Coverage
 Lower Channel Cost- Selling BSNL Products to small customers in villages by
appointing RDs in small pocket of Rural Areas.
 More Customized selling – adding a technical sales force to sell more
complex equipment.
However these gains from adding new channels come at a price. These new
channels typically introduce conflict & control Problems. Finally these Channels may
end up competing for the same customers and make cooperation more difficult. It is
therefore important that before starting business in open market, marketers likes BSNL,
MTNL etc. have to plan Channel Architecture first & assign jobs accordingly to avoid
conflicts. Now question arises how to plan Channel Architecture?
PLANNING CHANNEL ARCHITECTURE: - Proper planning of Channel Architecture is the
first need of marketers to increase the profit by avoiding conflicts within Channel
Partners. To plan the channel architecture, marketer has to use “Marketing Hybrid

Fig. 1: Marketing Hybrid Marketing Systems
The grid shows several marketing channels (rows) and several demandgeneration
tasks (columns). The grid illustrates why using only one channel is not
efficient. Consider using only a direct sales force. A salesperson would have to find
leads, qualify them, presell, close the sale, provide service, and manage account
growth. It would be more efficient for the company to perform the earlier tasks,
leaving the salesperson to invest his or her costly time primarily to close the sale. The
company's marketing department generates leads through telemarketing, direct
mail, advertising, and trade shows. The leads would be sorted into hot, warm, and
cool by using qualifying techniques such as checking whether a lead wants a sales
call and has adequate purchasing power. The department would also run a
preselling campaign informing prospects about the company’s products through
advertising, direct, mail, and telemarketing. The salesperson comes to the prospect
when the prospect is ready to talk business. This MultiChannel architecture optimizes
coverage, customization, and control while minimizing cost and conflict.
Companies should use different channels for selling to different size customers.
A company can use its direct sales force to sell to large customers, telemarketing to
sell to midsize customers, and distributors to sell to small customers, but these gains
can be compromised by an increased level of conflict over who has account
ownership. For example, territory based sales representatives may want credit for all
sales in their territories, regardless of the marketing channel used. Multichannel
marketers also need to decide how much of their product to offer in each of the
Conflict, Cooperation, and Competition
No matter how well channels are designed and managed, there will be some
conflict, if for no other reason than that the interests of independent business entities
do not always coincide. Channel conflict is generated when one channel
member’s action prevent the other channel from achieving its goal. Channel
coordination occurs when channel members are brought together to advance the
goals of the channel, as opposed to their own potentially incompatible goals. Here
we examine three questions: What types of conflict arise in channels? What causes
channel conflict? What can be done to resolve conflict situations?
Types of Conflict and Competition
Suppose a manufacturer sets up a vertical channel consisting of wholesalers and
retailers. The manufacturer hopes for channel cooperation that will produce greater
profits for each channel member. Yet vertical, horizontal, and MultiChannel conflict
can occur.
 Vertical channel conflict means conflict between different levels within the same
 Horizontal Channel conflict involves conflict between members at the same level
within the channel.
 Multichannel conflict exists when the manufacturer has established two or more
channels that sell to the same market. Multichannel conflict is likely to be
especially intense when the members of one channel get a lower price (based
on larger volume purchases) or work with a lower margin. This is the major
problem with BSNL because Channel Partners especially BSNL’s Franchisee are
giving more commission to retailer to grab the larger market by appointing the
retailers outside the primary assigned territory. Although the territory of each
franchisees if predefined and Franchisee Sale & Distribution Policy -2009 gives lot
of scope to the BSNL but conflict still persists. Besides this, the different commission
structures for sell of same product by different Channel partners working in same
territory also crate conflicts within channel partners, although scope of working of
channel partners are quite different for all channel partners.
A key question was whether the sales gains from the big retail chains would offset
the loss from the dealer defections.
Causes of Channel Conflict
It is important to identify the causes of channel conflict, some are easy to resolve,
others are not. One major cause goal incapability. For example, the manufacturer
may want to achieve rapid market penetration through a low-price policy. Dealers,
in contrast may prefer to work with high margins and pursue short run profitability.
Sometimes conflict arises from unclear roles and right. Territory boundaries and
credit for sales often produce conflict.
Conflict can also stem from differences in perception. The manufacturer may
be optimistic about the short-term economic outlook and want dealers to carry
higher inventory. Dealers may be pessimistic. In the beverage category, it is not
uncommon for disputes to arise between manufacturers and their distributors about
the optimal advertising strategy. Conflict might also arise because of the
intermediaries’ dependence on the manufacturer. The fortunes of exclusive dealers,
such as auto dealers are profoundly affected by the manufacturers product and
pricing decisions. This situation created a high potential for conflict.
Managing Channel conflict
As companies add channels to grow sales, they run the risk of creating
channel conflict. Some channel conflict can be constructive and lead to better
adaptation to a changing environment, but too much is dysfunctional. The
challenge is not to eliminate conflict but to manage it better.
There are several mechanisms for effective conflict management. One is the
adoption of super ordinate goals. Channel members come to an agreement on the
fundamental goal they are jointly seeking, whether it is survival, market share, high
quality, or customer satisfaction. They usually do this when the channel faces an
outside threat, such as a more efficient competing channel, an adverse piece of
legislation, or a shift in consumer desires.
A useful step is to exchange persons between two or more channel levels.
General Motors executives might agree to work for a short time in some dealerships
and some dealership owner might work in GM's dealer policy department. Hopefully,
the participants will grow to appreciate the other's point of view.
Co-optation is an effort by one organization to win the support of the leaders
of another organization by including them in advisory councils, boards of directors,
and the like. As long as the initiating organization treats the leaders seriously and
listens to their opinions co-optation can reduce conflict, but the initiating
organization may have to compromise its policies and plans to win their support.
Much can be accomplished by encouraging joint membership in and
between trade associations.
When conflict is chronic or acute, the parties may have to resort to diplomacy,
mediation or arbitration. Diplomacy takes place when each side sends a person or
group to meet with its counterpart to resolve the conflict. Mediation means resorting
to a neutral third party who is skilled in conciliating the two parties interests.
Arbitration occurs when the two parties agree to present their arguments to one or
more arbitrators and accept the arbitration decision. Sometimes when none of these
methods proves effective, a company or a channel partner may choose to file a
Legal and Ethical Issues in Channel Relations
For the most part, companies are legally free to develop whatever channel
arrangements suit them. In fact, the law seeks to prevent companies from using
exclusionary tactics that might keep competitors from using a channel. Here we
briefly consider the legality of certain practices, including exclusive dealing
exclusive territories, tying agreements, and dealers rights.
Many producers like to develop exclusive channels for their products. A
strategy in which the seller allows only certain outlets to carry its products is called
exclusive distribution. When the seller requires that these dealers not handle
competitors’ products this is called exclusive dealing like the case of BSNL
Franchisee. Both parties benefit from exclusive arrangements. The seller obtains
more loyal and dependable outlets, and the dealers obtain a steady source of
supply of special products and stronger seller support. Exclusive arrangements are
legal as long as they do not substantially lessen competition or tend to create a
monopoly, and as long as both parties enter into the agreement voluntarily.
Exclusive dealing often includes exclusive territorial agreements. The producer
may agree not to sell to other dealers in a given area, or the buyer may agree to sell
only in its own territory. The first practice increase dealer enthusiasm and
commitment. It is also perfectly legal- a seller has no legal obligation to sell through
more outlets than it whishes. The second practice whereby the producer tries to
keep a dealer from selling outside its territory has became a major legal issue.
Producers of a strong brand sometimes sell it to dealers only if they will take
some or all of the rest of the line. This practice is called full-line forcing. Such tying
agreements are not necessarily illegal, but they do violate law if they tend to lessen
competition substantially.
Producers are free to select their dealers, but their right to terminate dealers is
somewhat restricted. In general, sellers can drop dealers, "for cause," but they
cannot drop dealers if, for example, the dealers refuse to cooperate in a doubtful
legal arrangement, such as exclusive dealing or tying agreements.

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