What is channel conflict?

Horizontal and vertical marketing conflicts involve disagreements among businesses in a marketing channel. A marketing channel is how a product moves from its manufacturer to the consumer. Channels have different stages, or levels. Typically, the first level of a channel is a factory. The second level is the wholesaler who buys a large number of products to sell to retail stores, which occupy the third and final level. When members of a channel disagree about methods or goals, conflicts ensue.

Horizontal Conflicts

A horizontal conflict refers to a disagreement among two or more channel members at the same level. For example, suppose a toy manufacturer has deals with two wholesalers, each contracted to sell products to retailers in different regions. If one wholesaler decides to branch its operations into the other wholesaler’s region, a conflict will result. If the toy manufacturer doesn’t help solve the problem, its business dealings with both the wholesalers — and the downstream retailers, as well — might be in jeopardy.

Vertical Conflicts

Vertical conflicts involve a disagreement between two channel members on consecutive levels. For example, if the toy manufacturer discovers its products are arriving at retail stores later than scheduled, a conflict might develop between the manufacturer and the wholesaler responsible for shipping to retailers. At the same time, the retail stores might be in conflict with the wholesaler due to its inability to ship products on time.