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Channel Conflict: Samsung Case Study

The document discusses channel conflict faced by Samsung in India in 2014. Samsung's distributors threatened to boycott the company due to price discrimination between online and offline sales, where products were offered at lower prices online. This led to falling offline sales and losses for distributors. In response, Samsung extended exclusive selling rights of 48 models to offline retailers. However, industry observers felt this was a regressive move that could hamper future sales given the rise of online shopping in India.

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Biplob Nath
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805 views7 pages

Channel Conflict: Samsung Case Study

The document discusses channel conflict faced by Samsung in India in 2014. Samsung's distributors threatened to boycott the company due to price discrimination between online and offline sales, where products were offered at lower prices online. This led to falling offline sales and losses for distributors. In response, Samsung extended exclusive selling rights of 48 models to offline retailers. However, industry observers felt this was a regressive move that could hamper future sales given the rise of online shopping in India.

Uploaded by

Biplob Nath
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CHANNEL CONFLICT :

SAMSUNG CASE STUDY

PRESENTED BY:

BHUDEB ACHARJEE, 13

BIPLAB NATH, 15

MAGHONATH PURKAYASTHA, 31

POONAM DAS, 39
Contents:

• Channel Conflict: Theoretical Background


• Short Summary of the Case
• Background of Samsung
• Causes of channel conflicts in Samsung India
• Consequences of the channel conflict
• How to manage the channel conflict
• What should Samsung do to maintain it’s leadership
position
• conclusion
Definition: The Channel Conflict arises when the channel partners such
as manufacturer, wholesaler, distributor, retailer, etc. compete against
each other for the common sale with the same brand.
In other words, there is a conflict among the channel partners when one
prevents the other from achieving its objective.

Types of Channel conflict


1.Vertical Channel Conflict: This type of conflict arises between the
different levels in the same channel.
E.g. The conflict between the manufacturer and the wholesaler regarding
price, quantity, marketing activities, etc.

2.Horizontal Channel Conflict: This type of conflict arises between the


same level in the same channel.
E.g. The conflict between two retailers of the same manufacturer faces
disparity in terms of sales target, area coverage, promotional schemes, etc.

3.Multichannel Conflict: This type of conflict arises between the different


market channels participating in the common sale for the same brand.
E.g. If a manufacturer uses two market channels, first is the official website
through which the products and services are sold. The second channel is the
traditional channel i.e. through wholesaler and retailer. If the product is
available at a much lower price on a website than is available with the
retailer, the multichannel conflict arises.
Causes of Channel conflict

Ambiguous
Roles

Intermediaries
Dependence on Different
Manufacturer Perception

Goal Communication
Incompatibility Barrier
Managing the Channel Conflict

Exchange
Subordinate of
Goals Employe-
es

Trade Co-
Associati- operation
ons

Diplomacy,
Mediation, Legal
Resource
Arbitration
Case: Samsung India
Samsung Electronics, one of the leading players in mobile sales in India,
was faced with a boycott threat from its distributors in India in 2014. The
dealers raised their voice against the price discrimination followed by
Samsung in online sales where the mobile sets were offered at a discounted
price when compared to offline prices. They felt that this had led to a fall
in the sales of the models offline, and they were incurring losses due to this
price discrimination by Samsung. While the growth in the number of
online shoppers in India was increasing, the dealers of Samsung sent an
ultimatum to Samsung that unless it took action to safeguard their
interests, they would boycott its products. In response, Samsung
announced that it had decided to extend exclusivity of selling rights of 48
models, including its much-awaited Galaxy Alpha and Note 4, to offline
retailers. While the dealers welcomed this decision, industry observers felt
that the decision was regressive and might hamper the sales of Samsung in
future given the rise in the trend of online shopping. Some of its rivals had
already tasted success by opting for an online-only distribution model.

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