Factors Affecting Channel Conflicts in the Value Chain of FMCG Sector

Abstract

Marketing channels are a set of interdependent organizations involved in the process of making a product or service available to customers/consumers, for use or consumption. The channel members in a marketing channel include companies, distributors, wholesalers, retailers and customers. Channel conflict is when a member of the distribution channel perceives another member to be engaged in behaviour that negatively impacts the attainment of its goals. Marketing channel conflicts are of different types and there are vast variations in their intensity and scale. This study, therefore, aims to ascertain the factors that cause channel conflicts in the supply chain of the Fast-Moving Consumer Goods (FMCG) sector and their impact on the overall supply chain of their marketing. The study considers a wide variety of FMCG products such as processed foods, baked goods, fresh, frozen and dry goods, medicines, cleaning products, and office supplies. The geographical boundary of this study is the south Indian state of Kerala.A qualitative methodology is used in the study by conducting in-depth interviews of the different channel members in the supply chain of FMCG sector in Kerala. The Quota-sampling method was used to identify the sample to be interviewed. Further, a correlation and regression analysis are done to understand the most influential factors in marketing channel conflicts. The findings of the study revealed that the major factors causing channel conflicts, were damaged goods, late deliveries, miscommunication, poor packaging, very low margin etc. The study found that managing channel conflicts will ensure a more efficient value chain that will reduce the overall costs incurred by the channel members. The study aims to identify measures to tackle channel conflicts in the supply chain of FMCG sector and enhance its value.