Question

Suppose you roast coffee and sell it to Maximum Markets. You have a good relationship with Maximum Markets and have relied on them for many years to display your coffees in their stores. Your marketing chain has been relatively short, going from you (the producer) to the reseller (Maximum Markets) to the end consumer. However, you recently received an offer to sell your coffee in other retail stores, some that compete directly with Maximum Markets. You also would like to start selling directly through your website. You decide to provide discounts for coffee sold online. Integrating more channel members and selling to customers directly is likely to cause ________ with Maximum Markets.

Answer 1

Answer:

channel conflicts

Explanation:

Until now, your own distribution channel was Maximum Markets and you have a good relationship with them. Nut the goal of your business (and all businesses) is to make the largest possible profit.

So if you start to expand your distribution channels then there is a very concrete possibility that you will have conflicts with Maximum. Depending on how much you can sell through your other distribution channels will determine how your relationship goes with Maximum.

If other channels represent a very small percentage of your sales and profits, then you will be forced to offer some kind of preferential deal to Maximum. But if your other channels start to sell a lot, then you wouldn't need to worry that much about Maximum and continue your operations like they are right now.