Harvard Case - Supor: How to Resolve Channel Conflict
"Supor: How to Resolve Channel Conflict" Harvard business case study is written by Miao Cui, Yiwei Du, Jingqin Su, Sitara Aziz, Yi Hu. It deals with the challenges in the field of General Management. The case study is 9 page(s) long and it was first published on : Sep 29, 2016
At Fern Fort University, we recommend Supor adopt a multi-pronged approach to resolve channel conflict, focusing on fostering collaboration, streamlining distribution, and leveraging technology to enhance transparency and communication. This strategy aims to create a win-win situation for all stakeholders, ensuring Supor's continued growth and market dominance.
2. Background
Supor, a leading Chinese kitchenware manufacturer, faced a critical challenge: channel conflict between its direct sales force and independent distributors. This conflict arose from differing incentives, pricing strategies, and lack of clear communication, leading to customer confusion, price discrepancies, and ultimately, a decline in brand image and sales.
The main protagonists in this case are:
- Supor Management: Concerned about the impact of channel conflict on the company's growth and brand reputation.
- Direct Sales Force: Motivated by individual sales targets and potentially resistant to sharing customer information with distributors.
- Independent Distributors: Seeking to maximize their own profits and potentially engaging in price-cutting to gain market share.
3. Analysis of the Case Study
To analyze the situation, we can utilize Porter's Five Forces framework:
- Threat of New Entrants: Relatively low due to Supor's established brand and strong market position.
- Bargaining Power of Buyers: Moderate, as consumers have numerous choices in the kitchenware market.
- Bargaining Power of Suppliers: Moderate, as Supor relies on a network of suppliers for raw materials and components.
- Threat of Substitute Products: Moderate, as consumers can choose alternative kitchenware brands or opt for DIY solutions.
- Rivalry Among Existing Competitors: High, as Supor faces competition from both domestic and international brands.
This analysis highlights the importance of maintaining a strong brand image, competitive pricing, and efficient distribution channels to navigate the competitive landscape.
Key Issues:
- Lack of Collaboration: Limited communication and coordination between direct sales and distributors.
- Conflicting Incentives: Direct sales force focused on individual targets, while distributors prioritize profit maximization.
- Price Discrepancies: Uncoordinated pricing strategies leading to customer confusion and brand damage.
- Limited Transparency: Lack of clear information sharing between channels, creating mistrust and hindering effective decision-making.
4. Recommendations
1. Establish a Collaborative Channel Management System:
- Joint Sales and Marketing Initiatives: Implement joint campaigns and promotions to leverage the strengths of both channels and create a unified brand message.
- Shared Customer Database: Develop a secure system for sharing customer data between direct sales and distributors, ensuring data privacy and compliance.
- Regular Communication and Training: Conduct regular meetings, workshops, and training sessions to foster communication, build trust, and align incentives.
2. Streamline Distribution and Pricing:
- Define Clear Territories and Responsibilities: Establish clear geographical boundaries for each channel, minimizing overlap and potential conflicts.
- Implement a Uniform Pricing Policy: Develop a transparent pricing structure that ensures fair margins for both direct sales and distributors while maintaining competitive pricing for consumers.
- Offer Incentives for Collaboration: Develop a system of rewards and incentives for both channels based on achieving shared goals and contributing to overall company success.
3. Leverage Technology for Transparency and Efficiency:
- Online Sales and Order Management Platform: Develop a centralized platform for managing orders, inventory, and customer information, providing real-time visibility to all stakeholders.
- Data Analytics and Reporting: Utilize data analytics to track sales performance, identify trends, and make informed decisions regarding pricing, inventory, and marketing strategies.
- Mobile Apps for Sales and Distribution: Develop mobile apps for sales representatives and distributors to access information, track orders, and communicate effectively in real-time.
5. Basis of Recommendations
These recommendations are based on:
- Core Competencies and Consistency with Mission: Supor's core competency lies in its brand reputation and product quality. These recommendations aim to strengthen these assets by fostering collaboration and ensuring consistent customer experience across all channels.
- External Customers and Internal Clients: The recommendations prioritize customer satisfaction by addressing price discrepancies and improving communication. They also aim to improve the working environment for both direct sales and distributors.
- Competitors: By implementing a streamlined distribution and pricing strategy, Supor can remain competitive and attract customers in a crowded market.
- Attractiveness: The proposed changes are expected to increase sales, improve customer satisfaction, and enhance brand image, ultimately contributing to Supor's long-term profitability.
6. Conclusion
By adopting a collaborative approach, streamlining distribution, and leveraging technology, Supor can effectively resolve channel conflict and achieve sustainable growth. This strategy will not only enhance profitability but also strengthen brand image and customer loyalty, solidifying Supor's position as a leader in the kitchenware market.
7. Discussion
Alternatives:
- Eliminating One Channel: While this might appear to simplify the situation, it could lead to customer dissatisfaction and loss of market share.
- Ignoring the Conflict: This approach would only exacerbate the problem, leading to further damage to brand image and customer relationships.
Risks:
- Resistance to Change: Some employees and distributors might resist the proposed changes, requiring effective communication and change management strategies.
- Technological Challenges: Implementing new technology requires careful planning, training, and ongoing support.
- Cost of Implementation: Significant investments might be required for technology, training, and system integration.
Key Assumptions:
- Commitment from Management: Effective implementation requires strong leadership and commitment from Supor's management team.
- Willingness to Collaborate: Both direct sales and distributors need to be willing to work together to achieve shared goals.
- Technological Adoption: Employees and distributors must be comfortable using the new technology and embrace data-driven decision making.
8. Next Steps
- Form a Task Force: Establish a cross-functional task force to develop and implement the proposed solutions.
- Pilot Program: Pilot test the new systems and processes in a limited geographical area before full-scale implementation.
- Communication and Training: Conduct comprehensive training programs for all employees and distributors on the new systems and processes.
- Performance Monitoring: Regularly track key performance indicators (KPIs) to assess the effectiveness of the implemented solutions and make necessary adjustments.
- Continuous Improvement: Foster a culture of continuous improvement by seeking feedback from all stakeholders and implementing ongoing enhancements to the channel management system.
By taking these steps, Supor can effectively address channel conflict, create a more collaborative and efficient distribution network, and achieve long-term success in the competitive kitchenware market.
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Case Description
In 2007, the chairman of Supor Group led the company in a new venture in the sanitary ware industry. Supor Group was the first listed company in the Chinese cookware market, and Supor Sanitary Ware Co., Ltd. (Supor) was Supor Group's most important industry. Supor established three production bases in Zhejiang and Shenyang, China. Its marketing channels included brand agents and direct-sale stores. The company also opened an online flagship store on Tmall, a Chinese-language website for business-to-consumer online retail. Since its performance on Tmall was poor, the company outsourced this channel to Company X. However, this led to channel conflict between online and offline channels. How could Supor Group resolve the conflict, improve channel performance, and achieve channel synergy?
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