A Simulation Model for Managing Marketing Multi-Channel Conflict

Abstract

In today’s global competition, companies are obliged to go to market using multiple channels of strategy for various reasons. However, channel conflict is inevitable in multi-channel structures causing sharp decreases in the demand of one or more channels. A system dynamic model was developed to simulate the complex multiple channel structure and factors that affect the demand and channel conflict; aiming to simulate the situation of the supplier decision maker who takes fast decisions in one of the various variables that he controls to achieve maximum profits and minimum channel conflict. The model was validated using real data of a major consumer electronics supplier in Egypt that has traditional distributors and Hypermarkets as two different channels. Various policies of inventory allocations in each channel and different promotion rates were tested in order to achieve the objective of maximizing supplier profit and minimizing channel conflict.