Part A: Channel Conflict Challenge

Pharmaceutical (drug/medicine) companies make a broad range of products. Some must be sold via chemists/pharmacies (such as medicines), whereas some can be sold in supermarkets (such as supplements). Obviously, supermarkets offer significantly greater sales potential. This channel conflict challenge revolves around the distribution of a range of popular protein shakes. Traditionally, they have been sold only in chemists. However, as the overall market has become more health conscious, the major supermarket chains have approached the pharmaceutical firm, as they also now want to sell this product.

The chemist's channel is not happy with this news. Obviously, the supermarket chains are in a position to under-cut them on price, which would mean that they would lose this profitable product line, as well as a number of their customers who only visit a chemist to buy this product. Therefore, the chemist's channel has indicated to the firm that they want to keep their exclusive arrangement in place; otherwise, they will be less willing to distribute the firm's range of other products (that is, medicines).

1. How would approach/resolve the above situations?

2. How often, do you think, that channel conflict occurs in real business life?

3. If it is common, then is it worthwhile for some firms to minimize the number of channels that they use?

4. What type of firms/products would benefit from using many different distribution channels?