Multi Channel Marketing Essay Example

regardless of size and products, will face the challenge of integrating multiple channels or if it is only necessary for those dealing with diverse customer segments. The multi-channel challenge may also involve cost/benefit tradeoffs (Frazier, 1999). Will offering customers a wide variety of channel choices raise distribution costs while maximizing convenience?Is it possible to create different channel structures that decrease the total distribution cost by dividing the firm's customers into segments, ensuring that each segment is served by the most cost-effective channel? This means that high-volume customers would receive regular visits from the field sales force channel, while small customers would only have access to call center channels. Customers in between would primarily be served by the independent distributor channel.

Many firms in business-to-business markets already use this channel strategy. However, can more complex multi-channel strategies be created that give customers more flexibility in choosing channels and go beyond the simplistic model based on size and cost? Can dynamic multi-channel strategies be developed to give even small customers access to premium channels, with the assumption that these small customers could become larger ones in the future if they were offered superior service from the "expensive" channel? This special section of Industrial Marketing Management focuses on multi-channel strategy in business-to-business distribution channels, aiming to explore the opportunities and challenges that arise from multi-channel marketing. It includes five articles that discuss important issues in business-to-business multi-channel marketing.

In this article, the focus is on B2B multi-channel marketing strategy. The first article by Hugh Wilson and Elizabeth Daniel analyzes the decision processes necessary for an effective strategy. The authors use a methodology known as "dynamic capabilities analysis" along with analytic

induction from four case studies to provide insights into creating an integrated customer experience and synergy among different channels. From this analysis, Wilson and Daniel identify seven dynamic capabilities with practical implications for managers in B2B markets. The second article by Arun Sharma and Anuj Mehrotra presents a framework for creating an optimal channel mix in multi-channel environments.

The authors apply their model to a large multi-channel software firm in B2B markets. From their application, Sharma and Mehrotra derive several managerial implications for formulating multi-channel strategy. These implications highlight the importance of management emphasizing an empirical, databased approach to multi-channel strategy. The authors suggest that such rational and rigorous approaches are now more feasible due to the availability of better data from modern CRM systems and widely accessible software like Excel.

Kevin Webb and C. Jay Lambe's article, titled "Internal multi-channel conflict: An exploratory investigation and conceptual framework," delves into the complex issue of conflict within multi-channel strategy. The authors specifically focus on internal multi-channel conflict, which refers to conflict within the supplier firm among different groups and individuals responsible for managing multiple channels. Through in-depth research across four case studies, Webb and Lambe develop a comprehensive conceptual framework for understanding internal multi-channel conflict. They propose fourteen areas for future research and also provide managerial implications that can be immediately applied to address conflicts related to multi-channel marketing strategy.

In their article titled "From catalog to Web: B2B multichannel marketing strategy," Bill Merrilees and Tino Fenech emphasize the continued significance of the traditional catalog channel in the modern B2B multi-channel environment. Despite the prevalence of online channels, catalogs often generate higher sales. Through a structural equation model

and multiple regression analysis, Merrilees and Fenech explore the preferences of customers in the office supplies market. Their findings reveal that online channels cannot fully replace catalog channels, as customers appreciate the availability of multiple options that encompass both catalogs and online platforms.

Finally, the fifth article in the special section on B2B multichannel strategy by Julian Ming-Sung Cheng, Show-Ming Tsao, Wen-Hsien Tsai, and Hill H-J Tu focuses on the impact of adding an online channel to a firm's channel mix on financial performance. The authors conducted an exploratory study using Economic Value Added (EVA) and Market Value Added (MVA) metrics and found that adding online channels improved financial performance for the firms studied.

The five articles summarized above address various important issues related to B2B multichannel marketing strategy. These issues include integrating multiple channels, optimizing channel mix, managing conflicts in multiple channels, making channel trade-offs, and assessing financial performance.

This work provides significant insights and directions for future research and practical managerial implications for multi-channel marketing strategy. However, there are other important issues that need to be explored in future analysis and research in the context of the prospects and problems they present for multi-channel marketing strategy. One of the most influential forces in marketing channel strategy in recent decades has been Internet-based e-commerce. With the availability of the online channel option, every firm, regardless of its size, must now incorporate the Internet as a channel to reach its customers.

Additionally, all of these companies are confronted with the challenge of merging digital channels with traditional channels. Therefore, the term "bricks and clicks" is no longer merely a catchy phrase but an actual concern regarding marketing

channel strategy. The integration of online channels with conventional channels in order to provide customers with a seamless experience is undoubtedly the ideal scenario - at least in theory.

Although seamless integration of online and conventional channels is becoming more common, there are still obstacles to achieving it. While technology is advancing rapidly, there are still unresolved channel strategy issues. It is important to address key questions such as whether all products should be offered online, how to balance online and conventional channels, if online channels can reduce distribution costs, which products are more suitable for the internet, and whether online channels attract new customers or cannibalize sales from conventional channels. Additionally, online channels can enhance customer service, but they also replace human interactions in conventional channels.

• Reaching more customers through a multi-channel strategy

Is it guaranteed that having more channels will lead to gaining more customers? Many studies on multi-channel marketing suggest that it does, as additional channels provide more touchpoints for customers to access the firm's products. However, this proposition may not hold true under closer examination.

Additional channels may not effectively reach the desired customer segments. Alternatively, customers who patronize the new channels may primarily consist of those who have switched from the firm's previous channels, resulting in "channel cannibalization" rather than acquiring new customers. Furthermore, if multiple channels are poorly integrated, it may lead to customer dissatisfaction with the firm's multichannel strategy and subsequent loss of customers to competitors. Therefore, it is crucial to consider the channel mix and how well it is coordinated and integrated in determining how the customer base is affected by a multi-channel strategy. Future analysis and research should address these

concerns to determine whether adding channels alone attracts more customers.

In addition, future research should focus on finding the optimal channel mix rather than solely increasing the number of channels. The quality of the channel mix has a greater impact on the size of a firm's customer base. This research should examine the channel portfolio, which can be compared to financial instruments in a typical portfolio within the context of multi-channel strategy.

According to Johnson and Selnes (2004), similar to a diversified financial portfolio, a well-designed channel portfolio should provide a firm with access to various customer segments while achieving channel diversification.

The specific combination of channels and their composition will vary greatly across industries and companies. However, the focus on achieving an optimal channel mix is a central concept in multi-channel strategy (Fein ; Jap, 999). Synergy, in the context of multi-channel strategy, refers to one channel enhancing the effectiveness and efficiency of other channels. Utilizing online channels to gather information before buying through traditional physical stores is a common example of this synergy.

However, the potential for synergy across channels can be much wider. By implementing well-designed multi-channel strategies, it might be possible to offer customers more channels while simultaneously reducing distribution costs. This can be achieved through a more efficient allocation of distribution tasks across various channels (Rosenbloom, 2004). Each channel would then focus on the tasks it is best suited for, thereby complementing the performance of other channels in the mix. Additionally, multi-channel strategies can lead to synergies as different channels collaborate to enhance customer service.

The text discusses the benefits of a well-planned multichannel strategy in business-to-business markets. It highlights that smoothly shifting

a customer to another channel when faced with a stockout can lead to satisfied and delighted customers. The potential synergies from implementing a multichannel strategy are mentioned and suggested as an area for future research. Furthermore, the importance of securing cooperation among channel members in a multi-channel environment is emphasized, as they can fear being bypassed or replaced by other channel options.

Ultimately, the effectiveness of multi-channel strategy relies heavily on how distribution tasks are assigned throughout various channels, encouraging cooperation among members while avoiding conflicts. To achieve this, strategic alliances have become popular in securing increased cooperation among channel members. These alliances generally involve shared long-term goals and often require significant investment and management involvement. Although each channel member may sign a written agreement, strategic alliances are typically not formally defined entities governed by laws at different levels. Instead, the foundation of these alliances is built on trust, B.

The study conducted by Mehta, Larsen, Rosenbloom, and Ganitsky (2006) highlights the importance of trust, commitment, and cooperation for channel members to effectively collaborate in a multi-channel strategy. It raises concerns about the challenges of forming strategic alliances in a dynamic multi-channel environment and how multi-channel strategy impacts existing alliances. Furthermore, it questions whether strategic alliances become even more crucial in fostering trust and commitment among channel members in an unstable channel environment. Future research on multi-channel strategy should address these fundamental questions regarding the role of strategic alliances in marketing channels.

In today's competitive global environment, it has become increasingly difficult to build a sustainable competitive advantage solely through product differentiation or lower prices. Competitors worldwide can quickly imitate, match, or even improve upon product differences including

technological superiority, design innovation, quality standards, or brand identity within a relatively short timeframe.

Focusing on lower prices as a long-term competitive advantage is no longer viable in today's market. With manufacturing capabilities spread across different regions, competitors can always find a cheaper way to produce the product and undercut the price. As a result, companies are now turning their attention towards channel strategy, particularly multi-channel strategy, as a means of achieving sustainable competitiveness. The main reason behind this shift is that well-designed channel strategies cannot be easily copied by competitors. Developing multi-channel strategies often requires significant investment in infrastructure and resources over an extended period. An example of this is Caterpillar's extensive dealer network, which would be difficult for competitors to replicate quickly (Fites, 1996). Therefore, analyzing and researching multi-channel strategies within the context of competitive strategy has become increasingly important.

Examining different channel configurations and mixes in the context of how they can be used for competitive advantage may lead to a new research perspective in the field of competitive strategy. Additionally, focusing more on multichannel strategy could offer a wider range of options for competing in a highly competitive global environment. Supply chains and multi-channel strategy become more complex when there are more channel options to distribute products through. It is important for firms utilizing multi-channel strategy to have the correct product, appropriate quantity, and timely delivery in all the channels they offer.

From the customers' perspective, a multichannel strategy that does not meet this standard will not be seen as valuable (Montoya-Weiss, Voss, ; Grewal, 2003). In fact, inadequate channel integration may lead to inferior customer service. Thus, a multi-channel strategy elevates the requirements

for managing the supply chain. To synchronize the supply chain and ensure that each channel satisfies customer service expectations regardless of their choice, the latest technology and logistical management expertise are needed (Kim, Cavusgil, ; Calantone, 2006).

The use of Radio Frequency Identification (RFID) technology in supply chains is becoming increasingly important. It may become a requirement to track a wide range of products that flow through multiple channels. Managing supply chains in complex multi-channel environments, while still reducing distribution costs, is the expected standard for supply chain management. Can this challenge be met? Will new supply chain paradigms be necessary? Or can existing paradigms suffice? Is effective and efficient supply chain management, even in the new multi-channel environment, mainly dependent on good execution and appropriate technology? These are important questions that both practitioners and researchers will need to address as more businesses in B2B markets use multiple channels to reach global customers.

One major hurdle in developing successful multi-channel strategies is the conflict that arises between the various channels used to reach customers. Some participants may view multi-channel strategies as a zero-sum game, where one channel gaining customers means another channel losing them.

Researchers studying multi-channel strategy in B2B markets should investigate the prevalence of the zero sum perception among channel participants when employing multi-channel strategy and its role in causing conflict. Additionally, researchers should assess whether this perception accurately reflects the reality of multi-channel strategy (Mohr & Nevin, 1999). It is possible that well-designed multi-channel strategies can circumvent the zero sum model and instead offer greater potential returns for all channels involved. If this proves to be true, it would be valuable to

conduct research on the development of erroneous perceptions in multi-channel systems and explore why they occur.

Practitioners are particularly interested in conflict related to multi-channel strategy. It is crucial to focus on preventing dysfunctional conflict when designing multi-channel strategies. Can conflict between channels be avoided by anticipating potential conflicts and formulating strategies and policies to prevent or significantly reduce conflict? For instance, can sales commissions be adjusted in a way that benefits all channels involved, such as when a manufacturer sells directly to customers through both online and field sales force or independent distributors? This would result in customers having more channel options, field sales representatives and independent distributors being credited for direct sales, including commissions, and the manufacturer achieving incremental sales due to a wider channel network. If complete elimination of channel conflict through the original design of multi-channel strategy is not possible, practitioners and researchers should explore methods to resolve or at least lessen cross channel conflicts associated with multi-channel strategies.In the realm of conflict management, managers utilize various tools. These tools comprise traditional behavioral approaches aimed at strengthening relationships among channel members, as well as resorting to arbitration and legal methods. However, technology is predicted to increasingly influence these practices in the future.

Under the concept of distribution relationship management (DRM), certain companies have developed and one has patented software that can assist channel managers in dealing with conflict. The software provides automated systems to ensure that all channel members receive their fair share of profits when products are sold through multiple competing channels. (Reshare, 2006) Multi-channel strategy, which includes a variety of marketing approaches, is not a passing trend but instead a

crucial marketing challenge for the foreseeable future. This is due to the increasing demand from customers for more channel options and advancements in technology that make multiple channel options economically feasible (Verhoef & Donkers, 2005). Thus, for many firms, multi-channel strategy has become a strategic issue that warrants attention from top management. However, in addition to upper-level focus, successful multi-channel strategy also requires management attention at the operational level to govern the development, management, and coordination of different channels in order to deliver a seamless customer experience.

To achieve highly coordinated and integrated multiple channels, organizational changes prioritizing the development of well-integrated multiple channels are necessary. The concept of a "channel manager," which has been extensively discussed in the marketing channels literature and implemented in some firms, could become more widespread (Jackson ; Walker, 1980). This role would consolidate responsibilities currently held by multiple executives, including V.P. marketing, general marketing manager, sales manager, as well as the president and CEO in certain organizations.

The consolidation of authority and responsibility under a single executive position overseeing multiple channels has the potential to improve multichannel integration. In the business-to-business sector, the adoption of a multi-channel strategy is becoming increasingly common. Customers worldwide are requesting more channel choices to access products and services, and advancements in technology have made it feasible for companies to provide a broader range of channels, particularly online channels. However, the expansion of multiple channel structures also highlights the importance of well-planned multi-channel strategies.

Managers responsible for designing and managing channels of distributions face several challenging issues in multi-channel strategy. These issues include integrating high-tech online channels with conventional channels, determining optimal channel mixes, creating synergies

across channels, forming strategic alliances in a multi-channel environment, using multi-channel strategy for sustainable competitive advantage, coordinating complex supply chains to efficiently serve multiple channels, managing multi-channel conflict, and providing effective leadership for multi-channel strategy. The articles in this special section of Industrial Marketing Management offer some guidance for future research on these issues and provide initial insights and management implications for practitioners.

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One of his books, "Marketing channels: A management view" is currently in its 7th edition and is widely used as a textbook in the field of marketing channels by numerous universities.

S. and international markets. Dr. Rosenbloom's extensive publishing experience includes contributions to

prestigious professional journals such as the Journal of Marketing, Journal of the Academy of Marketing Sciences, Journal of Retailing, Industrial Marketing Management, European Journal of Marketing, and more.

Rosenbloom has also provided consulting services for businesses and organizations in both the U.S. and abroad.