Industrial Marketing Management 36 (2007) 4 – 9 Multi-channel strategy in business-to-business markets: Prospects and problems Bert Rosenbloom ? LeBow College of Business, Drexel University, Philadelphia, Pennsylvania, USA Available online 28 July 2006 Abstract Multi-channel marketing strategy has become a major force in business-to-business distribution channels, especially since the option of Internet-based online channels emerged less than a decade ago. Making products and services available to business markets via a wide array of different channels can provide increased levels of customer choice and service.
But the task of coordinating and integrating multiple channels that operate at high levels of efficiency has forced managers responsible for channel management to deal with a variety of challenging issues. These include the role of e-commerce in the multi-channel structure, finding an optimal channel mix, creating synergies across channels, building strategic alliances, creating sustainable competitive advantages, managing more complex supply chains, dealing with conflict, and providing the leadership necessary to attain well integrated multiple channels. 2006 Elsevier Inc. All rights reserved. Keywords: Multi-channel strategy; Channel management; Integrated multiple channels; Multiple channels; Channel coordination Moving past the first half decade of the twenty-first century, it has become obvious that such forces as Internet-based Ecommerce, globalization, and intense international competition have made marketing channel management much more challenging and complicated than it was just a few short years ago (Narus & Anderson, 1996).
Businesses all over the world now have many more choices in the channels they can use to reach their customers (Rangaswamy & Van Bruggen, 2005). In fac...
t, numerous companies in the business-to-business sector already use multiple channels to go to market with their products and services (Cespedes & Corey, 1990). The company’s own field sales force channel, the distributor channel, the sales rep channel, the catalog/mail order channel, the online channel, the call center channel, and several other may all be needed by the same company to serve ts customers effectively and efficiently (Friedman & Furey, 1999). But such a wide range of channel choice and combination potential means that businesses also face the challenge of formulating strategies to achieve an optimal channel mix while avoiding conflict among the different channels being used ? Tel. : +1 215 895 6992; fax: +1 215 895 6975. E-mail address: [email protected] edu. 0019-8501/$ – see front matter © 2006 Elsevier Inc. All rights reserved. doi:10. 1016/j. indmarman. 2006. 06. 010 (Rosenbloom, 2004).
So, the overriding question becomes: How do firms utilize multiple channels, including new hightech E-commerce channels, to foster channel confluence and synergy rather than conflict? Other important and related questions include: Will virtually all firms regardless of size and products sold face the challenge of developing well-integrated multiple channels? Or will a multi-channel strategy need to be pursued only by those firms that deal with diverse customer segments that seek maximum choice in how, when, and where they purchase products and services?
The multi-channel challenge may also involve cost/benefit tradeoffs (Frazier, 1999). Does offering customers maximum convenience via a wide variety of channel choices necessarily raise the cost of distribution? Or, is it feasible to design multiple channel structures that actually reduce the overall cost of distribution by segmenting
the firm’s customer base in such a way that each customer segment is served by the most cost effective channel? Thus, large volume customers get called on regularly by the field sales force channel while small customers have access only to call center channels.
Customers in the intermediate range are served mainly by the independent distributor channel. Numerous firms selling in business-to-business markets already operate essentially according to this channel strategy. But are more sophisticated multi-channel strategies feasible that allow B. Rosenbloom / Industrial Marketing Management 36 (2007) 4–9 5 customers more flexibility in channel choice and that move beyond the perhaps overly simplistic and static model based virtually entirely on size and on cost?
Instead, can more dynamic multi-channel strategies be developed that enable even small customers to have access to premium, more peopleintensive channels on the assumption that some of today’s small customers could become giant ones in the future if the “expensive” channel offered them a superior level of service that exceeded their expectations? The purpose of this special section of Industrial Marketing Management on Multi-Channel Strategy in Business-to-business Distribution Channels is to begin addressing the opportunities and challenges presented by multi-channel marketing strategy.
Five highly thought provoking articles that deal with some of the most important issues in business-tobusiness multi-channel marketing have been included in this special section. This article then goes on to discuss further some of the key challenges and opportunities associated with B2B multi-channel marketing strategy. 1. Overview of the articles The first article, “The multi-channel challenge: A dynamic capability approach” by Hugh Wilson and Elizabeth Daniel, provides an analysis of the underlying decision processes needed for effective multi-channel strategy.
Using a methodology the authors borrow from the strategic management literature “dynamic capabilities analysis” along with an analytic induction approach to data analysis from four case studies, the authors provide important insights into what is required to create an integrated customer experience and synergy among the different channels being utilized by the firm. From this analysis, Wilson and Daniel derive seven dynamic capabilities that have important and very practical implications for managers designing and managing multi-channel strategies in B2B markets.
The second article in this special section, “Choosing an optimal channel mix in multichannel environments” by Arun Sharma and Anuj Mehrotra develops a framework for creating an optimal channel mix. The authors then apply their model to a large multi-channel software firm operating in B2B markets. Based on the empirical application of the model to this firm, Sharma and Mehrotra derive several managerial implications for formulating multi-channel strategy. These implications point to the need for management to emphasize an empirical, databased approach to multi-channel strategy.
The authors argue that such rational and rigorous approaches are becoming more feasible given the availability of better data such as that provided by modern CRM systems and widespread availability of common software such as Excel. In the third article of this special section, entitled “Internal multi-channel conflict: An exploratory investigation and conceptual framework,” Kevin Webb and C. Jay Lambe, examine one of the most vexing problems in multi-channel strategy — conflict.
The authors focus particular attention on what they refer to as internal multi-channel
- Audience Theory
- Brand Management
- Competitor Analysis
- Customer Service
- Discount Store
- Electronic Commerce
- Fixed Cost
- Internet Marketing
- Laundry Detergent
- Market Research
- Market Segmentation
- Marketing Management
- Marketing Mix
- Marketing Plan
- Marketing Research
- Marketing Strategy
- Online Shopping
- Point Of Sale
- Product Differentiation
- Promotion And Marketing Communications
- Research Methods
- Supply And Demand
- Total Cost
- Total Quality Management