When a single firm sets up two or more marketing channels to reach one or more customer segments this is known as?

A single firm sets up two or more marketing channels to reach one or more customer segments Often called hybrid marketing channelsAlmost every large company and many small ones distribute through multiple channels •Advantages: oexpand sales and market coverageogain opportunities to tailor its products and services to the specific needs of diverse customer segments oChanging channel organization Changes in technology and the explosive growth of direct and online marketing are having a profound impact on the nature and design of marketing channels Trend toward disintermediation•The cutting out of marketing channel intermediaries by product or service producers, or the displacement of traditional resellers by radical new types of intermediaries •Channel innovators who find new ways to add value in the channel can sweep aside traditional resellers and reap the rewards •To remain competitive, product and service producers must develop new channel opportunities, such as the internet and other direct channels •Channel design decisionMarketers struggle between what is ideal and what is practicalMarketing channel designs-designing effective marketing channels by analyzing consumer needs, setting channel objectives, identifying major channel alternatives and evaluating them oAnalyzing Customer needs Providing the fastest delivery, greatest assortment and most services may not be practical or possibleCompany and its channel members may not have the resources or skills needed Providing higher levels or service results in higher costs for the channel and higher prices for the customer oSetting Channel Objectives Companies should state their marketing channel objectives in terms of targeted levels of customer service Channel objectives are influenced by the nature of the company, its products, its marketing intermediaries, its competitors and the environment Environmental factors such as economic decisions and legal constraints may affect channel objectives and design oTypes and number of intermediaries

Intensive distribution-stocking the product in as many outlets as possible Exclusive distribution-giving limited number of dealers the exclusive right to distribute the company’s products in their territories Selective distribution- the use of more than one, but fewer than all, of the intermediaries who are willing to carry the company’s products oEvaluating Channel Alternatives Economic criteria-company compares the likely sales, costs and profitability of different channel alternatives Adaptability criteria•Channel Management Decision oMarketing channel management-selecting, managing, and motivating individual channel members and evaluating their performance over timeWhen selecting intermediaries, the company should determine what characteristics distinguish the better ones •Evaluate each channel member’s years in business, other lines carried, growth and profit record, cooperativeness and reputation •

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Multi-channel distribution systems are an important strategic issue in marketing and e-Business. Strengths and drawbacks of using multi-channel distribution systems are provided alongside, how to implement these systems, and various measures and ways to maximise success.

Technique Overview

Multi-Channel Distribution Systems Definition

A multi-channel distribution system is a system in which a single firm sets up two or more marketing channels to reach one or more customer segments. It is also called a hybrid distribution system (Teltzrow et al., 2003).

Multi-Channel Distribution Systems Description *

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Business Evidence

Strengths, weaknesses and examples of Multi-Channel Distribution Systems *

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Business Application

Implementation, success factors and measures of Multi-Channel Distribution Systems *

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Further Reading

Multi-Channel Distribution Systems web and print resources *

Multi-Channel Distribution Systems references (4 of up to 20) *

• Agatz, N., Feischmann, M. and van Nunen, J. (2006) E-Fulfilment and Multi-Channel Distribution. A Review. ERIM Report Series Research in Management, August.
• Boyaci, T. (2005) Competitive Stocking and Coordination in a Multiple-Channel Distribution System. IIE Transaction, May 2005, [online] Available at: (http://www.researchgate.net/publication/239393470_Competitive_stocking_and_coordination_in_a_multichannel_distribution_system) [Accessed 12 October 20
• Bovensiepen, G., Schögel, M. and Rumpff, S. (2007) Success Through Diversity. [Online] Available at: (pwcplus.pwc.de/fileserver/EmbeddedItem/PwC-Survey_Multi-Channel Management_Management Summary_EN.pdf?docId=e5e4194c4a32ef1&componentName=pubDownload_hd) [Accessed 12 May 2012].
• Cote, B. (2011) 5 Best Practices for Multichannel Campaign Success. Fifth Gear. [Online]. Available at: (fifthgearanalytics.com/2011/06/5-best-practices-for-multichannel-campaign-success/) [Accessed 12 May 2012].

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