Marketing Channel Strategy



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Marketing Channel Strategy An Omni-Channel Approach

Physical
Possession
Ownership
Promotion
Negotiation
Financing
Risking
Ordering
Payment
Information
Sharing 
Commercial Channel Subsystem 
Producers
Wholesalers
Retailers
Customers:
Industrial
and
Household
FIGURE 1.1
Typical Channel 
System


The Omni-Channel eCOsysTem
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The Internet and e-commerce, smartphones and mobile technologies, and social 
media all have altered how consumers and end-users buy, with far-reaching impli-
cations across the channel landscape. Social media and online review sites present 
opportunities for brand advocacy but are also taking over information functions 
traditionally provided by channel partners, leaving them with less control over 
what information gets spread.
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 Department stores such as Macy’s, JCPenney, and 
Sears are struggling to find their bearings,
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 while various specialty stores such as 
Sports Authority have closed shop.
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Managers are vexed by such altered channel landscapes for several reasons. 
First, building or modifying a channel system involves costly, hard-to-reverse 
investments. Taking the effort to do it right the first time has great value; making 
a mistake may put the company at a long-term disadvantage. Second, modifying 
channels means confronting entrenched interests and the way things have always 
been done. Channel conflicts intensify and require attention. Third, managers 
face challenging decisions when devising an optimal channel strategy, including 
where to devote the considerable financial investments required and how to adjust 
the roles and compensation of different channel members. The latest frontiers of 
e-commerce, including automatic replenishment, virtual and augmented reality, 
and shorter delivery time frames, will continue to vex marketers.
Integrating across channels also remains a challenge. For example, the prolifera-
tion of mobile devices makes price and product comparisons easier, so consumers 
demand greater pricing transparency but also learn about various features available 
from competitive brands. Price differences across channels can exacerbate chan-
nel conflict, but online stores accrue much lower operating costs, because they do 
not need locations in high-rent districts or expensive salespeople. Thus, whereas 
in 2015, only 8 percent of consumers bought groceries online, that percentage 
doubled just one year later.
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Showrooming also has grown into a difficult challenge, such that consumers use 
one retail outlet to touch, feel, and try on products but then buy from a different, 
e-commerce outlet. In the practice of 

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