Marketing Channel Strategy

The OmnI-ChAnnel eCOsysTem
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an in-house direct sales force, reflecting the potential size of their order and their 
demand for guaranteed product availability or custom delivery options. Suppliers 
alternatively might hire manufacturer representatives to transact with potential 
customers. Some sellers (especially newer firms) may lack the resources needed to 
develop an in-house sales force, and agents and brokers that already have connec-
tions with customers could offer an appealing option. These agents often carry a 
portfolio of products from different manufacturers, which many customers pre-
fer, rather than being limited to transacting individually with different suppliers. 
Finally, in globalized marketplaces, many international firms turn to agents and 
brokers as a key mode of entry into new overseas markets.
A firm also might go through a wholesaler or distributor. Grainger is a lead-
ing industrial distributor that stocks nearly 1.5 million items (www.grainger.
com). Many finished product manufacturers source items from distributors such 
as Grainger, which offer one-stop shopping convenience. Furthermore, Grainger 
helps both suppliers and finished goods manufacturers with their supply chain 
functions, such as inventory management. In other industries, such as pharma-
ceuticals, wholesalers play a more critical role; Amerisource Bergen, Cardinal 
Health, and McKesson account for an estimated 90 percent of drug distribution 
in the United States.
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 These wholesalers often provide service for the complete 
inventory line produced by manufacturers and have access to a wide array of 
retail outlets (e.g., traditional pharmacies, supermarkets, mail order pharmacies, 
hospitals). In technology sectors, value-added resellers also can be critical; these 
distributors offer complete solutions packages that bundle components, software, 
or hardware from a variety of providers or add features to existing packages. If 
end-users need complete solutions that a single vendor is unable to provide, these 
resellers become critical intermediaries, because customers prefer to buy through 
them to obtain those value-added services.
Some firms instead turn to direct, B2B e-commerce, supported by proprietary 
electronic data interchange (EDI) systems or cloud computing services provided 
by companies like Amazon (https://aws.amazon.com/ecommerce-applications). In 
the automotive industry, for example, finished goods sellers can find and transact 
with component part suppliers using shared online platforms, some of which even 
feature reverse auction mechanisms, such as Covisint (www.covisint.com). These 
platforms allow firms to find suppliers that meet certain criteria, while also expand-
ing the suppliers’ options. Direct selling in B2B settings also can create challenges, 
though, because buyers readily turn to these platforms to find alternative suppli-
ers, which might strain relationships that salespeople have spent years cultivating. 
Salespeople also may need to leverage more communication tools, including social 
media, even in a B2B context, but still deliver a consistent message across com-
munication channels. Thus, the role of the salesperson is poised to change in the 
shifting omni-channel context.

The Omni-Channel eCOsysTem
21
Most omni-channel research tends to focus on business-to-consumer contexts, 
though,
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 as represented on the right side of Figure 1.3. In reality too, such consid-
erations are prominent. Automakers are closely watching Tesla’s direct distribution 
model to determine if it threatens to upend traditional distribution channels 
through franchised dealers. At the same time, dealerships themselves increasingly 
use the Internet to acquire customers, but they need to realize that those custom-
ers are better informed, having done plenty of research before they ever visit the 
dealership. Consumers also can shop among various dealerships for the same vehi-
cle model, thus creating more intra-brand competition. For these customers, the 
marketer needs to find an appropriate way to synergize the offline and online expe-
riences,
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 but also guard against the risk of revenue loss if consumers move from 
one channel to another. A key question is whether customers that transact with the 
company through a particular channel are more valuable than those that transact 
through other channels.
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Most evidence indicates that customers that use multiple 
channels tend to be more profitable and transact more with the firm.
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Figure 1.4 summarizes the various challenges that managers face in developing 
an omni-channel strategy. We highlight the need to integrate across marketing 
and communication channels, to create unified brand experiences for customers. 
By necessity, an omni-channel strategy is data rich and relies heavily on data 
analytics. Furthermore, an omni-channel strategy demands pricing transparency 
and consistent pricing across channels or even globally. Certain industries are 
affected by the shift to an omni-channel environment more than others, though. 
We develop all these themes throughout this book; more briefly, in Sidebar 1.2 
we highlight challenges associated with deriving a distribution strategy. We 
close with a brief example that highlights the opportunities and promises of an 
omni-channel environment.

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