Marketing Channel Strategy

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and perhaps more high-end, televisions in its online store, which might appeal 
to a customer demographic that is far more affluent than its typical shopper 
profile. This would result in Walmart becoming a direct competitor of Best Buy 
and invading their space. Walmart has invested heavily in e-commerce to com-
pete effectively against Amazon and is also going after a more affluent audience 
through its acquisition of Jet.com.
22
Another category of sellers challenged to create omni-channel strategies is 
man-
ufacturers
, which must find ways to maintain and manage healthy partnerships 
while also expanding their direct-to-consumer sales. Doing so demands acquiring 
necessary retailing expertise, especially if they set up their own retail stores. For 
example, to build brand awareness and offer a unique customer experience, retailers 
might design dedicated stores, or they might insert dedicated, clearly demarcated 
stores-within-a-store in existing retail locations. In the omni-channel age, manu-
facturers are increasingly held responsible for understanding and contributing to 
the consumer journey. Consumers can easily visit a manufacturer’s website, where 
they expect to find detailed product information, even before they go to a store 
to interact with the product or obtain recommendations from a salesperson. For 
manufacturers, a key objective is to manage channel conflict, which likely means 
making sure they do not undercut the price position of their retail partners, but still 
ensure a well-designed channel strategy that meets customers’ needs.
T H E F O U R P I L L A R S O F A N O M N I - C H A N N E L 
S T R A T E G Y
Even as we emphasize the benefits and appeal of an effective omni-channel strat-
egy, we also must recognize that not all companies plan to adopt omni-channel 
strategies, and not all consumers want to be omni-channel consumers. A con-
sumer who does not use a smartphone will never shop the mobile channel; 
someone who prefers to use cash might shop online occasionally but is not truly 
an omni-channel consumer. Although modern sellers likely cannot avoid adding 
channels, if they hope to remain in business, they might exhibit a multi-channel, 
instead of a truly omni-channel, strategy. For example, automobile manufactur-
ers establish channel arrangements that heavily emphasize offline channels to 
interact with customers and rely on their online operations mainly for branding 
or informational purposes.
23
 At the other extreme, industries that have been rad-
ically altered by digitalization trends (e.g., publishing, music) have shifted most 
of their focus to online channels, with less attention and resources devoted to 
their “legacy” offline channels.
24
But for those companies and consumers who understand the benefits and 
actively pursue seamless omni-channel interactions, it becomes necessary to inte-
grate retail, social, mobile, and mass communication channels, with the goal of 

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Harnessing
Customer 
Knowledge
Managing 
Channel 
Relationships
Leveraging 
Technology
Assessing 
Channel 
Performance
FIGURE 11.1
Pillars of an 
Omni-Channel 
Strategy
maximizing customers’ experiences and total brand sales across all channels.
25
We 
argue that such a strategy is metaphorically a canopy, held up by four pillars, as 
we depict in Figure 11.1:
1. Harnessing customer knowledge.
2. Leveraging technology.
3. Managing channel relationships.
4. Assessing channel performance.
Harnessing Customer Knowledge
The first pillar is deep, data-driven understanding and appreciation of the cus-
tomer. An omni-channel environment is data rich, so firms have means and 
opportunity to gain intimate insights into consumer needs, preferences, and 
behaviors. An omni-channel marketer should leverage data from multiple sources: 
in-store visits, calls to customer service, loyalty program data, web and mobile 
visits, and social media. With these combined data, omni-channel marketers can 
design the best, most efficient, individualized customer experiences. In turn, cus-
tomers can move among channels, depending on the specific characteristics of 
the product, the service, and the channel, as well as their own preferences and 

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goals.
26
 For example, even on its Instagram page, Nordstrom lists “shoppable” 
posts that consumers can click to obtain product details and make a purchase, 
without ever leaving the social media site.
27
Because an omni-channel shopper moves across channels to complete the pur-
chase process, a key goal is to understand what drives a consumer to choose a 
particular channel at each specific stage and for various reasons, such as seeking 
sources of information or wanting to complete the actual purchase.
28
 That is, the 
importance that consumers assign to each channel depends on their purchase 
stage and the purchase situation.
29
Consumers who use more channels tend to 
shop more frequently, offer greater lifetime value, and increase firm revenues 
more than customers who only patronize a single channel.
30
We previously dis-
cussed (see Chapter 1) the practices of webrooming (to research online and buy 
in store) and showrooming (to research in store and buy online); in these clear 
examples, omni-channel consumers use the different channels distinctly for their 
information versus purchase needs. Omni-channel integration thus involves 
integration across not just channel types but also purchase stages.
31
 For example, 
incentivizing online shoppers to visit offline physical stores increases profits, but 
incentivizing store shoppers to go online decreases them,
32
mainly because con-
sumers tend to engage in impulse shopping in-store, where experiential products 
such as clothing can catch their eye. This scenario also means they tend to com-
pare prices less when they are in the store rather than shopping online.
33
 Online 
shoppers within “reasonable” distance to a store thus might be encouraged to 
visit physical stores through tactics such as supporting in-store pickup or sending 
coupons that are only redeemable in stores.
In addition, each customer may take a different path through the purchase 
process, so marketers need to identify, recognize, and minimize any potential or 
perceived hurdles along the way.
34
 According to a recent study, to do so, marketers 
must address a prominent and persistent challenge, namely being able to recog-
nize and access customer information across multiple channels and devices.
35
In 
practice, firms may access less data about a consumer than is available, due to the 
fragmentation of their interactions. Without comprehensive insights, though, the 
firm cannot appeal optimally to customers, nor can it educate them about all its 
omni-channel capabilities. With a focus on the customer interaction with a brand 
(manufacturer brand or private label), the variety of communication (traditional 
media, online, sales force) and marketing channels is vast.
36
Because not all customers want the same thing, the degree of heterogeneity or 
homogeneity of customer segments becomes a matter of great import. Even if mar-
keters know that consumers rely on both brick-and-mortar stores and online stores, 
the extent to which they visit each channel varies. For example, banks have made 
significant investments in information technology, and more than one-quarter 
of bank customers only use digital channels. But even if these consumers are less 
costly to serve, because they are not using more expensive, in-person branch ser-
vices, they seem less satisfied and less connected with their banks.
37
Marketers need 

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to manage relationships with each customer segment, but even when they enter 
the same segment, due to their similar channel usage patterns, different consumers 
value different attributes more or less. Some consumers demand next-day delivery; 
others are more focused on obtaining the lowest price and willing to wait longer 
to receive the product.
Combining these notions, we argue that the task before today’s omni-channel 
marketers is to find ways to integrate customer data from multiple touchpoints to 
identify an effective segmentation strategy that enables the firm to deliver what 
each consumer segment wants, without wasting resources on offers that specific 
segments do not value or are unwilling to pay to obtain, while also identifying any 
future customer-related challenges and opportunities by mining their data.
38
 As the 
Luckin Coffee example showed, Starbucks missed an opportunity to meet Chinese 
consumers’ latent need for delivery-only coffee stores.
Moreover, strong omni-channel operations (just like any form of sales and 
marketing) require effective store retailing, e-commerce, and merchandising 
capabilities.
39
Online customers express deeper connections to a brand when 
they visit a showroom, and retail salespeople can get a better sense of their needs 
by interacting with customers in person.
40
Yet in the future, stores might con-
tinue shrinking in size, increasingly functioning as showrooms and experience 
centers rather than fulfillment centers.
41
 As these developments arise, it would 
be difficult to integrate across channels without a clear mastery of the opera-
tional elements and strong ability to keep up with the changes in the landscape 
of each channel.
Leveraging Technology
With regard to the second pillar that holds up the canopy of an omni-channel 
strategy, it is worth noting that technology essentially initiated and has enabled 
the omni-channel age. Thus mastery of technology clearly is necessary to integrate 
across channels; existing tools enable firms to perform cost-efficient inventory man-
agement, synchronize inventory availability across channels, and establish in-store 
pickup or delivery to get their offerings into consumers’ hands in the shortest, most 
cost-effective way. Technology also can be leveraged to enable customers to make 
better, more informed choices or facilitate their shopping experience. Finally, as a 
communication tool, technology is invaluable, allowing interactions that provide 
customers with detailed product information, product comparison tools, or cus-
tomized promotions.
With the proliferation of smartphones worldwide, omni-channel marketers in 

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