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Case Study Multiple Channels Sage
Case Study Multiple Channels Sage
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Abstract
Advances in information technology and changing customer needs for channel service outputs have dramatically affected the
routes to markets in many industries. The authors propose that these changes have led to significant alterations in how cus-
tomers interact with firms and consequently to a phenomenon that we dub ‘‘channel multiplicity.’’ Channel multiplicity is char-
acterized by the customer’s reliance on multiple sources of information from independent (and often disparate) channel
organizations and increasing demand for a seamless experience throughout the buying process. The authors identify the new
market operating realities driving channel multiplicity and provide an overview of the consequences for channel design and
channel management: a broadened view of products and services, channel leadership challenges, alterations in channel struc-
ture, and an expanded view of distribution intensity. The authors also identify issues triggered by these developments, which
calls for further research in this field.
Keywords
multiple channels, channel multiplicity, channel design, channel leadership, distribution intensity
Empowered
Increasing
customers and Customers’ evolving
transaction
direct channel needs
fragmentation
relationships
Channel multiplicity
• Multiple information sources and outlets
• Seamless experiences
It is worth noting the distinction between channel multipli- channel design and management that must occur in response
city and multichannel management. As defined by Neslin et al. to channel multiplicity. Prior related work on multichannel
(2006, p. 96) in their seminal review, multichannel customer management (e.g., Ganesan et al. 2009; Neslin et al. 2006;
management refers to ‘‘ . . . the design, deployment, coordina- Neslin and Shankar 2009) assumes the deployment of multiple
tion, and evaluation of channels to enhance customer value channels as a deliberate, carefully planned, and manufacturer-
through effective customer acquisition, retention, and develop- controlled set of ‘‘go to market’’ decisions (Rangaswamy and
ment.’’ Our emphasis in this article is on the emerging phenom- van Bruggen 2005). In contrast, we propose channel multipli-
enon of customers’ seeking information and demanding city to be an exogenously determined phenomenon that has cul-
products and services from an ever-increasing range of sources. minated in a ‘‘perfect storm’’ of technological and structural
Our contention is that one of the many consequences of channel environmental changes.
multiplicity is the need for a sound multichannel management Figure 1 illustrates the overview of our discussion. In this
strategy. Hence, while the former represents the behavior, the section, we describe the factors that have led to the develop-
latter reflects the firm’s response to that behavior.1 ment of channel multiplicity: (a) the seismic shifts occurring
The immediate result of channel multiplicity is a sea of in the firms’ routes to markets and customer interactions,
change not only in the way firms must design and manage their (b) the accompanying fragmentation of exchange, whereby the
marketing channels, and coordinate and create incentives for consummation of a transaction may consist of a series of indi-
their channel partners (i.e., the organizational response), but viduated channel functions, each of which may be performed
also in our conceptualization of ‘‘products’’ and ‘‘channels’’ capably (and sometimes solely) by distinct independent parties.
(i.e., the phenomenon). Add to this the ever-increasing level We then (c) identify customers’ evolving channel needs as a
of product and/or service digitization and the corresponding critical driver of channel multiplicity and discuss the implica-
growth in information-based offerings, and the result can be tions of their information-based empowerment for new
uncontrolled chaos . . . or unbridled opportunity. approaches to segmentation and value creation.
The purpose of this article is to identify the new operating We propose that channel multiplicity calls for a significant
realities driving the phenomenon of channel multiplicity and modification and broadening of what we mean by the terms
provide an overview of the likely changes in distribution ‘‘distribution channel’’ and ‘‘product,’’ and calls into question
current notions of channel leadership and planned distribution information source for customers; other consumers and
structure. Specifically, we consider four key implications for individuals across various social networks also play a key role
(a) products and services, (b) channel leadership, (c) channel in the process. Manufacturers will need to play a more active
structure, and (d) distribution intensity. The central thesis is and pro-active role in alternative channels. An increasing num-
that changes to channel structure are not necessarily a function ber of companies have become significant contributors to
of carefully planned deliberations, but rather, a response to online forums and use Facebook and Twitter to update their
market and customer evolution. We conclude with an outline customers with up-to-date information and respond to informa-
of the challenges and opportunities inherent in channel tion requests. In addition to these outlets, manufacturers
multiplicity. increasingly have the option to sell and deliver products next
to their traditional resellers. Furthermore, the entry barriers for
new entrants performing channel functions have become much
The New Market Realities lower than before. Online retailers, recommendation sites, and
price comparison sites are examples of such new channel
Direct Relationships With Empowered Customers members.
Advances in information technology have dramatically chan-
ged the way customers interact with firms and consequently,
the manner in which these firms (should) design their routes
Increasing Fragmentation of the Transaction
to markets (Wallace, Giese, and Johnson 2004). Before the rise Along with the growing movement in firm-to-customer and
of the Internet, most companies would market their products customer-to-customer interactions, we are observing an
through indirect channels using independent intermediaries increasing fragmentation of the transaction and reorganization
such as wholesalers, distributors, and retailers. Communication of key channel functions over the purchase lifecycle. As an
would typically take place through mass media such as televi- example, historically, phones were sold through self-service
sion advertising and newspaper ads. Customers who needed retail stores or directly through intermediaries or online chan-
information could contact companies directly by telephone; nels. However, the rise of smartphones has increased the need
however, most communication would occur indirectly through for more education support and tactile handling prior to pur-
resellers and channel intermediaries. These days, channel func- chase. Hence, what is emerging is the creation of more retail
tions have become allocated across various members (and non- outlets (whether they be manufacturer owned or through inter-
members) of a marketing channel. The choice of appropriate mediaries, either in stores or kiosks) to allow the ‘‘touch and
channel member for a given function is governed by both effi- feel’’ of the product, with purchase occurring online or after the
ciency and effectiveness concerns. As an example, channel result of a web-based multi-vendor search and price compari-
members might try to avoid the duplication of channel func- son. Subsequent product support, such as software updates,
tions among multiple intermediaries in the channel. The result- technical support, and complementary purchases and applica-
ing channel structure would emerge as a compromise between tions are also provided online or in independent forums or via
the customers’ channel service demands and the various chan- software application providers. In this manner, the nature of the
nel members’ capacities and interests and would serve the channel of distribution has expanded from being focused on the
needs of either the average or the most important customer product only to the provision of valuable support services and
group. Within this structure, the various firms become more customer retention activities.
or less dependent on each other for realizing their goals.
Although the concept of channel functions is by no means
new (see Coughlan et al. 2006 and Rosenbloom 2003 for thor-
Customers’ Evolving Channel Needs
ough reviews), the increasing granularity with which such The customer’s buying process consists of several stages or
functions may be assigned, observed, and incentivized is a new phases. In each of these stages, the marketing channel plays a
operating reality. As we point out in this section, an immediate role. Customers start with a search for information about prod-
and notable consequence of such granularity is that information ucts and services and process what they find. This results in the
about products and service offerings may no longer be under choice of a product and/or service. The product/service will be
the control of a single firm. We now consider the implications ordered and when the order is fulfilled a transaction has taken
of this change for product- and channel-related viewpoints and place. Following the transaction, customers may need post-
understanding. purchase servicing. The intensity with which customers go
The rise of the Internet and mobile smartphones has enabled through the various stages of this buying process depends on
firms to establish and maintain more direct relationships with the buyer (e.g., experience and time constraint) and the charac-
their customers (Ganesan et al. 2009). Manufacturer websites teristics of the product being purchased (e.g., price, newness,
provide relevant information about their products and services and riskiness). Within each stage of the buying process, the
available for (potential) customers. At the same time, custom- customer will need the marketing channel to provide certain
ers are frequently interacting with each other through social channel services. Verhoef, Neslin, and Vroomen (2007) find
media platforms such as Facebook, Twitter, and online forums. that the optimal channel will often differ for the various stages
So, the traditional marketing channel is no longer the dominant of the buying process. They identify the research-shopper
phenomenon, which is the tendency of customers to use one instances they may not. Research should identify the most
channel for search and another for purchases. We would further effective strategies for dealing with coordination issues (e.g.,
argue that even within the purchasing stage, different channels channel conflict and free riding) in various situations.
may be preferred for ordering and delivery. Similarly, custom-
ers may prefer different channels for post-purchase activities
than the channels for prepurchasing activities.
Ideally, marketing channels will be designed in such a way Implications for Channel Design and
so as to optimally meet customer requirements, and the chan- Multichannel Management
nels that are best at meeting these requirements will emerge
as the preferred method for doing so. In the 1960s, Bucklin
Broader View of Products and Marketing Channels
(1966) proposed four basic channel service outputs: spatial Historically, the purpose of channel design and implementation
convenience, waiting time, lot size, and assortment variety; was to reduce transaction costs, exploit contact efficiencies,
channels must ensure that customers can obtain information and leverage specialized functions (Coughlan et al. 2006).
and buy products at the place they prefer, at a time which suits However, the emergence of channel multiplicity due to new
them best, and in a quantity they prefer. The channel should technologies, changing customer needs and wants, and
also deliver the products and information customers actually increased mobility suggests that our view of what a channel
want and ideally offer complementary purchase opportunities. comprises must be broadened. In this section, we consider the
Channels can add value for customers through assortment various formats in which channels might exist and the implica-
variety. tions of decoupling functions.
By mapping the customer’s buying process and the channel If products are digital representations or experiences, a
service outputs, one can determine the most appropriate chan- broader view of the channel demands that all digital conduits
nel per phase of the decision process. For each phase in the could potentially represent a channel of distribution, including
buying process, one has to determine the service outputs but not limited to mobile phones, kiosks, and any user-
requested by the customers and how important these services generated phenomena such as blogging sites, social networks
are. Next, one needs to determine how the various alternative (i.e., Facebook, Twitter, LinkedIn, etc.), video sites (YouTube.
channels available will perform in delivering these channel ser- com and Hulu.com), and games as well as all other branded
vice outputs per phase of the buying process. From this, formats such as retailers, brand fans, user groups, and catalogs.
emerges the roadmap for the preferred channel. This is because multiple channels are often prevalent in fast
Following this logic, one can evaluate how well the various changing market environments; if the product market matured
available channels perform with respect to the four channel more slowly, the channel structure would have time to adapt to
service outputs in each phase of the decision-making process. changing customer demands (Anderson, Day, and Rangan
Previous research has mainly focused on the differences 1997). Thus, we must rethink not only how channels are
between online and offline channels (Verhoef, Neslin, and designed, managed, and coordinated but also how products,
Vroomen 2007). However, within the online category, various pricing, and promotion should be reconfigured. One of the most
platforms are available nowadays (e.g., Corporate Websites, important consequences of the digitization of products is the
Opinion Platforms, Facebook, Twitter, and YouTube), each drastic reduction of the marginal costs of reproduction and
with their own strengths and weaknesses (Hennig-Thurau product distribution, which can result in significant
et al. 2010); and more research is needed to understand the production-side economies of scale and the emergence of net-
potential value of these various platforms. One can also deter- work externalities (i.e., the goods become more valuable as
mine how important the channel service outputs are to custom- their market share increases). As an example, America Online
ers. By combining these importance scores with the or Google can successfully aggregate thousands of news arti-
attractiveness of the various channel alternatives, a preferred cles, stock reports, chat rooms, health tips, horoscopes, and
channel per phase in the customer buying process can be iden- scores for consumption. While this may seem straightforward,
tified. This preferred channel can differ for different buyers, the difficulty arises for firms who must manage both online and
buying situations, products, and so on (Nunes and Cespedes offline distribution channels simultaneously. An example of
2003). Research should more systematically identify the this might be Dow Jones, or Consumer Reports, which must
strengths and weaknesses of the various available channels and make content available both online and offline and their pric-
configurations across different buying situations. ing, communication, and product offering strategies must also
It is also possible to develop customer segments (Konus, be coordinated across these very different channel formats.
Verhoef, and Neslin 2008) with similar channel preferences. Bakos and Brynjolfsson (2000) provide an analytical frame-
Channel multiplicity will require suppliers of products to work for these effects, including how to manage upstream and
expend more effort in tracking customer segment preferences downstream competition for such goods, bundling strategies,
as they have multiple options for effectively serving these cus- and their effects on competitive strategy, innovation, and mar-
tomers. This development means that manufacturers will need ket dynamics. However, more work is needed that empirically
to manage a more diverse portfolio of routes-to-market. In investigates these possibilities on multichannel management
some cases, the parties’ interests will be aligned, while in other design and evolution.
As channel functions become increasingly decoupled from the firm’s own channels concurrent with other independent
organizations, one implication is that they are completely dis- channel intermediaries (Vinhas and Anderson 2005). On the
connected and managed altogether by alternative organizations other hand, this multiple channel approach does appear to be
that can perform the function more effectively. As an example, a stable, long-term equilibrium.
when the view of the channel was the distribution of physical In particular, the remaining puzzle is how channel multipli-
products, information provision was often part and parcel of city and its implications for channel management converge to
a coordinated channel. However, under a broader view of the support a more coherent and strategic multichannel strategy.
channel, the information function might be completely inde- How do consumers interact with various channel formats and
pendent of the coordinated channel—that is, owned and oper- for what functions? How do these patterns change over time
ated by an independent firm—or even user generated. as the consumer becomes more loyal and develops a greater
Consider the travel services industry as an example. It used understanding of the firm and its products? As an example,
to be that travel agents, providers, or firms would provide infor- we might witness consumers engaging in more freeloading
mation about hotel accommodations, points of interest, and so across channels of competing firms (such as the physical exam-
on. However, this information always had the potential to be ination of a book in a Borders store but order placement at
somewhat biased, as many of these firms may have arrange- Amazon.com). Initially, but over time, they may forego the
ments with these points of interest that motivate their informa- retail format altogether and go straight to purchase at a website.
tion sharing. Now, such information is candidly offered From the firm’s perspective, how should the ‘‘touch points’’ of
through user-generated content sites such as Tripadvisor.com, various channels be coordinated so as to create a ‘‘singular’’
where past visitors to these locations will post their comments product or service experience for the customer? As digital tech-
and pictures of their experiences. For the consumer, this offers nologies become increasingly pervasive, in the customer’s
an unbiased (i.e., not from any specific brand perspective but mind, there may no longer be an ‘‘online or offline’’ version
from other consumers) sources of information to be considered, of the firm, but just the firm, with ongoing interactions through
although it introduces new risks, that is, content credibility and a web browser, mobile phone, or local Internet connection.
user relevance (may no longer be completely customized). The fragmentation of channel structures and outsourcing of
Another example of the unbundling (and total management) function ownerships to alternative firms and customer groups
of the information unbundling function is WebMD.com in the may potentially create a dark side as well. If consumers are
health care industry. This site tries to educate consumers on no longer dependent on the coordinating channel firm for infor-
their health options and the trade-offs associated with their mation provision, or various aspects of the product (e.g., the
choices. Google is another example of how information has hotel accommodation, touring schedules, and transportation)
become unbundled and resourced to a completely different are outsourced to multiple independent firms, then the coordi-
company altogether. The search capabilities that it provides nating firm loses a significant level of influence and control
is much more efficient, thorough, and less biased than the view- over the consumer experience, as the necessary functions it
point of any particular firm. provides diminishes. While this creates an ‘‘empowered con-
In turbulent or fast changing market environments, the exis- sumer,’’ who is better able to manage the coordination of these
tence of multiple channels is necessary. However, Anderson, channel functions, it may also facilitate the customer’s move-
Day, and Rangan (1997) caution that the value of proliferating ment away from the firm.
channels does not increase at infinitum. Instead, channel diver- Collectively, this suggests a broader view of the ‘‘channel’’
sity is only valuable as long as the firm treats such arrange- as we know it. Historically, the channel might have been com-
ments as options that allow the firm to persevere and provide prised of a series of firms, typically chosen, designed, and coor-
some semblance of stability in a rapidly changing environment. dinated by a single firm. If the purpose of the channel is to
By viewing channels as bundled options, the firm gains flexi- deliver the right product at the right place and time, and an
bility while it explores various directions. However, over time, independent intermediary such as an information provider
these authors would predict that as the environment stabilizes, enables this, then should not this provider also be viewed as
the number of channel arrangements should be fewer, more sta- part of the ‘‘channel?’’ We would argue that it should. One
ble, and part of a larger coherent channel strategy. Since then, implication of this approach is that we should no longer view
we have witnessed a partial fulfillment of this prediction. On the channel according to its ownership (i.e., by a single or
one hand, we have seen an increase in the number of channels multiple firms) but instead view the channel as a series of
by which the firm now goes to market (Jindal et al. 2007), and value-adding functions and/or services that combine together
this has led to several papers that model the consumer’s chan- to create enhanced customer experiences (e.g., more choice and
nel adoption and usage as a function of individual customer competitive comparisons, as well as greater objectivity,
characteristics, time trends, and marketing actions (i.e., price independent advice, and trustworthiness). This represents a sig-
discounts and communication efforts; Ansari, Mela, and Neslin nificant departure in perspective from the literature. In the past,
2008; Thomas and Sullivan 2005; Venkatesan, Kumar, and we viewed degrees of ownership, vertical integration, and
Ravishanker 2007). Research from the firm’s perspective con- franchising arrangements as critical determinants of channel
siders the overlap of a firm’s sales force with other channel ser- performance. Under this new approach, our perspective
vices providers (Dutta, Heide, and Bergen 1999) and the use of might better be expanded by considering more explicitly the
value-added functions and services provided by various or payment), except shipping which has to be done by the
channel outlets and more importantly, how the combination intermediaries, to offer a seamless experience to the customer
or redistribution of the functions and services provided by buying from their website. Although this configuration is not
these outlets affect customer satisfaction as a whole. entirely novel—retailers sometimes invite specific brands to
Another key aspect to be considered is the additional costs set up, staff, and supply their own area (e.g., a Ralph Lauren
incurred by adding more routes to market. How to combine ‘‘store’’ or boutique within Macy’s). Amazon’s approach is
‘‘bricks and clicks’’ approaches along with sales force efforts extremely decoupled; it would be analogous to Macy’s allow-
and reverse channels (for both store and online returns) in a ing the vast majority of its departments to be completely run by
cost-effective manner has yet to be investigated. outsourced vendors. Most retailers would be reluctant to give
up such merchandising and sourcing influence within their
store’s footprint. An alternative (and bleaker) scenario to the
Challenges to Channel Leadership evolution of a more complex and more organic channel is the
An additional key concern in channel coordination is the issue devolution of the channel participants into dysfunctional
of leadership or which firms becomes the primary ‘‘captain’’ of competition.
the distribution system’s activities. Historically, the perspec- Finally, since the customer experience and needs are also
tive on channels has been that the manufacturer is the critical fragmented, the channel captain becomes whoever has the
linchpin, directing, designing, and determining which interme- greatest impact on product value or who is the chief designer
diaries to include in their efforts to reach the downstream cus- of the product experience. Returning to the travel channel
tomer. This approach may no longer be optimal in today’s example, if the chief purchase is an airline ticket or airline
marketplace. If channel forms are becoming increasingly vacation package, the airline becomes the channel captain and
decoupled and spun out to independent firms, this creates an TripAdvisor might then be used to provide additional informa-
environment that favors specialist firms (e.g., fewer routines tion on the destination or package experience. Or perhaps, the
and narrow operations) at the expense of generalists (e.g., cov- firm that initially facilitates the exchange becomes the channel
erage of more domains). However, it also raises the thorny captain. So, if the airline ticket or vacation package is paid for
issue of coordination as each firm follows its own agenda and by redeemed miles or at the airline’s website, then that firm
goals and may not see itself as part of a larger, value-adding becomes the channel leader. In all of these scenarios, the
channel. Finally, channel multiplicity also raises important ‘‘leader’’ is more loosely defined than our historical view of the
questions such as Who now owns the channel, various func- channel leader or captain. The channel leader in today’s mar-
tions, or the customer? What happens without a channel leader? ketplace is the chief value provider of the consumer defined
In the past, channels with a proliferation of specialists still product but may not directly coordinate with or incent addi-
had a dominant lead on whom all downstream specialists and tional channel intermediaries to act on its behalf. In other
generalists would depend for adding value (Raju and Zhang words, the channel leader becomes occasion-specific and user
2005). As an example, in the computer industry, a computer defined. This represents an important innovation in our per-
manufacturer such as Dell or IBM produces the computer that spective of channel leadership and coordination.
then moves along a value-added chain of various value-added
resellers and distributors before reaching the customer. These
intermediaries are dependent on the computer manufacturer for
Evolving Versus Planned Channel Structure
their existence and role—that is, without a computer, there Another consequence of channel multiplicity is its evolutionary
would be nothing to add value to or enhance. But as we return impact on channel structure. As an example, let us consider
to our travel industry or health care example, intermediaries how technological advancements have affected the travel
such as TripAdvisor or WebMD may provide valuable infor- industry. Historically, travel agencies were the chief providers
mation to customers, but they do not rely on the existence of of various travel functions, such as information provision,
any one airline, hotel, or travel agency in order to add value. assortment building, consulting, transaction execution, deliv-
In fact, the purpose of these organizations may in fact be to ery of tickets, and ancillary services such as insurance. In the
enhance the sales and revenues all such firms in the industry. current environment, these functions have fragmented, with
One implication of this is that without channel leadership, consumers now taking over some of these functions (e.g., infor-
the consumer’s experience can no longer be seamless. A coun- mation collection and decision making). Moreover, these tasks
ter argument to this is that over time, we might observe some are made even more efficient by the available technologies. As
form of organic evolution such that each firm and intermediary an example, some online travel sites allow users to sort hotel
realizes the incremental value that they bring to a larger expe- recommendations by the profile of the recommender such as
rience (an entire vacation experience) as opposed to their own single traveler, couple, or family with young children. This
individual profit position. If firms realize that coordination kind of service was virtually impossible for traditional agencies
could lead to enhanced individual positions, they might then to provide. Thus, new levels of value creation are possible due
willingly engage in a coordinated experience. Amazon.com, to emerging technologies (Hennig-Thurau et al. 2010).
for example, offers intermediaries to sell products on their The opposite case exists as well. Consider the case of
website. Amazon takes over all functions (display, invoice, Fenwick forklift trucks. Today, all forklift trucks are equipped
with IT technology that monitors many functions and activities The consequence is that existing firms (e.g., manufacturers
of each truck, such as the number of starts, average usage dura- or distributors) who are offering the entire set of channel func-
tion, drive time versus lift time, idle time, and so on. The data tions will be less competitive with respect to the new
are remotely transmitted to the manufacturer who uses the data information-based intermediaries. Such firms will need to
to make recommendations to the user about more efficient actively combat or adapt to this new reality or risk being rele-
types of trucks (or better usage of chosen trucks) for their given gated into a position to simply offer the lowest priced prod-
task (Reinartz and Ulaga 2008). Since traditional wholesalers ucts—a situation that might be far from their intended
lack the technology and knowledge of managing and using strategy. Thus, the impact of these new online technologies and
such complex data, channel structures change insofar that the platforms is not only on channel structures but on firm strategy
manufacturer takes back certain channel functions such as as well. Anecdotal evidence of this exists in the U.S. travel
after-sales-support or even sales for certain customers. industry. With the exception of American Express, past chan-
Thus, new technologies can affect both the user and the nel leaders (e.g., Rosenbluth) are no longer major players or
product supplier, although, we concede that the modal impact have ceased to exist. Instead, the industry landscape is now
is most likely to be intermediation—that is, the adding in of punctuated with firms such as Expedia, Travelocity, Orbitz, all
additional channel functions and/or channel players, as in the of which did not exist 15 years ago.
travel industry example. This is because new (online) technol- For the new information player, the challenge will be to
ogies enable existing or new members of the channel system to extract the required revenues from potential buyers for the
provide better information to the customer—be it presale, dur- information offering. Given the open availability of informa-
ing, or post-sale. As a result, the decoupling of information tion and pervasiveness of user-generated content sites, this has
exchange functions from typical product handling functions become a challenging issue in many industries. For the legacy
is to result in the evolution of more specialized entities whose channel organization, the challenge is to find the segments that
sole function is to provide information and do so in a manner still value the entire set of channel functions from a single
that is more sophisticated and granular than past information source.
provision channel functions. This is consistent with the Trans-
action Cost Economics argument that predicts a more efficient
operation of the specialized outsourced channel participant. Broadened View of Distribution Intensity
The split in channel functions among different organizations ‘‘When consumer demand is varied and complex, distribution
in the same channel is akin to the notion of ‘‘hybrid channels,’’ channels will be varied as well. (Bucklin 1966)’’
(Anderson and Coughlan 2002). However, a key difference
between our concept of channel multiplicity and hybrid chan- While theory suggests that a firm should adopt only a limited
nels is that the latter is typically the result of the manufacturer’s variety of routes to market because of the concept of ‘‘channel
volition regarding (a) the ownership of the channel (vertically conflict’’ (both within firms for direct sellers as well as across
integrated or not), and if not owned, (b) the structure and com- channels for outsourced distribution; Coughlan et al. 2006), we
position of the channel. In the era of channel multiplicity, there argue that the kind of relatively simple channel configurations
is less volitional control over the ownership, structure, and that used to exist will be untenable in the future, given the
composition of the channel. Stated differently, firms are already described external forces. What Bucklin stated back
increasingly unable to control the channel structure as new in 1966 is particularly relevant in today’s environments of
information-based organizations take over the information- severe channel multiplicity. Many if not most organizations
provision function and provide this function more efficiently deploy multiple simultaneous channels such as, for example,
and effectively than the ‘‘designated or chosen’’ organizations owned or outsourced sales forces, retailers, company-owned
in the past. outlets, call centers, catalogs, and web stores. Customers use
To this end, we observe that consumers rely increasingly these channels through which they select, purchase, order, and
on user-generated content sites and product rating sites for receive a product or a service (Frazier and Shervani 1992).
information about electronic products rather than on a retai- Since multichannel distribution systems have practically
ler’s sales clerks. The possibility to leverage the actual expe- become the norm in today’s environments, the question arises
rience of thousands of other consumers is much more of how intensively firms would like to be present in each of the
powerful than the potentially biased opinion of one sales chosen channels? This channel presence, or intensity, refers to
associate. This idea is also consistent with our premise that the number of intermediaries used by a manufacturer within its
channels are reconfiguring as to better adapt to what the cus- trade areas (Bonoma and Kosnik 1990; Corey, Cespedes, and
tomer actually does, rather than structured around anticipa- Rangan 1989); hence, intensive distribution occurs when a prod-
tion of what the consumer might do (in other words, from uct is available in a maximum number of outlets within a given
‘‘push’’ to ‘‘pull’’). Thus, traditional channel members are geographic area (Kotler and Keller 2006). The ideal distribution
increasingly becoming bystanders while the structure of their intensity would make a brand available widely enough to satisfy,
channel system is being reconstructed and disintegrated but not exceed, target customers’ needs, because oversaturation
around them. This phenomenon is novel and deserves further increases marketing costs without providing benefits. The issue
attention in the academic literature. of what the optimal distribution intensity should be in an
1. View of products and 1. How do customers interact with various channel formats and for what functions?
marketing channels 2. How do these patterns change over time?
3. How to combine ‘‘bricks and clicks’’ approaches along with sales force efforts and reverse channels
(for both store and online returns) in a cost-effective manner?
2. Channel leadership 1. What are the antecedents of channel leadership?
2. What happens without a channel leader?
3. Channel structure 1. How does the position and role of traditional members evolve when channel systems are reconstructed?
2. How do information players in channel systems extract revenues from customers?
3. What are characteristics of customer segments that still value the entire set of channel functions from a
single source?
4. Distribution intensity 1. How can one best measure a firm’s distribution intensity?
2. What is the optimal distribution intensity in an environment of severe channel multiplicity?
3. What multichannel and channel-function combinations are best to achieve the goals efficiently and
effectively?
4. Which channels should be treated independently and which channels are substitutable?
products at the right place and time, the notion of channel man- Bucklin, Louis P. (1966), A Theory of Distribution Channel Structure.
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Business.
Notes Corey, E. Raymond, Frank V. Cespedes, and V. Kasturi Rangan
1. We are grateful to an anonymous reviewer for this suggested (1989), Going to Market: Distribution Systems for Industrial Prod-
approach to distinguishing the two constructs. ucts. Boston, MA: Harvard Business School Press.
2. We are grateful to an anonymous reviewer for providing us with Coughlan, Anne T., Erin Anderson, Louis W. Stern, and Adel I.
this insight. El-Ansary (2006), Marketing Channels. Upper Saddle River, NJ:
Prentice Hall.
Authors’ Note Dutta, Shantanu, Jan B. Heide, and Mark Bergen (1999), ‘‘Vertical
Territorial Restrictions and Public Policy: Theories and Industry
This article is a result of the 3rd Thought Leadership Conference on
Evidence,’’ Journal of Marketing, 63 (4), 121-134.
Customer Management, held in Montabaur, Germany, September
2009. Frazier, Gary L. and Walfried M. Lassar (1996), ‘‘Determinants of
Distribution Intensity,’’ Journal of Marketing, 60 (4), 39-51.
——— and Tasadduq A. Shervani (1992), ‘‘Multiple Channels of Dis-
Declaration of Conflicting Interests
tribution and their Impact on Retailing,’’ in The Future of U.S.
The author(s) declared no potential conflicts of interests with respect
retailing: An Agenda for the 21st Century, Robert A. Peterson,
to the authorship and/or publication of this article.
ed. Westport, CA: Quorum Books, 217-237.
Ganesan, Shankar, Morris George, Sandy Jap, Robert W. Palmatier,
Funding and Barton Weitz (2009), ‘‘Supply Chain Management and Retai-
The author(s) received no financial support for the research and/or ler Performance: Emerging Trends, Issues, and Implications for
authorship of this article. Research and Practice,’’ Journal of Retailing, 85 (1), 84-94.
Hennig-Thurau, Thorsten, Ed Malthouse, Christian Friege, Sonja
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Rangaswamy, A. and G. van Bruggen (2005), ‘‘Opportunities and Goizueta Business School, Emory University. Her PhD is from the
Challenges in Multichannel Marketing: An Introduction to the University of Florida (Go Gators!). Her research focuses on the devel-
Special Issue,’’ Journal of Interactive Marketing, 19 (2), 5-11. opment and management of interorganizational relationships such as
Reinartz, Werner and Wolfgang Ulaga (2008), ‘‘How to Sell Services how to create and manage multichannel networks and strategic alli-
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7th ed. South-Western College Publications. and B2B e-commerce, particularly in regard to the use of online auc-
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Venkatesan, R., V. Kumar, and N. Ravishanker (2007), ‘‘Multichannel of Marketing.
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Verhoef, Peter C., Scott A. Neslin, and Bjorn Vroomen (2007), ‘‘Mul- Cologne, Germany and was previously the Cora Chaired Professor
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Marketing, 24 (2), 129-148. focuses on the subjects of customer management, marketing strategy,
Vinhas, Albberto Sa and Erin Anderson (2005), ‘‘How Potential Con- retailing, and services. His work in these domains has been recognized
flict Drives Channel Structure: Concurrent (Direct and Indirect) with major academic awards such as the 1999 AMA Doctoral Disser-
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Wallace, David W., Joan L. Giese, and Jean L. Johnson (2004), Dissertation-Based Research Paper to be published in Journal of Mar-
‘‘Customer RetailerLoyalty in the Context of Multiple Channel keting Research or Journal of Marketing, the 2003 and 2005 MSI/Paul
Strategies,’’ Journal of Retailing, 80 (4), 249-263. Root Award of the Journal of Marketing, and Finalist for the 2009
O’Dell Award. He has published extensively in journals such as
Journal of Marketing, Journal of Marketing Research, Journal of
Bios Consumer Research, Journal of Retailing, International Journal of
Gerrit H. van Bruggen is a professor of Marketing at the Rotterdam Marketing, and Journal of Service Research. In addition, his research
School of Management, Erasmus University. He studies the way mar- was presented in four different feature articles in Harvard Business
keting strategy and decision making can exploit the opportunities, Review. Furthermore, he is an area editor of International Journal
which advances in information technology offer. He published articles of Research in Marketing and a member of the editorial boards of
in a variety of journals in both marketing (including Marketing Sci- Journal of Marketing and Marketing Science.
ence, Journal of Marketing, and Journal of Marketing Research) and
information systems (including Management Science, MIS Quarterly, Florian Pallas is a doctoral candidate of the Center for Customer
and Information Systems Research). He also coauthored the book Management at the Marketing Centrum Muenster, University of
Marketing Management Support Systems with Berend Wierenga, Muenster. His research areas are behavioral pricing and customer rela-
which was published by Kluwer Academic Publishers. tionship management.