Channel Integration and Systems

Last updated on 30/12/2021 0 By indiafreenotes

The integration of marketing channels involves a process known as multi-channel retailing. Multi-channel retailing is the merging of retail operations in such a manner that enables the transacting of a customer via many connected channels.

Vertical Channels:

These are professionally managed and centrally programmed networks that are established to achieve operating economies and maximum market impact. Hence, they are bound to be capital intensive; they are designed to achieve technical, managerial and promotional economies through integration, coordination and synchronization of marketing flows from the point of production to the point of final consumption.

a) Administered Channel:

This is developed in such a manner that the co-ordination of marketing activities is achieved by using the programs of one or few firms. An example of this type of system could include a large retailer such as Wal-Mart dictating conditions to smaller product makers, such as producers of a generic type of laundry detergent.

b) Contractual Channel:

Here, independent channel components integrate on contractual lines to attain economies of scale and maximize the market impact.

c) Corporate Channel:

Here, channel components are owned and operated by the same organisation. Although it provides full control, this comes with a huge investment. An example of a corporate vertical marketing system would be a company such as Apple, which has its own retail stores as well as designing and creating the products to be sold in those retail stores.

Horizontal Channels:

Here, two or more companies join hands to exploit a marketing opportunity. This may be achieved by themselves or by creating an independent unit, for example, Sugar Syndicate of India, Associated Cement Company, etc. The factors motivating horizontal integration are rapidly changing markets, racing competition, swift pace of technology, excess capacity, seasonal and cyclical changes in consumer demand and the risks involved in accepting financial risks single-handedly.

Omni-channel retailing is concentrated on a seamless approach to the consumer experience through all available shopping channels like mobile internet devices, computers, bricks-and-mortar, television, catalogue, and so on. The omni-channel consumer wants to use all channels simultaneously and retailers using an omni-channel approach will track customers across all channels, not just one or two.

Multi-channel retailing is built on systems and processes, but customer heavily dictates the route they take to transact. Systems and processes within retail simply facilitate the customer journey to transact and be served. The pioneers of multi-channel retail built their businesses from a customer centric perspective and served the customer via many channels long before the term multi-channel was used.