Click and Mortar firms face a managerial challenge: falling prey to channel conflicts. Many marketing pundits have long recognized these conflicts occurring when a product can take several paths to get to the consumer. In addition, traditional sales people can take issue with the lack of integration with the internet sales channels within a Click and Mortar business model.
The phrase Clicks and Bricks have to do with a business model, where there is a marriage between the traditional “face-to-face in the building” way of doing business, coupled with the interaction of a website or email campaign. Each business model uses various channels to market the product to the customer. This integration of e-commerce and the traditional physical plant can create problems for any organization.
Channels in the marketing world are defined as forms of contact and reach. The telephone, fax, email, mobile smart phone and the internet, along with the core traditional print and visual media are used to put that channel into place. Channels are direct sales, call centers, virtual communities, the website, direct mail and again traditional print media. Nearly all businesses use each channel in various phases and in coordination or conjunction with each other to inspire, inform, advise, serve, relate and gain contracts with the consumer.
Cornelius Streit, Marketing Manager for Bayer in Singapore shared his insight into marketing channel conflicts and how business leadership can manage them. When our marketing efforts are in the Inspire/Attract phase, then marketing tactics using resources available via Internet, Direct Mail or Traditional Media can coexist. Streit does not recommend that the consumer can be economically inspired or attracted with Direct Sales, Call Centers or an event Community. When in the Inform/Orient phase his research suggests the best channel is the Internet. Once informed, we move to the Advise phase where Streit offers the Internet or a Community as an economically manageable option. Direct sales should be used to advise, consult at the contracting stage and expand the relationship with the goal of deeper commitments to your brand.
Channel conflicts can occur when one method of reaching prospective consumers interferes or even cannibalizes another. This can range from consumers engaging in one form of the purchase process being confused with another, to the internal perceived threat that the Click side has over the Brick side. To avoid a channel conflict in a click-and-mortar business, it is necessary to ensure that both traditional and online channels are fully integrated. This reduces possible confusion with customers while providing the business benefits of a dual channel.
Such high-risk conflicts generally occur when one channel targets customer segments already served by an existing channel. This leads to such a deterioration of channel economics that the threatened channel either retaliates or simply stops selling its product. The result is disintermediation. The two main disintermediation causes are finance and internet. Selling over the inrnet while maintaining a physical inventory and store-front can enhance this marketing conflict.
Leadership must act to diffuse conflict and assure employees, especially those whose income and performance is gauged upon such transactions, by aligning goals, and coordinating communication to achieve synergy. This shows to all employees involved that the whole company benefits from sales from all channels. Some channels may be harder to measure than another.
Customers must be able to freely move from one channel to another and feel as if they are engaged with a company as well as seeing no difference between Click and the Mortar. This requires coordination, control mechanisms, system interoperability and incentives to encourage cross-channel cooperation so that the strengths and efficiencies of each channel are utilized.
A well-executed Click and Mortar strategy will take advantage of, and leverage many synergies. They will share infrastructure, operations, customer base, supplier and distribution channels, branding, and expand upon internal learning and common trust across departments. Once this becomes a well-oiled machine the advantage with Click and Mortar over a pure internet business model, is that people want to do business with people. And those people will level the playing field when they are educated in product knowledge and are used to build virtual relationships.
The strength of a well-planned multi-channel marketing system has many obvious benefits. By broadening the customer reach and market coverage, the costs of marketing can be reduced when the strengths of each channel are used in an optimal way.
Managing a multi-channel marketing system can be complex and challenging. Mostly because many businesses are organized and departmentalized by what it takes to implement a channel and follow it through to where the consumer makes a purchase. Additional considerations would be that certain customer types should be avoided in certain channels.
Source: Channel Conflicts Wiki
Source: Definition of Channel Conflict
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