Multichannel Retailing Lynda Gamans Poloian

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Chapter 6 Cross-Channel Collaboration

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 4 Elements of Cross-Channel Collaboration Cross-Channel Organizational Design Performance Guidelines: –Strategies should encompass all channels –Maintain customer-centric focus –Select integrative technologies and performance metrics –Cultivate executives and associates that embrace multichannel retailing

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 5 Cross-Channel Organizational Design Semi-integrated— share some operational and informational tools Fully integrated-- share all key operational functions Independent— channels run separately

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 6 Significance of Channel Synchronization Branding, technology and communications should be consistent across all channels Collaboration impacts brand equity, sales and profits Cross-channel shoppers spend significantly more than those who shop only one channel

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 7 Solutions to Cross-Channel Collaboration Problems Six Areas of Concern and Possible Solutions 1. Synchronizing Information Technology –Resources for cross- channel management are plentiful –Planning for global distribution presents new challenges 2. Sharing Customer Data –Retailers collect much data about customers –Not all is useful or easily accessible –Customer privacy concerns retailers –Opt-in methods of data collection work best

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 8 Six Areas of Concern and Possible Solutions 3. Implementing Customer Service Procedures –New channels necessitate further training for associates –Compensation methods require review –Customers require different levels of service 4. Countering Limited Financial Resources –Lack of capital may encumber investment in new technology –Creative solutions include use of –Metrics used in tandem with cost-saving measures

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 9 Six Areas of Concern and Possible Solutions 5. Developing Internal Expertise –More retailers developing online stores in-house –More expertise now available –Directors should be part of executive team 6. Embracing Change –Many companies resistant to change –Effective retailers plan proactively –Examples of innovative change: kiosks, special search methods, and neuromarketing

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 10 Integrative Marketing Strategies Building Brand Equity Across Channels: –Employ common theme across channels– like Victoria’s Secret –Partner with other strong retailers to enhance Web selling—like Amazon.com –Retailers worldwide understand the strength of branding—like House of Fraser

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 11 Integrative Marketing Strategies Merchandise Selling and Pricing Tactics: –Having right goods at right price is critical –Cross-Channel Selling—integrating order management, fulfillment, and customer service software –Selling Luxury goods—targeting high income fashion conscious shoppers can be effective

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 12 Integrative Marketing Strategies Pricing Techniques: –Online stores tend to do less promotional pricing and take fewer markdowns –Comparison shopping has made customers more price conscious and better educated –Poor economy makes price negotiations more prevalent across channels

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 13 Price Setting Variables Customers influence retail prices Branded goods are more expensive than generic goods Private-label merchandise is priced lower and is more profitable for retailers Quality and price sometimes inversely proportional Reducing prices improves the flow of goods

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 14 Effective Distribution Practices Customer Expectations: –Site-to-store pickup option –Catalog selection and purchase online or in store –Cross-channel promotions and return service –Retailer access to customer history across channels –Access to all merchandise across all channels

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 15 Effective Distribution Practices Fulfillment Strategy Examples: –REI—customers can order online or through store kiosk and have goods shipped to store or home –Anthropologie—began using separate systems; moving toward common interface –Walmart—first to offer site-to-store; encourages customers to shop online

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 16 Promotion in Perspective Typically depended on classic advertising, sales promotion, and direct marketing methods to reach customers Web-based new media has radically changed customer contact options Recession slowed advertising spending; online sector expected to resume growth

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 17 Consistent Cross-Channel Exposure Paiva, an athletic apparel company, maximized cross-channel tactics for its opening: –Online store opened three days after brick-and- mortar store –Catalog received four days later –Branding synchronized across channels –Catalog promoted in-store

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 18 Modern Media Trends Online Media Tactics: –Personalization –Social Network Advertising – Contact and Advertising –Banner Advertising –Search Drives Sales –Inter-Channel Promotion

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 19 Online Media Tactics Personalization Relationship building tools Individualized content Use customers name in message Fully engages customers Social Network Advertising MySpace, Facebook and LinkedIn as advertising vehicles Effectiveness not yet proven

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 20 Online Media Tactics Customer Contact and Advertising Powerful, personal, cost- effective Transactional messages confirm order status Many creative options used to reach customers Banner Advertising Online retailers moving away from original banner design Viral marketing and widgets more prevalent Use pay-per-click or per thousand (CPM) methods

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 21 Online Media Tactics Search Drives Sales Retailers constantly update key words and systems Advanced search functions on sites increase sales

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 22 Online Media Tactics Inter-Channel Promotion Maximizing customer options across all channels M-commerce initiatives growing Kiosks to simple sales announcements work

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 23 Customer Relationship Management CRM dependent upon: –Database development and use—Coldwater Creek one of first to share customer info across all channels –Data mining to facilitate advertising—Retailers use geodemographic tools, cookies, and behavioral targeting –Cross-channel loyalty programs—J.Jill and Gap use cross-channel incentives

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 24 Organizational Leadership To recruit and retain talent and implement multichannel retailing: –Build management team –Establish performance review guidelines –Develop new recruiting tools –Implement management training programs –Communicate well and expand globally

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 25 Organizational Leadership Human resource management: –New technological tools available –Avatars used to interview in absentia –Social network sites used for recruitment and referral –Online recruitment firms like Monster.com –Web-based training programs

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 26 Organizational Leadership Profitability and Productivity: –New channels require fresh ways to measure profit and loss –Online business expense allocation different from other channels –Proportion of revenue attributed to brick-and- mortar sales usually higher than online sector

L. Poloian Chapter 6 ©2009 Fairchild Books, A Division of Condé Nast Publications. 27 Summary Multichannel retailers choose cross-channel collaboration as a means to reach performance goals while building customer loyalty