You can buy a used car from a dealer in the city center, bread is available from the baker on the street corner, and the antique tea service from the teleshopping channel can be ordered exclusively by telephone – companies used to concentrate on selling their goods mostly on a single sales channel (today this approach is called “single-channel”).
The provider – not the buyer – decided where, when and how products and services could be obtained. Then came the digital revolution: Existing channels changed, and new ones were added – first e-commerce, then mobile shopping. With the new information and communication technologies, consumer behavior also developed further.
In addition to a large selection of products and a 24-hour service, buyers demanded a wide selection of sales channels to choose their favorites. To remain competitive, companies and traders soon could no longer afford to market their goods in just one way. Multichannel marketing was born – but what exactly does this term mean?
What Is Multichannel Marketing? A Definition
Multichannel marketing, also called multi- or multichannel strategy in German, is a communication and sales strategic approach of companies, with which potential consumers are to be reached on several communication channels simultaneously.
From the customer’s point of view, the multichannel system makes it possible to contact a company in various ways, to find out about the products and services offered, and finally to purchase them. The various sales channels roughly include:
- Manufacturer branches
- Stationary trade (shops, shopping centers)
- Itinerant trade (mobile outlets, street vendors, sales representatives)
- Catalog/mail order business
- Internet/online shopping
- Mobile shopping (has become the driving factor of multichannel marketing)
With a multi-pronged distribution system, a company reacts to the consumer’s demand to be independent of predetermined contact channels and to be able to select certain tracks according to their standards (e.g., convenience or information needs).
The main focus of multichannel is, therefore, on maximizing the performance of each channel offered, i.e., tailoring it specifically to the target group’s needs. For example, a customer in stationary retail expects personal advice from a specialist, while when shopping online, the focus is on time efficiency and an attractive price policy.
Advantages Of A Multi Channel Strategy
As a flexibility feature of a company, multichannel improves customer satisfaction and consequently strengthens customer loyalty. Additional sales channels allow target groups to be reached that previously could not be covered with a single-channel strategy. At the same time, this enables the development of completely new business areas, within which you can offer new products and services and thus reposition yourself on the market.
The company’s sales should be increased through a multichannel strategy in the long term. Multi-pronged sales approaches of this kind have meanwhile developed into the standard in the economy. Even small and medium-sized companies usually have at least one webshop in addition to their stationary business. After all, only a presence on as many channels as possible can prevent potential customers from migrating to the competition if their favorite track is unavailable.
Disadvantages Of A Multi Channel Strategy
Handling communication, advertising, distribution, and sales via several channels instead of just one is associated with more complex logistics and a higher control effort. Suppose the various channels need to be presented in a homogeneous corporate image. In that case, potential customers may be irritated and no longer recognize that the range of products and services belongs to the same company.
Another disadvantage of multichannel is that the individual sales channels only exist side by side but are not linked to one another in terms of organization and information technology. The inability to switch back and forth between the preferred channels at will within the same transaction (e.g., with the practical click and collect) can therefore be unattractive for some consumers and lead them to prefer to switch to a competitor who offers a more holistic shopping experience (see the cross and omnichannel marketing below).
In a multichannel strategy, each of these channels works independently. The stationary customer advisor does not benefit directly if a potential customer seeks advice on-site and concludes the contract via the company website. In this case, one speaks of a cannibalization effect: The business and, thus, the sales shift partially or completely from one channel to the other.
For example, many store owners fear customers will migrate from offline to online retail. However, this can only be proven with numbers to a limited extent. Some studies even paint the opposite picture: consumers would use the Internet as a source of research, but in 42 percent of the cases, they would rather buy locally, referred to as the “ROPO effect” in specialist circles.
Overview: Advantages And Disadvantages Of Multi Channel
Multi Channel Marketing – Examples Of Strategies
Multichannel strategies are mainly, but not exclusively, used in retail or the B2C area, whereby the link between online and offline measures is usually mentioned in this context. In addition to their physical points of sale, many retailers set up a web shop, which generally offers a larger, if not the complete, range of products that would not be logistically possible in stationary retail, In this way, rarely can in-demand goods also be sold regardless of time and place.
Due to their inherent characteristics, the two channels have their cost structure and pricing policy. This is unfavorable as the customer wants a shopping experience that is as homogeneous as possible. One solution to this problem is, for example, to offer the same price level on all channels but to advertise online with selective special offers.
Synergy effects should also be used: email newsletters can, for example, refer to sales in brick-and-mortar retail, and shop owners can display flyers that contain information about the online shop. A more explicit example of a multichannel strategy is the business model of the consumer goods company Tchibo: part of the product range can be obtained at the sales outlets and depots in supermarkets. drugstore chains, and other partner companies. At the same time, there are stationary Tchibo sales outlets with a much more extensive range of products. Finally, shopping is also possible by phone or online.
Multichannel Marketing – Differentiation From The Cross And Omnichannel Marketing
There are different terms for selling through multiple sales channels. “Multichannel” is the classic, as it is the most widespread and has been in use for the longest time. In addition to the artificial terms “No-Line Commerce” and “Everywhere Commerce” used more for marketing purposes, the terms “Cross-Channel” and “Omnichannel” have also become established; the difference between which and multichannel lies in detail. The multichannel strategy is the evolutionary forerunner of the cross- and omnichannel concepts – and is, therefore, gradually being considered outdated.
Distinction From Cross-Channel Marketing
While multichannel means a silo-like, separate operation of several channels, in the cross-channel approach, these are closely linked (integrated) and thus allow a cross-channel buying experience. For example, the customer can, and For example, you can find out about a product in brick-and-mortar retail, order it in the web shop and then pick it up from the store via click-and-collect or in-store pick-up.
The same product range, or at least part of it, can be found on all available sales channels. The absolute technical prerequisite for this integrative aspect of cross-channel marketing is a consistent, centrally managed, and always accessible database with information about the customer and the inventory.
Distinction From Omnichannel Marketing
A multichannel strategy should cover as many sales channels as possible to reach all relevant target groups. According to its name (“Omni” means “everything” or “everywhere”), the omnichannel approach claims to be present on all existing channels with marketing measures.
At the same time, the media should be closely interlinked with one another so that the customer can mix and match them and use them in parallel. Omnichannel thus combines the advantages of multichannel and cross-channel marketing in one concept.
Although some retailers are still somewhat skeptical about multichannel marketing (or cross- and omnichannel marketing ), one consideration seems quite plausible: If you don’t reach customers on their favorite channel, they will migrate to the competition for convenience, who can use it to do theirs.Can expand power in the distribution network.
Some industries, products, and companies must be omnipresent in their communication, advertising, distribution, and sales efforts. However, small and medium-sized companies that lack the technical possibilities for a consistent and centralized customer database should at least pursue a selective multichannel strategy– the absolute minimum for this is a combination of stationary trade and online shopping.