Managing channel proliferation

Even before the internet arrived, companies were under pressure to serve their customers with more varied channels. With new toll-free services, companies added call centers at a rapid rate during the past decade. New composite channel designs were devised to divide up the channel functions. Instead of each channel performing all the functions the immediate customer requires, a team of channel partners, each specializing in a few tasks, satisfies the customer's total needs. The supplier might negotiate the sale, while the partners take over order fulfillment, distribution and aftersales service (Anderson et al., 1997).

This proliferation of channels and customer contact points poses acute synchronization problems. Customers also don't limit themselves to a single channel; instead they pick the one that is most convenient or effective for the situation. But they also assume the firm will recognize them at each step of the way. When they place an order via the internet they expect call-center records to be updated, inventory information to be consistent across channels, and that they can return goods to the store.

The internet plays two roles: it is a rich and interactive channel that complements existing channels, and the digital architecture enables the connection and synchronization of all channels. This is why the firms with the most channels are also the most enthusiastic about the internet (see Figure 1).

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