The Role of Multi-channel Retailing within the Service Industry - Term Paper Example

Multi Channel Retailing Apple i-phone case study Introduction Today, businesses are widely focusing on strategies that enable organizations to woe customers. The multi-channel approach has been improved through innovations mainly through improved technology. Many production companies have made it their quest to find new and magnetic ideas that are aimed at giving additional advantages through purchasing their products. This study will gives a detailed analysis of what multi-channeling is and how it can be applied to attain formulated organizational goals. Further, it will discuss advantages and disadvantages of multi-channel retailing and its role to retailers in relation to Apple i-phone Australian company. Definition of multi-channeling Multichannel retailing is the lay down activities concerned in the selling of products and or services to customers or consumers by the use of more than one conduit. It is what links the based store to the non-store vending. It is the chance given to the customer or consumer to be able to purchase the same product from the same retailer through the utilization of multiple channel procurement conduits. It employs strategies that are aimed at ensuring the consumer is multi channeled (Neslinc et al, 43). This enables the customers to collect similar kinds of products from different store formats. A multi channel retailer avails the products to the consumers through more than one outlet channel. Apple mobile phone industry in Australia has a booming mobile phone and accessories has provided applications retail network in Australia with over 100, 000 outlets all over the state. The phone company utilizes the multi channel retailing strategy to compete against other mobile phone power houses like Nokia and Motorola that had already set base in the region’s market. Apart from the iPhone additional innovations, the company uses a variety of strategies to ensure their products are accessible to the consumers as per their demands. Types of distribution channels In their strategy, iPhone Australia applies four types of distribution channels to avail their products to its consumers. These include; Direct channel: This occurs when a particular manufacture of a particular product vends it directly to the customers and consumers. IPhone utilizes the retail outlets in shopping malls and authorized dealer outlets that are placed strategically in the country to avail its phones to the consumers. Retailer channel: This is the widely known channel where the product manufacturer sells the item to retailers who later sell it to the consumers. iPhone in Australia manufactures products and sells the product to authorized agents who later avail them to the consumers. Dual/multiple channel: this occurs when a manufacturer sells products to different consumers using two or more channels (Eisenmann, 23). Despite the retailers’ authority over the distribution channels, it is the producer who controls the decisions as to which distribution channel is to be adopted for the availing of a particular product to the consumers. There are characteristics that have to be followed in ensuring the right channel is chosen for particular products. The manufacturer has to consider the type of products so as to determine the right channel for the product to assume. The perishable goods definitely have to follow a shorter distribution channel than the non perishable goods. Mizuno sports apparel manufacture produces sports equipment in Australia and they are non perishable in nature (Warrington et al, 2004 Pg. 57). They therefore will follow a longer distribution channel than Linfox Group Company which avails fresh produce to consumers through their retail outlets. Perishable goods need no intermediaries along their distribution channel. Small purchases always correspond to long distribution channels this is mainly as a result of lack of adequate funds by the retailer to purchase goods in large quantities. The end users of a product also determine the type of channel the products follow as they are to decide where they are to purchase the products and in what quantities. Another determinant of the distributional chain is the market size. This encompasses the population size of the area and the site itself. The retailer has to be aware whether the market is in an urban or rural setting. The retailer has to consider the total number of consumers in the area who will or use the product. Characteristics of multi-channeling There are three characteristics of distribution strategies employed by Apple iPhone in Australia. These include the exclusive, selective and the intensive distribution strategies. The exclusive distribution is mainly used as the Apple iPhones are highly lucrative. The retailers and chain stores have legal obligation to store, distribute and service the products. The producer is in direct link with the retail channel and provides assistance to them including trainings. In selective distribution the Apple iPhone retailers are selectively screened and only a permitted number of them are allowed to deal with the product line. The firm also has few selected retail outlets that sell their products mainly at a discount price (Gulati, 58-59). Roles of retailers in multi-channeling and their trend The Apple iPhone distribution channel has different participants who play significant roles in the supply chain from the production and the marketing of the different kinds of products. The retailers sell the products to the end user. Retailers are grouped according to their ownership, pricing philosophy, product assortment or their service level. The wholesalers are the middlemen who buy Apple iPhone products from the manufacturers and avail them to the retailers. They are manifested with the responsibility of purchasing iPhones from the manufacturers and storing them in inventory till when they are sold out to retailers. The agents are intermediaries who work on commission based as they sell to both the wholesalers and retailers. Other entities in the Apple iPhone distribution channel include the resident sales agent and the buying offices that pair up the retailers to the identified manufacturers. Future trends of Apple iPhone Australia The company intends to utilize the e-CRM approach stand to gain benefits in different areas. Mobile phone technologies have not been fully embraced to fully maintain customer relationship. The company intends to use the text messaging to inform the consumers of deals, user information and trends. This will enable the company to develop good customer satisfaction and constancy. The company intends to employ the long passive experience nature of the television to reach out to potential buyers and fully experience the CRM multi channel. This is vital as mobile technologies are safe, dependable and automatable (Kennedy, 56). Other areas that the Apple iPhone industry wants to extend their grip include: Extended packaging: The mobile phone customers will be able to access more information on how to use their products through their mobile phone. This will be done through the internet and through the phone. Coupons: This section aims at enabling the iPhone users to capture, convert and manage voucher and discounts. Loyalty: iPhone mobile customers will be able to replace their mobile phones with loyalty cards that will enable them provide tailored mobile services. Self scanning and checkout: The iPhone mobile users in Australia will have other added advantages as they can be able to utilize their phones to scan products as they purchase products while shopping. This will be done easily with little or no assistance from shop attendants. Store Selection: iPhone mobile users will able to use their phones to cite the location of their various stores or that store their products using the phone. Not only will they be able to locate the store locations but also be able to navigate through the retail shop as the phone has a soft ware to guide the consumers through the various points in the retail outlet making them easy to identify the products they need. Advantages and disadvantages of multi-channel retailing It is evident that multi-channel retailing has several pros and cons which normally affects their daily operations. These pros and cons are essential as they help in the formulation and development of new strategies? (Simester 2004). Advantages Multi channel retail ensures that new markets are established. Based on accessing new markets this is an advantage on the basis that retailers are normally limited to local areas within where their stores are. This therefore led to non-store channels that usually make retailers with restricted locations to make the most of economies of scope through constant expansion of market without any additional store (Scott 2008). Research further indicate that, retail by way of internet only, channel choice and store is widely associated to growth of multichannel segment. On average this particular customer spends more as compared to those in single channeled. This is because consumer in multiple channeling will find it satisfactory and efficient in goods being offered. Multi-channeling retail has ensured that customer is satisfied and remains loyalty. Through the blending of channels, retailers are offering better services that are satisfactory to customers by way of exploiting benefits and ensuring that deficiencies are overcome. For instance, multi-channeling provide certain distinctive benefits such as the use of five human senses when evaluating the variety of products on offer, option in cash payments, instant acquisition and social experiences. However, for this benefit to be felt, consumers need to spend minimal time res. In addition to customer satisfaction, consumers are able to obtain a lot of information especially on certain purchases one would want to make (James 2003). Multi-channeling retailing enables the creation of a strategic advantage. It is evident that retailers are able to come with new strategies whereby they are able to develop resources which can not be counterfeited by their competitors. Here, a retailer is able to develop a seamless customer interface fro their customers ensuring that consumers are protected from any kind of risks. Because of the difficulty experienced by store based retailers in developing expensive customer databases, multi channeling retail ensures that customer remain loyal by constantly issuing loyalty program cards. By use of internet, retailers are able to obtain customer information which they can use it effectively in targeting especially while marketing their produce (Nikhilesh 2005). Based on pros, it has provided improved financial performances to the retailers especially in the banking sector. Operating by way of multi-channeling retail indicate that this operation has positive impact especially on an organizational financial performance. This is normally due to low cost experienced especially when accessing new markets, maximum customer loyalty and satisfaction and creation of various strategic advantages. Proper multi channel retailing ensures that there are health cross-channel customer promotions and communications. This is very essential as it acts as a way of marketing of various goods banking services therefore establishing ways of advertising. For instance, in apple I-phone a customer may window shop from one store but later buy the service or commodity from another different store. Good relationship between the customer and retailer is experienced as there are direct interactions by way of phones and person to person conversations (Bernd 2007). From this health relationships, customer may notice difference in selling rate of a service either to a specified location and therefore decide to direct a customer to a different store for maximum satisfaction. Cross channeling have been linked to fostering and improving decision of one channel and therefore positive response to the others. For instance, a customer from one retail store may provide information which may be relevant to another store therefore increase in sale. Today, customer are participating in online multi channel retail therefore enhancement of customer and various channel relationship (Jason 2000). Disadvantages It is evident as main retailers are headed to multi channeling, internationally this is way of retailing is being criticized. This is because of these three main reasons; consumer access to broadband internet services, the cost being experienced through multichannel and operation difficulty. For instance on broadband internet access, early stages of this development may be seen as a positive measure in multiple channel but later on this become questionable due to limited access to internet by the public (Euehun 2006). For example, in Australia future use of internet will increase which may not be the case to developing countries hindering the process of multi channeling retailer. On operational difficulties, while it is evident that demand is high for multi channel retail (that is most consumers interact anytime anywhere or at any time through seamless interfaces), operational advantage may not be achieved because new skills and resources may be needed for efficient management of each specific channel. For instance, retail distribution centers (DCs) that normally support a store channel requires minimal handling especially when moving commodities from inbound cartons and outbound trucks (Jason 2000). This cross docking entails that cartons or commodities remain in the DC less than 24 hours. This is a contrast in the fact that DCS that supports internet channel are usually designed to receive commodities the break them down to manageable size for repacking and distribute them to customers. Skills associated to allocating and managing merchandises are more demanding compared to those required to manage inventory within few DCs. It is obvious that multi channel retail requires unique pricing and merchandise so as to reach out to different predesigned target markets. Due to these operational differences, these kinds of retailers have various outsource channels increasing challenges in attaining customer satisfaction. It has been observed that retailers providing personal services may at times be reluctant to increase number of channels store due top negative impact in their brand image (Jason 2000). On cost associated to multichannel retail, internet or online channel retailers cost linked to opening of stores within national coverage may be unaffordable. Initial investments may cause these retailers to face inefficacy in coming up with multi channel store because of lack of knowledge to determine its location, its maintenance and their assortment within local markets (Steve 2007). These mentioned factors clearly explain why solely retailers have included store channel in their operations. In addition, the coming up with an organizational structure for multi channel retail remains greatest challenge to deal with. This is because most of these retailers tend to came up with decentralized management as a way to maintain its inventory processes. Decentralized organizational management has been seen to cause inconsistencies especially in meeting up with customer satisfaction. Conclusion In conclusion, although multichannel retailers prefer on coming up with separate strategies in managing key functions, there is greater need to develop a centralized all data especially those pertaining warehousing. This is considered as a con due to the fact that it acts as a challenging factor since it need coming up with an integrated IT so as to link all information in a more holistic manner (Euehun 2006). This requires a lot of integrated skill so as to have centralized data system as compared to one store retailing (Kumar 2005). A good centralized data base system requires targeting of appropriate resources, customer relation and tracking of customer progression. References Simester, I, 2004, “Long-Run Effects of Promotion Depth on New versus Established Customers: Three Field Studies,” Marketing Science, 23 (1), 4-20. Scott A, 2008, “Customer Channel Migration,” Journal of Marketing Research, 45 (1), 60-76. James, D, 2003, “Direct Marketing, Indirect Profits: A Strategic Analysis of Dual-Channel Supply-Chain Design,” Management Science, 49 (1), 1-20. Nikhilesh, D, 2005, “Multichannel Retailing: A Case Study of Early Experiences,” Journal of Interactive Marketing, 19 (2), 63-74. Bernd, S, 2007, “Evaluating Channel Performance in Multi-channel Environments,” Journal of Retailing and Consumer Services, 14 (1), 17-23. Jason, G, 2000, “Get the Right Mix of Bricks and Clicks,” Harvard Business Review, 78 (3), 107-114. Kumar V, 2005, “Who Are the Multichannel Shoppers and How do They Perform? 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Gulati, R & Garino, J (2000), “Get the Right Mix of Bricks and Clicks,” Harvard Business Review, 78 (3), 107-114. Eisenmann, R et al (2006), “Strategies for Twosided Markets,” Harvard Business Review, 84 (10), 92-101. Read More