Hybrid Marketing Systems

Hybrid Marketing Systems

In the past, many companies used a single channel to sell to a single market or market segment. Today, with the proliferation of customer segments and channel possibilities, more and more companies have adopted multichannel distribution

hybrid marketing systems ­ often called hybrid marketing channels. Such multichannel marketing than n els

occurs when a single firm sets up two or more marketing channels to reach one or Multichannel

more customer segments.

distribution, an when a Figure 21.5 shows a hybrid channel system. In the figure, the producer sells single firms ­sets up two

directly to consumer segment 1 using direct­mail catalogues and telemarketing, or more marketing

and reaches consumer segment 2 through retailers. It sells indirectly to business channels to reach one or

segment 1 through distributors and dealers, and to business segment 2 through its more customer

own sales force.

segments. A variety of

direct and indirect Sony maintains 3 wide distribution coverage by adopting a hybrid marketing approaches are used to

system. In the UK, Sony sells its consumer products through exclusive retail deliver the finn's goods

outlets such as the Sony Centres, through mass merchandisers like electrical to its customers.

chains and catalogue shops (e.g. Comet, Dixons and Argos), and by using direct marketing channels, such as mail­order catalogues operated by direct marketers Grattan, Preemans and Kays.

Hybrid channels offer many advantages to companies facing large and complex markets. With each new channel, the company expands its sales and market coverage, and gains opportunities to tailor its products and services to the specific needs of diverse customer segments. But such hybrid channel systems are harder to control, and they generate conflict as more channels compete for customers and sales. For example, when IBM began selling personal computers directly to customers at low prices through catalogues and telemarketing, many of its dealers cried "unfair competition' and threatened to drop the IBM line or give it less emphasis. The key to managing hybrid channel systems successfully is mini­

Channel Design Dceisi'tjns • 907

nrizing interchanncl member conflict, while maximizing consumer demand through superior product quality and design and extensive communications to reinforce brand values and identity. In some cases, the multichannel marketer brings all of its channels under its own ownership and control to minimize external channel conflict, although the marketer might face greater internal conflict over how much financial support each channel deserves.

Channel Design Decisions

We now look at several channel decisions facing manufacturers, in designing marketing channels, manufacturers struggle between what is ideal and what is practical. A new firm usually starts by selling in a limited market area ­ a few manufacturers' sales agents, a few wholesalers, some existing retailers, a few trucking companies and a few warehouses. Deciding on the best channels might not be a problem: the problem might simply be how to convince one or a few good intermediaries to handle the line.

Ii' the new firm is successful, it might branch out to new markets. Again, the manufacturer will tend to work through the existing intermediaries, although this strategy might mean using hybrid marketing channels. In smaller markets, the

firm might sell directly to retailers; in larger markets, it might sell through distribu­ tors. In one part of the country, it might grant exclusive franchises because that is the way merchants normally work; in another, it might sell through all outlets

willing to handle the merchandise. In one country it might use international sales agents; in another, it might partner a local firm.

Thus channel systems often evolve to meet market opportunities and con­ ditions. However, for maximum effectiveness, channel analysis and decision making should be more purposeful. Designing a channel system calls for:

• Analyzing customer service needs. • Defining the channel objectives and constraints. • Identifying the major channel alternatives. • Evaluating those alternatives.