Today consumers are shopping from multiple channels like websites, sales agents, stores, etc. In response to this, most retailers are adopting omnichannel strategies that focus on integrating activities within and across channels to correspond to how consumers shop. Companies reach out to customers through multiple channels that include websites, television advertisements, store-based promotions, call centres or salespeople and push messages. They provide information and persuade consumers through these different channels (Diagram 1). An interesting question thus arises for companies: How do marketing efforts in one channel affect sales in other channels? A study focusing on the auto insurance industry has tried to answer this question.
Diagram 1: Categorisation of Channels
Adapted from Fig. 1, Omnichannel marketing: Are cross-channel effects symmetric? by Venkatesh Shankar & Tarun Kushwaha
The findings of this study offer interesting insights about omnichannel marketing. It found that some channels are complementary. Marketing efforts in one of these channels leads to increased sales in the other channels. Typically, channels with different primary purposes tend to be complementary: informative and persuasive channels; informative and balanced channels; persuasive and balanced channels; or informative, persuasive, and balanced channels. For instance, physical stores and the web are complementary channels.
Interestingly, the cross-channel impact of these channels is not symmetrical. Marketing efforts in some channels push up sales in complementary channels more than marketing efforts in the complementary channels push up sales in these channels. For example, we can consider insurance companies such as LIC of India or ICICI Prudential. Marketing efforts on their websites can increase sales for their agents much more than marketing efforts by their agents can increase their online sales.
The study also found that some channels can, in fact, be substitutional. These are typically channels that have the same primary purpose: two or more informative channels; two or more persuasive channels; or two or more balanced channels. In the case of such channels, say exclusive agents and independent agents, increased marketing efforts in one channel can actually hurt sales in another channel.
Moreover, these impacts, like the impacts of complementary channels, are also asymmetric. For example, we can consider major clothing brands such as Van Heusen or Peter England. Increased marketing efforts in exclusive showrooms of such brands can hurt sales of these brands in multi-brand outlets such as Lifestyle or Shoppers Stop much more than increased marketing efforts in multi-brand outlets can hurt sales in exclusive showrooms.
The results of this study are significant for managers since it can guide them in allocating resources more effectively across channels. The first implication is that companies should use complementary channels such as a rich, primarily persuasive channel (e.g. exclusive agent), a lean, primarily informative channel (e.g. website), and a balanced channel (e.g. call centre) together to gain the maximum out of their marketing efforts.
Secondly, companies should carefully avoid cross-channel marketing where the channels are substitutional (e.g. company owned showrooms and third-party owned showrooms).
A final implication is based on the finding that a company’s dedicated channels such as websites, exclusive agents, or showrooms are far more effective than channels not entirely under the company’s control, e.g., call centres or independent/multi-brand outlets, etc. Therefore, greater marketing efforts in dedicated channels can lead to greater benefits for the organisation.
Comments