Modern companies are using more and more complex channel strategies, responding the shifted behaviour of their customers, globalizations of markets and ubiquity of the Internet. Using multiple channels is a must for any competitive business. The growing trend of implementing complex channel strategies is called hybrid distribution strategy. Companies use this strategy in order to get the bigger share of the market and to reduce expenses (Webb & Hogan, 2002).
This strategy may be beneficial for a company in several ways. It allows more flexibility in adapting to customer demands and habits. It is beneficial for companies with broad lines of products. Companies suffering from overproduction can benefit from new channels. The hybrid strategy also allows a company to conduct more targeted marketing.
With all its benefits, hybrid distribution strategy can also bring certain challenges and problems. Multiple channels are demanding for company’s resources. Moreover, different channels of distribution may conflict with each other over customers, which may cause their dissatisfaction. This internal conflict still may provide some positive effects as it may help to distribute resources more effectively. On the other hand, the conflict itself reduces the performance of each channel.
Channels can conflict because of revenue objectives and promotional support. It is worth noting that the conflict is not the same as the competition, for the latter implies a common goal for all channels while conflicting channels have different goals. Their goals’ incapability may result in greater is the intensity of the conflict. Multi-channel conflicts are particularly dangerous for a mature of declining product.
In order to prevent internal conflicts, managers should watch the channels closely and provide a formal way to deal with conflicts. The best solution, however, is a creation of a system, where channels do not overlap (Webb & Hogan, 2002).
References
Webb, K., & Hogan, J. (2002). Hybrid channel conflict: causes and effects on channel performance. Journal of Business & Industrial Performance, 17 (5), 338-356.