Lecture Nr. 1: Multiple channel realities (offline, online, mobile, IoT) and the
ongoing fragmentation of customers: How to get in charge and understand the
customer journey?
Introduction
Channels are customer contact points or media through which the company and the
customer interact (Neslin et al. 2006). Channels are being used for distribution: 1. offline, 2.
online, 3. mobile. However, a 4th Channel should be the Internet of things: All products
should be seen as channels. Because they facilitate the distribution of something (products,
content, data)
Channel integration = degree to which different channels interact with each other.
Two basic approaches:
1) providing access to and knowledge about the internet store at physical stores = offline-
online channel integration
2) providing access to and knowledge about physical stores at the internet store (online-
offline channel integration, OI)
Types of channels
1. Multi-channel – customers are forced into a specific channel (e.g. channel 1 for
payment, channel 2 for information). Customer cannot trigger channel interaction
and/or retailer does not control channel integration => lowest level of integration
E.g. merchandise purchased from online store cannot be collected/returned in physical
store. No customer, pricing, inventory data is shared across channels. Inconsistent
merchandise and service across channels.
2. Cross-channel – advanced form of multichannel. Some channels exchange data.
Customer can trigger partial channel interaction and/or retailer controls partial channel
integration => medium level of integration
E.g. merchandise purchased from online store can be collected or returned in physical
store. Booking the same flight via the mobile, telephone, internet is possible but not
possible to book via physical store. Customer pricing, inventory data is shared across at
least two channels.
3. Omni-channel – customer can choose in which channel he does which activity. All
channels exchange data, most complicated. Customers can trigger full interaction
and/or retailer controls full channel integration => highest level of integration.
E.g. Customers can return merchandise regardless of where they bought it. Customer,
pricing, inventory data is shared across all channels. Merchandise and service are
consistent across all channels.
Omnichannel characteristics:
1. Complexity: creates a lot of data, difficult to analyze/ integrate data
2. Brand experience: primarily experience brand and channel only in background
3. Consistency and seamlessness: omnichannel is often presented as ONE construct but
what are we actually dealing with? (Hure -> Model)
→Can be implemented on different levels (Saghira):
1. Information – 2. Payment – 3. Product delivery channels – 4. Product return channels
,These levels can be integrated with another e.g. payment and delivery (paying at the door)
or product information channels (tv, social media, phone) and agents who provide this
information (manufacturer, physical/digital retailer, 3 rd party) -> It shouldn’t matter with
which agent you are in contact – it should all be perceived as one.
Development of the internet:
1. IoT: Now. A blended marketing channel
reality
2. IoE: Partly nowadays already. Internet of
everything; smart objects communicating
with each other. Shift to marketers focusing
on object data rather than consumer data
3. Tactile Internet: In the future. The internet where time disappears. Time is only
relevant for physical objects. Everything that happens at one point happens at
another point at exactly the same time -> e.g. no transaction time
Channel Trends
The more channels people use, the more sessions they have, and the more contacts
companies have to sell their products
,Article: Hure, E., Picot-Coupey, K. & Ackermann, C.L., (2017) – “Understanding omni-channel
shopping value: A mixed-method study”
Aim: Investigating omni-channel shopping values (SV)
1. Introduction: how digitalization is transforming shopping value
Retailers engage in multiple initiatives in order to synchronize bricks and clicks, that is, to
simultaneously com- bine physical and digital touch points and manage their retailing mix in
a consistent way so that the fundamentals of the brand are aligned on every touch point
Research questions:
(1) How can omni-channel shopping value be modeled?
(2) How can omni-channel shopping value be accurately measured?
2.1. Shopping value: concept and measures
SV has both a utilitarian and hedonic dimension. The utilitarian value dimension reflects the
task completion aspect of the shopping experience, whereas the hedonic value dimension
indicates the shopping experience's ability to offer pleasure and fun (Babin et al., 1994).
Rintamäki et al. (2006) added a third dimension to SV, namely social value, obtained through
status and self-esteem enhancement. With this third dimension, they recognized the
importance of the shopping experience's social facet and enriched Babin et al.'s (1994)
approach. Most research so far has considered value in a single- channel context and
therefore has neglected the interaction effects arising when consumers shop in multiple
touch points.
2.2. Distinctive features of the omni-channel shopping experience
Multi-channel refers to a siloed strategy that operates channels as independent entities;
cross-channel integrates multiple channels to allow consumers to move and collaborate
through channels and touch points. Omni-channel lies at the extreme of the continuum.
Regarding the existing literature, omni-channel could be referred to as the complete
alignment of the different channels and touch points, resulting in an optimal-brand
customer experience.
Three key specific characteristics of omni-channel shopping: (1) its complexity due to the
multiple interactions; (2) its focus on brand and finally; and (3) its level of consistency and
seamlessness.
2.2.1. Characteristic no. 1—increased complexity of shopping behaviors
The number of touch points used by consumers and developed by retailers is increasing
concomitantly. These touch points can be transactional or relational, and they can be
physical and/or digital. Consumers prefer the one that delivers the highest value regarding
their expectations (e.g., finding the best information, comparing prices the most efficiently,
evaluating the product the most accurately, or ordering the most conveniently). Through
their usage of multiple touch points, consumers exhibit more complex shopping behaviors.
2.2.2. Characteristic no. 2—the omni-channel shopping experience as a brand experience
“While multi- and cross-channel retailing focuses on retail channels, the emphasis of omni-
channel retailing is on the interplay between channels and brands”. Therefore, branding
becomes all the more important in an omni-channel context because the brand is at the
crossroads of the touch points. Retailers are therefore encouraged to lock-in consumers
within the brand ecosystem, and this thus reinforces consumer loyalty.
,2.2.3. Characteristic no. 3—an expected consistent and seamless omni- channel shopping
experience
The omni-channel shopping experience can be represented as fully integrated, merging the
information-rich digital environment with the physical one. The retailer's objective is
therefore to blur the barriers between touch points with the aim of allowing consumers to
have a frictionless shopping experience within a brand ecosystem.
2.3. Research model of the omni-channel shopping value
We consider the three most popular shopping touch points: the physical store, the online
touch point, and the mobile touch point. Furthermore, for each touch point, each of the
three value dimensions is considered: 1) utilitarian, 2) hedonic, and 3) social value. In order
to grasp the characteristic of intensity, we posit this construct as a moderator: omni-channel
intensity is proposed to positively moderate the relationships between each touch point SV
and the global omni-channel SV. Based on this, we propose that omni-channel SV is caused
by touch points’ SV, and touch points’ SV themselves are formed by utilitarian, hedonic, and
social dimensions.
Discussion and Conclusion: The four key findings of our paper are that, as expected, 1)
omni- channel SV is caused by touch points’ SV; 2) this causal effect is moderated by omni-
channel shopping perceived consistency, but 3) the content of the constructs and their
measure must be reconceptualized in the omni-channel shopping context, and 4) the
physical shopping's nature evolves in both its utilitarian and social dimensions, and this calls
for further research.
Comments
Changes in conceptual model
1) Item USV was combined with SSV to form USSV because authors found that these two
items overlap and are not distinct enough.
2) Two variables influencing omni-channel intensity (seamlessness, perceived consistency)
had low validity and were therefore deleted from measure → seamlessness aspect
completely disappeared
, Critics
1) Point 2 in changes
2) Small number of respondents
3) Mobile shopping was not significant for Omni channel shopping value. Researchers say
mobile experience needs to be VERY high in order to create value. However, they should
have used a good mobile example to test this statement.
Conclusion
Still high offline shopping value. This will maybe change because online is becoming more
experiencing through augmented reality, virtual reality, 360 rotation etc.
Article: Herhausen et al. (2015) – “Integrating Bricks with Clicks: Retailer-Level and Channel-
Level Outcomes of Online-Offline Channel Integration”
Aim: This research examines the impact of online–offline channel integration (OI), defined as
integrating access to and knowledge about the offline channel into an online channel. The
perceived service quality and perceived risk of the Internet store mediate the impact of OI
while the Internet shopping experience of customers moderates the impact of OI.
Introduction: Purely online players, such as Zappos and Amazon, tend to dominate the
market for certain product categories and outperform their brick-and-click competitors,
whereas some multi-channel retail firms with physical stores still struggle to answer the
important yet unresolved question of whether they can create competitive advantage from
a multi-channel strategy. However, some business experts foresee that channel integration
will soon become the main focus of retailers and channel managers even stated, “cross-
channel integration is fast becoming a competitive necessity”.
Disadvantages of channel integration: It may increase research shopping – defined as the
propensity of consumers to search in one channel and then purchase through another
channel – by more than 25 percent as it reduces channel-specific lock- in effects. This finding
is critical given that showrooming – whereby customers evaluate products at one store but
buy them elsewhere – is a major problem for physical stores and Internet stores. In addition,
a firm’s integration activities could be counteracted by the inherently missing
complementarity between the firm’s distribution channels, which due to their different
characteristics, such as price and assortment strategies, do not enable achieving synergies.
Finally, channel integration may be either a zero-sum game where advantages in one
channel are offset by disadvantages in another channel (“dissynergies” or “cannibalization”)
or may even harm firms in cases of negative spill-over effects from one channel to another.
Most common integration activities:
- efficient dealer search (introduced by 19 % of leading multi-channel retailers)
- ability to check product availability in the physical store via the Internet (34 %)
- possibility to reserve products online for purchase in the physical store (25 %)
- return products purchased online at the offline store (15%).
There are two basic approaches to channel integration:
1. providing access to and knowledge about the Internet store at physical stores (offline–
online channel integration)
2. providing access to and knowledge about physical stores at the Internet store (OI).
