Getting Multi-Channel Distribution Right

List of Figures About the authors Acknowledgment Preface Chapter 1: Distribution Channels Today 1.1 Introduction 1.2 What is New: Radical Changes in the Navigation of Distribution Channels 1.2.1 Changing Business Models 1.2.2 OmniChannel Retailing 1.2.3 Data 1.2.4 Regulation 1.3 The Road Ahead Part I: The Bedrock of Channel Functions, Power, and Conflict Chapter 2: Push, Pull, and Total Channel Performance 2.1 Introduction 2.2 An Organizing Framework Illustrated with Natura's Distribution Channel 2.2.1 Push 2.2.2 Pull 2.2.3 Supplier Inputs, Downstream Effects, and Channel Performance 2.3 Push-Pull Inputs and Downstream Effects in PepsiCo's Channel 2.4 Push and Pull for Services and Digital Channels 2.5 Beneficial and Harmful Feedback Loops in the Push-Pull System 2.6 Conclusion Chapter 3: Root Causes of Channel Conflict 3.1 Introduction 3.1.1 Examples of Channel Conflict 3.1.2 Myopia and Four Root Causes of Conflict that Strain the Partnership 3.2 Uncoordinated Pricing and Selling Effort 3.2.1 Double, Triple, and Quadruple Marginalization 3.2.2 Loss Leaders Have Their Own Problems 3.3 Over- and Under-Distribution 3.3.1 Under-Distribution 3.3.2 Over-Distribution 3.3.3 Competing with Your Customers 3.3.4 Unauthorized Distribution 3.4 Division of Work and Pay -- Who Sold That? 3.4.1 The Case of Leather Italia: Functions Performed and Margin Earned 3.4.2 Free Riding on Showrooms, Webrooms, and Billboards 3.5 Adapting to Change -- Where Does the Future Lie? 3.6 Conclusion Chapter 4: Middlemen in Today's Channel Ecosystem and their Functions 4.1 Introduction 4.2 Brick and Mortar Intermediaries 4.3 New Digital Intermediaries 4.4 Support Service Providers 4.5 What is Different About Today's Channel Functions 4.5.1 The Critical Nature of Delivery and Returns 4.5.2 Increasingly Targeted Selling and Peer Persuasion 4.5.3 Location Means More Not Less 4.5.4 Agglomeration is Alive and Well 4.6 Conclusion Chapter 5: The Sources and Indicators of Power in the Channel 5.1 Introduction 5.2 Power in the Channel and its Sources 5.2.1 How Social Psychologists and Economists Think About Power 5.2.2 Sources of Power in the Distribution Channel 5.3 Consumer Search Loyalty: The Ultimate Source of Power 5.3.1 Loyalty to the Brand or to the Channel? 5.3.2 Search Loyalty: Hard to Get, Harder to Measure in the Physical World 5.3.3 Fake It Till You Make It? 5.3.4 Is Loyalty a Dinosaur in the Digital World? 5.4 Economic Indicators of Market Power 5.4.1 Monopoly Power: The Lerner Index and Price Elasticity 5.4.2 Manufacturer Versus Retailer Price Elasticity and How it Can Distort Power Assessment 5.4.3 Profitability as a Sign of Power 5.5 Conclusion Chapter 6: Using Power without Using it Up 6.1 Introduction 6.2 Applying Power in Channel Relationships 6.3 Investments and Safeguards: Efficient Partnership or Power Struggle? 6.3.1 Make Partner-Specific Investments With Open Eyes 6.3.2 Safeguards Protect Each Party's Interests 6.3.3 Safeguards Can Outlive Their Usefulness 6.3.4 How Automobile Dealer Safeguards Came to Be 6.4 The Challenge of Preserving Power 6.4.1 Using Up Power: The "Objectification" of Leather Italia USA 6.4.2 Pushing Power Too Far or Giving it Up: Retailers and Their Private Labels 6.4.3 Should National Brand Manufacturers Produce Private Label? 6.5 Vertical Restraints: Welfare Enhancing or Anticompetitive? 6.6 Conclusion Part II: Metrics, Tools, and Frameworks for Getting the Right Distribution Chapter 7: Metrics for Intensity and Depth of Distribution Coverage 7.1 Introduction 7.2A Framework for Measuring Distribution and Matching it to Demand 7.3 Measuring Stocking Outlet Findability: Metrics for Intensity of Distribution Coverage 7.3.1 Importance of Outlets can be Measured by their ACV, PCV, and GMV 7.3.2 Traffic and Search are Important, Perhaps Even More than Sales Volume 7.3.3 Online or Offline, Stocking Outlets have to be Findable 7.3.4 The Double-Edged Sword of Increasing Importance of a Channel Member 7.3.5 Integrate Metrics Across Offline and Online Channels 7.4 Metrics for Distribution Depth 7.4.1 Total Distribution Provides More Information than Brand Distribution 7.4.2 Aggregate Other Depth Metrics Only Across Stocking Outlets 7.4.3 Getting the Data to Monitor These Metrics 7.5 Conclusion Chapter 8: What Are You Managing Towards? Distribution Performance Metrics 8.1 Introduction 8.2 A Hierarchy of Performance Metrics 8.2.1 Compliance Metrics can Catch Problems Early 8.2.2 Cross- and Omni-channel Metrics are Increasing in Importance 8.2.3 Both Parties Care about Sales, Share, and Sales Velocity but in Slightly Different Forms 8.2.4 Gross and Net Margins, Category and Customer Profitability 8.3 Conclusion Chapter 9: The Challenge of Optimizing Distribution Breadth 9.1 Introduction 9.2 Classic Categorizations of Products and Distribution Coverage 9.3 Consumer Search Loyalty and Distribution Elasticity 9.3.1 How Consumer Search Loyalty Reduces Distribution Elasticity 9.3.2 Empirical Evidence of Distribution Elasticities Less Than One 9.3.3 Feedback Effects and Longer-Term Distribution Elasticity 9.4 The Difficulties of Optimizing Distribution Coverage 9.4.1 The Complexity of Distribution Costs 9.4.2 Discontinuities Arising from Retail Structure 9.4.3 Distribution is Not Under the Complete Control of the Supplier 9.5 Conclusion Chapter 10: Using Velocity Graphs to Guide Sustainable Distribution Coverage 10.1 Introduction 10.2 The Concept of a Velocity Graph 10.2.1Sustainable Positions Likely Lie Close to the Velocity Graph 10.2.2Special Logistics Can Allow a Brand to Persist "Off" the Graph 10.2.3Three Main Variants of Velocity Graphs 10.3 Insights from Velocity Graphs: An Illustration with Laundry Detergents 10.3.1 Brand Distribution Velocity Graphs 10.3.2 Total Distribution Velocity Graphs 10.4 Velocity, State Franchise Laws, and Overdistribution of US Auto Makers Chapter 11: Augmenting the Distribution Mix: Digital Channels and Own Bricks and Clicks 11.1 Introduction 11.2 A Variety of Own-Stores to Augment Distribution by Independent Resellers 11.2.1 Store-Within-A-Store to Improve Distribution Depth 11.2.2 Flagship Stores and Outlet Stores Are at Two Extremes of the Branding Spectrum 11.2.3 Look Before You Leap with Regular Physical and Web Stores 11.2.4 Showrooms are a Little Like Flagship Stores 11.3 The Inevitability and Challenge of Online Distribution 11.3.1 Whether to be Online is No Longer Debatable 11.3.2 Coverage Versus Control is a Steeper Trade-off Online 11.3.3 How Viable is the Online Channel's Revenue and Profit Model? 11.4 Be Clear about "Why" to Decide "How" to Distribute Online 11.4.1 Which Segments are You Trying to Reach and Why Do They Go Online? 11.4.2 Own Website is Usually Not Enough and Omnichannel Retailers will Expect to Sell Online 11.4.3 Think Hard about the Functions that Pure Play Web Intermediaries Perform 11.4.4 Whether and How to do Business with Tech Behemoths is a Strategic Question all its Own Chapter 12: Three Cases on Online Distribution 12.1 Introduction 12.2 The Saga of Brooks Running and Amazon.com 12.2.1 What Do Segments of Runners Search for Online and Where? 12.2.2 Coverage without Sacrificing Control 12.3 Aggregation: Work Worth the Pay in the Online Travel Channel? 12.3.1 Why the Online Travel Intermediaries Thrive 12.3.2 Power from Consolidation and Pull Marketing 12.3.3 Limits to Power from Regulation and Competition 12.3.4 What is Sustainable? 12.4 Building a Viable Revenue Model Online: News, Music, and TV 12.4.1 Online Erosion of a Two-Sided Platform's Business Model 12.4.2 Music and Pay TV Tread More Carefully 12.5 Conclusion Part III: Aligning the Marketing Mix to Manage Distribution Chapter 13: Using the Product Line to Manage Multiple Channels 13.1 Introduction 13.2 Channel-Motivated Expansion of SKUs, Brands, and Categories 13.3 Portfolios of SKUs for a Portfolio of Channels 13.3.1 Product Line Length is Tied to Marketing and Distribution Structure 13.3.2 Product Line Guidance from Total Distribution and SKU Distribution Velocity Graphs 13.3.3 Use the Opportunity to be a "Category Captain" Judiciously 13.3.4 Be Clear About Why and How SKUs are Aligned with Channels 13.4 Portfolios of Brands to Protect Equity and Mitigate Channel Conflict 13.4.1 Get Clarity on your Brand Portfolio Strategy and Brand Architecture 13.3.2 Real Differentiation is Harder than it Looks 13.5 Expanding to Support an Exclusive or Direct Channel 13.5.1 Enticing Consumers to the Direct Channel Requires Greater Scale and Scope 13.5.2 Sometimes It Makes Sense to Sacrifice Profits to Support the Channel 13.5.3 But Make Sure the Long Tail is Not Wagging the Strategy Dog 13.6 Cautions At All Three Levels of Product Line Expansion 13.6.1 Pre-Empt, Monitor, and Control Unauthorized Distribution 13.6.2 Curation is More Important than Ever 13.7 Conclusion Chapter 14: Harnessing the Power of Price and Price Promotions 14.1 Introduction 14.2 Why one "Everyday" Price is to Resellers Is Usually Not a Good Idea 14.2.1 Variable Supplier Prices Can Alleviate Double Marginalization 14.2.2 Trade Promotions Fund Retail Promotions to Consumers 14.3 The Many Varieties of Trade Promotions 14.3.1 Trade Promotion Goals Evolve Over the Product Life Cycle 14.3.2 Pay-for-Performance Trade Promotions Tie Funding to Reseller Actions 14.4 The Challenge of Assessing the costs and Profitability of Trade Promotion 14.4.1 What is the Cost of a Trade Promotion? 14.4.2 How Much of the Sales (and Profit) Bump is Incremental For Whom? 14.4.3 Additional Metrics for Key Value Items and Loss-Leaders 14.4.4 Baseline Sales Evolve Over Time Chapter 15: Managing Prices and Incentives Across Channels 15.1 Introduction 15.2 The Goals and Challenges of Channel Incentives 15.2.1 Sales and Channel Management Goals 15.2.2 Challenges in Implementing Incentives 15.2.3 Conditioning Incentives on Reseller Efforts or Performance 15.3 How to Maintain Reseller Prices 15.3.1 Incentives to Keep Reseller Prices From Being Too Low 15.3.2 Control Inventory to Control Price 15.4 Decide Whether to Differentiate or Harmonize Across Multiple Channels 15.4.1 Different Products, Retail prices, and Retail Services Across Channels 15.4.2 Harmonized Retail Prices Across Channels Can Reduce Showrooming 15.4.3 Minimum Advertised Price (MAP) Policies Can Help 15.4.4 Differential Incentives for Valuable Channels That Serve as Showrooms 15.4.5 Use Targeting to Reduce Channel Conflict 15.5 Challenges Even When You Control Retail Price Directly 15.5.1 Don't Erode Your Own Price to Get the Buy Box 15.5.2 Paywalls When Information Wants to be Free but Two-Sided Markets Fall Apart 15.6 Conclusion Chapter 16: Summary: Dashboards and Principles for Managing New Directions in Distribution 16.1 Pulling (and Pushing) it all Together 16.1.1 An Expanded View of the Push-Pull System 16.1.2 A Note About Pull 16.1.3 What Does it Mean to Coordinate Pull and Push? 16.1.4 Measure, Match, and Manage to Nurture Beneficial Feedback Loops 16.2 Distribution Dashboards 16.2.1 A Simple Illustration of the Insight from Push-Pull Dashboards 16.2.2 A Distribution Dashboard for Pete and Gerry's Organic Eggs 16.2.3 A More Complicated Distribution Dashboard for Hotel Companies 16.3 The Magical Number Seven Plus or Minus Two Nuggets of Wisdom 16.3.1 Consumer Search Loyalty Bestows Power and Can Create Conflict. 16.3.2 Prevent Power Outage - Power is Precious and it is Easy to Use it Up. 16.3.3 Be the Expert on Where and Why your Target Consumer Visits, (Re)Searches, and Buys. 16.3.4 Form Should Follow Function with Channel Pay and Incentives. 16.3.5 The Direct Approach Can Work, but You Have to Really Know What You are Doing. 16.3.6 The Devil is in the Details, and So is the Profit. 16.3.7 Avoid Future Shock by Planning and Managing the Rate of Change. 16.4 Conclusion: Who Will Be the Masters of Multi-Channel Distribution? Index