Multichannel marketing strategy for men's clothing retailers

Multichannel Marketing

The advent of online shopping has changed marketing of almost every product, men's clothes being no exception. No longer can firms rely on bricks and mortar to deliver their products to consumers. Multichannel marketing has become the norm in the men's clothing industry, led by companies like Abercrombie & Fitch and the Gap. Some of the major channels used in the industry include retail stores, web sites and catalogs. Each major marketer of men's clothing operates at some point along a spectrum with respect to their channel focus, but all firms seem to be moving towards a multichannel model.

Our firm is a large, successful multichannel marketer. With 250,000 active customers and an average ticket of $120, we do over $30,000,000 in business annually. The competition in our marketplace is intense, coming from other large multichannel marketers as well as single-channel marketers both large and small. Buyer power is high in the industry. There are low switching costs, so customer loyalty can be hard to develop. Moreover, there are myriad success drivers including fashionableness, price, distribution, and customer service.

Success in this industry demands that our company understand the market well. We must therefore engage in intensive market research in order to keep our firm successful. To develop this plan, we will identify the information that we want to gather, and develop strategies by which we will gather this information. Both considerations will vary depending on the type of customer we are researching. There are four main types of customers that we will therefore take into consideration. We shall look at existing customers and competition customers. For each, we will examine those who shop via multiple channels and those who shop via a single channel.

Plan Objectives

There are different ways to approach multichannel marketing within the CRM context. As such, the methods chosen should reflect the firm's desired outcomes. The first key step is to decide between a multiple channel strategy and a multi-channel strategy that provides cross-channel benefits (Yulinsky, 2000). The former is easier to implement, and is effective for building out capabilities with respect to reaching different markets that need to be reached in different ways. The latter is best suited for customer bases that utilize different channels. This group tends to be the most lucrative, therefore the firm's choice between the two strategies will be guided in large part by the degree to which they want to focus on that multi-channel segment. Therefore, one objective must be to determine the size of that segment vis-a-vis the other segments. We are a medium-sized company, so we much consider that we cannot chase markets that are unable to make a significant contribution to our bottom line.

The strategy we will ultimately develop must be focused, to avoid the key pitfall of attempting to be everything to everyone (Ibid.). We must focus our limited resources on the segments with the best profit potential. Flowing from this, we will be aligning our budget and human resources capabilities in line with our marketing strategy. This aspect of multichannel marketing is sometimes overlooked, but it is essential to remember that each component of strategy must support the multichannel philosophy, or the effort will not deliver the expected success.

This leaves us with a two-pronged set of objectives with respect to our research of each segment -- financial data and habit data. It is imperative that our research allows us to understand our customers at a deep level (Daufelft, 2008). The size of each of our four customer segments will be determined by the segment's size, its average ticket, its loyalty and by the costs associated with reaching them. In terms of habits, we are especially interested in demographic and psychographic profiles, shopping habits and communications habits. The cost and ease of reaching the different segments will vary in particular by their shopping and communication habits. Thus, from our research we intend to know how big each market is, how we can reach them and what it will cost to do so, and the expected sales from reaching that segment.

Customer Segment B: Existing Multi-Channel Customers

The tactics utilized to reach Segment B. will give us Segment B. customers as well. It will be critical for us to separate these two groups, so that will be built into the survey. However, it is important to note that while 55% of companies effectively use their customer information for target marketing, only 39% of companies can create customer profiles across multiple channels (CRM Today, 2008). The survey must result in a clear separation of single and multi-channel customers, for most robust data analysis. Questions should focus on specifics with respect to which channels are used, how frequently and how much money is spent on each (Ibid). This will help us to break down the different types of multi-channel customers that exist. If we treat all multi-channel customers as one category without differentiation, we will not know our main target customer nearly as intimately as we need to. Lastly, we must also gather from a and B. information as to why they shop with us as opposed to our competitors. This will later be combined with results from C. And D. To help us develop strategies to reach the highest number of customers.

Customer Segment C: Competitor Single-Channel Customers

Chasing after the loyal customers of competitors is an expensive and often futile proposition (Thiel, 2008). However, it is worth noting two key points. One is that some customers of competitors are there for the taking. They are not all loyal, and switching costs are relatively low. It is essential to move when your competitors make a mistake (Ibid.). In the men's clothing industry, there are many decision drivers and therefore many potential mistakes. This adds a layer of extra information that needs to be gathered. We must know at what stage of the customer lifecycle these customers are.

This is in addition to uncovering the same type of data that we are going to uncovered from our own customers. With respect to the single-channel competitor customers, we also want to know why they are single-channel. This might result from a failing of our competitors to meet their needs through all channels, which would open the door for us to steal the customer.

Customer Segment D: Competitor Multi-Channel Customers

This group is the most lucrative segment, as they buy more than single-channel customers and it would be all new sales, as opposed to our existing customers. While this group may be more loyal, it is worth noting that multi-channel shoppers have more money to spend than single-channel customers and they are therefore more willing to shop around (Yulinsky, 2000). This segment has the same research objectives as single-channel competitor customers, but with the additional consideration of ideal methods of communication -- reaching these customers is paramount to marketing success. For both C. And D. we also need to ascertain what drivers have resulted in them becoming competitor customers and not ours.

Best Methods

With respect to existing customers, we will approach the marketing via all of our current channels. We will use a detailed survey, to allow us to gather the information we need. In addition to demographic and psychographic information, we will also focus on triggers. For non-online customers, the main trigger is brand identification and reinforcement; for online customers it is direct action (Thiel, 2008) so that line of questioning will be structured differently for the two mediums. For the survey, we will use our 250,000 strong database.

Reaching competitor's customers is trickier. Without the benefit of a database, a smaller sample size will need to be used. We have a basic understanding of the demographics we serve. Our customers may serve other demographics, but those customers that do not fit with our demographics are unlikely to switch. Our survey design will therefore be focused on members of our key demographics. We will specifically ask about purchasing habits with respect to us or our key competitors and filter out those respondents who shop at our competitors. We will need to continue this exercise until we have gathered enough respondents in both the C. And D. categories as to be statistically significant.

Conclusion

As a mid-sized retailer of men's clothing, we have a strong internal database from which to draw research on our existing customers. Marketing to in-store customers, online customers and multichannel customers will be slightly different for each category. Therefore, we will run two surveys, one online and one in-store. We will separate customers immediately by which of the three categories they are, so that we have a sound breakdown of the demographic, psychographic, purchasing behavior and communication behavior for each segment.

For these three categories of our competitor's customers, we will need to conduct market surveys, identifying competitor's customers as an integral part of the research process. The survey, once we have attained a statistically significant sample for each segment, will be similar to that used on our own customers. During the evaluation process, we will attempt to ascertain the differences between our customers and competitor's customers, to identify which of the key drivers are most important. Our objective in doing this will be to identify areas of competitor weakness that we can exploit, and to identify the customer segments that are the most potentially lucrative so that we can improve the focus of our marketing initiatives.

Works Cited:

Yulinsky, Corey. (2000). Multi-Channel Marketing. McKinsey. Retrieved March 31, 2009 from http://www.mckinsey.com/practices/retail/knowledge/articles/Multichannelmarketing.pdf

No author. (2008). The Five Essentials of Multi-Channel Marketing. CRM Today. Retrieved March 31, 2009 from http://www.crm2day.com/content/t6_librarynews_1.php?id=EpVFVEEFpEiAIkskdo

Daufeldt, Deb. (2008). Multi-Channel Marketing -- the Keys to Making it Work. Green Chair Marketing Group Retrieved March 31, 2009 from http://www.greenchair.net/articles/Multi-Channel-Marketing -- the-Keys-to-Making-it-Work.htm

Thiel, David. (2008). Diagram: Customer Lifecycle and Differences in Online & Offline Media Consumption. Etailology. Retrieved March 31, 2009 from http://etailology.com/blog/archives/tag/multichannel-marketing