[MUSIC] In the past, many companies used a single channel to sell to a single market or market segment. Now with the proliferation of customer segments and channel possibilities, more and more companies have adopted multi-channel distribution systems. Today most companies distribute through multiple channels. Adding more channels offers many advantages to companies, market coverage, lower channel cost, and customized selling. Let us start with the first advantage, market coverage. The company expands itself on market coverage against opportunities to tailor its product and services to the specific needs of a diverse customer segment. Customers buying in more than one channel are more profitable. There is a second one that would be the lower channel cost. Selling, for example, office supplies by phone is cheaper than personal selling to small customers. And a third point would be the customized selling. Companies use different channels for different sized business customers. For example. Using technical sales force to sell complex telecom equipment versus using a web to sell mobiles to end consumers. Companies should not only use different sales channels for different business customers. Multi channel marketers also need to decide how much of their product to offer in each of these channels. However, new channels typically introduce conflict and problems with control and cooperation. So companies need to think about their channel architecture and determine. Which channels should perform which functions? To do so, companies can elaborate simple grids to make channel structure decisions. For example, using major marketing channels as a row in the x-axis and channel functions in columns, or in the y-axis. In addition, nowadays the big challenge is to convert this multiplicity of channels in an only channel management strategy. Multi-channel implies to have different channels separately. An omni-channel implies to have the channels integrated around a customer, according to Kotler and Keller. An integrated or omni-channel marketing system is one in which the strategies and tactics of selling through one channel reflect the strategies and tactics of sellling through one or more other channels. Customers want to get the products and services when, where, and how they need them. To respond to these needs, marketers need to use different channels. Fully integrated to deliver a seamless customer experience. Furthermore, they need to treat every customer as a unique individual. Companies need to be everywhere that customers want them to be. And changes in technology and the explosive growth of direct and online marketing are having a profound impact on the nature and design of marketing channels. There is a major trend toward this intermediation. This occurs when a producer cuts out intermediaries and goes directly to the final buyer or new type of channel intermediaries displacing traditional ones. In the retail arena channel convergence is taking place. Brick and mortar companies have been forced to evolve into brick and click. Whereas the pure click are becoming click and brick. Do you understand anything or are you lost? I'm going to explain it to you. The brick and mortar, or business that have physical presence, like stores, have been forced to evolve into the brick and clicks. Businesses that also have online presence. An example would be Barnes & Noble. On the other side, the pure click, or companies that launch a website without previous experience as a firm, like Amazon, are becoming click and brick. You can buy online, and pick up even in the Amazon stores, physical ones. In addition, although the B2C websites, or business to customer, attract more attention, more activities are being conducted on the B2B sites, business to business sites. Because they make markets more efficient, giving buyers easy access to a great deal of information. From supplier websites, intermediaries, market makers, and customer communities. We have the example of Alibaba. It was created in 1999, in China and it is the largest online B2B marketplace. According to a McKinsey article, On the Executive Guide to the Internet of Things, These new channels introduced a set of opportunities, like for example expanding value in global B2B markets, new levels of operational excellence and possibilities for innovative business models. In parallel, executives will deal with three challenges, organizational misalignment, technical interoperability and analytical herders, and increased cybersecurity risk. In addition, consulting the article, three rules for building the modern retail organization, gives us the three organizational changes required to support an only channel strategy. The number one, be a silo bluster, building cross channel and cross functional capabilities is a must. The second goal, go beyond a structure devising new ways of working. And the third one, have bold ambitions being deliberate about how to get there. On top of that, as I mentioned before, new and multiple channels typically introduce conflict and problems with control and cooperation. So we will learn how to solve them in the next class. [MUSIC]