An exploratory study into the drivers of channel change

Abstract

Purpose – The purpose of this paper is to aim to understand the factors influencing the magnitude of change in distribution channels. Distribution channels are slow to change due to a number of factors. Yet, the distribution mix is a vital part of a company's competitive position and companies must, therefore, constantly examine their mix of channels to most closely approximate the changing needs of its customers. It therefore is important to look at the factors influencing change in distribution. Design/methodology/approach – A model of channel change is developed and tested with data from financial services organizations in the UK. In addition to quantitative data, the researchers also collected qualitative feedback. Findings – The degree of channel change is related to: volatility in customers' needs; the sophistication of the target customer; product sophistication; environmental conflict; volatility in competitors' strategies; scope economies; and company size. Research limitations/implications – The sample size is relatively modest, although this has not prevented the emergence of significant results. Practical implications – The results of the study are important for both academics and practitioners. It helps alert practitioners to the factors that affect channel change. For academics, it demonstrates that this complex subject can be researched. It also raises some research issues that might be taken on board in future studies. Originality/value – This article is one of the first to test a set of hypotheses regarding the drivers and inhibitors of change in distribution systems at the micro level.