Retailer marketing mix response when launching a direct channel: Not all retailers are alike

Michiel Van Crombrugge (), Els Breugelmans (), Kathleen Cleeren () and Scott A. Neslin ()
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Michiel Van Crombrugge: Erasmus School of Economics, Erasmus University Rotterdam
Els Breugelmans: KU Leuven
Kathleen Cleeren: KU Leuven
Scott A. Neslin: Tuck School of Business, Dartmouth College

Journal of the Academy of Marketing Science, 2025, vol. 53, issue 5, No 6, 1379-1400

Abstract: Abstract Many manufacturers introduce an online direct channel to create brand value that could benefit both manufacturer and retailers. However, retailers often view direct channel entry as a threat. Research on horizontal entry suggests retailers protect their sales by adjusting their marketing mix, particularly assortment and price. However, the direct channel is a vertical entry by a partner that is now also a competitor. The challenge for retailers is how to adjust their marketing mix. We employ a value creation/value capture framework to hypothesize and test how retailers contend for their “piece of the pie.” We analyze a consumer electronics manufacturer’s direct channel entry. The average retailer decreases assortment and increases price but there is ample heterogeneity depending on retailer characteristics. For example, small “mom-and-pop” stores follow the average, while large multichannel specialists increase assortment and increase price less. Manufacturers must develop segmentation strategies to market new direct channels to retailers.

Keywords: Manufacturer direct channel; Manufacturer encroachment; Competition; Retailer marketing mix; Value creation; Value capture (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11747-025-01084-7

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