With Schwinn’s recent expansion into many large-scale retail stores (i.e. Wal-Mart, Toys-R-Us, Target, etc.), they began to shift into a dual channel marketing strategy. Often times, if not handled properly, this type of approach can result in significant problems for some or all of the distribution channel partners. Fortunately for Schwinn however, they were able to make many critical decisions which ensured that each of the partners’ distinct interests was narrowly aligned with their own. This proactive plan not only motivated many of their smaller independent bicycle dealers to continue carrying their products but it also allowed Schwinn to effectively reach a much larger segment of their target market. By closely analyzing this case, we can learn many valuable lessons regarding the overall importance of strong channel management.
Product differentiation was one of the primary ways that Schwinn managed to avoid channel conflict. Schwinn segmented the market and delivered to the different segments of the market through different channels. The product line delivered through the mass market channel consisted of completely different bicycles than those found at the independent bicycle dealers. This segmentation reduced the likelihood of conflict between the two channels, since the two product lines were targeted at segments with little to no crossover. Additionally, Schwinn introduced products like the Sting Ray which had nostalgic appeal and stretched beyond the traditional customer base of the independent bicycle dealers. These types of bicycles provided them with a unique product and furthermore a healthy margin to bolster profits. By maintaining distinct product lines for their two channels, Schwinn was able to minimize multi-channel conflict.
The key to motivating channel members is to provide value and benefits to each partner in order to align interests and thus achieve the ultimate goal: satisfy the customer’s needs. Schwinn used both push and...
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