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Retail and Channel Management

That is the question whether to deal with retail or wholesale –. No one can give the exact answer to it. Nevertheless, the interests of customers should be taken into account by retailers, and many important issues should be covered in the process of retail trading development. Such aspects as the location, target customer's interests, affordability and availability of goods or services and many other ones should be taken into account by retailers. It is possible for retailers to win a significant market share, in case they implement a holistic approach in their dealings with customers and in the very process of operation. Nowadays, in the context of globalization and the Computer Age, a special attention for retail expansion on the web should be also paid to retailers, as they would be the effective channel for trade.

Customer Relationship Management

CRM often becomes the primary topic of discussion in the context of governmental performance. Needless to say that CRM is the concept widely used in marketing literature to define the relationships between the customers and suppliers. Very often, the term CRM and the term relationship marketing are used interchangeably. A narrow view of CRM is a form of database marketing that emphasizes the promotional aspects of marketing associated with database efforts. Moreover, CRM is often considered as an approach to understanding and managing consumer’s behavior by means of effective communication which, as a result, improves customer acquisition, loyalty and profitability. Despite the slight differences in CRM definitions, “the core theme is the focus on cooperative and collaborative relationship between the firm and its customers, and other marketing actors” (Hutt 2000). CRM is about focusing on the process of acquiring, partnering and retaining customers to create superior value for both the customer and the company (Sheth & Shainesh 2001). For many years, CRM was discussed in the context of and together with Business Process Reengineering and Total Quality Management. Although, the former has already become obsolete, TQM continues to produce significant effects on the state of public services delivery.


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Today, CRM is associated with the personalization of products, the integration of the planning, business and product development processes, the interaction of channels and communication and customer selection. All these elements are also characteristics of public management and public administration. CRM aims to identify and retain the most profitable customers. The unbelievable success of information technology solutions in various fields of customer relationship management gave rise to a number of publications which seek to apply the basic principles of CRM. The transfer of private sector concepts and principles to public management has already become a trend, and CRM occupies one of the most important places in the modern scholarly literature on public administration. The current state of research on CRM is rather scarce, due to the fact that the notion is relatively new, while the level of CRM applications is relatively low. Professional managers and scholars in management studies admit that practical application of CRM in business has always been a problem for executives: customers complained the low quality of product and service delivery while organizations failed to meet the most sophisticated customer needs. Unfortunately, the state of literature about CRM is too scarce to make appropriate judgments. It would be fair to assume that the research is still in its infancy. However, the real-life case studies can provide better information about how organizations choose to use their IT capabilities and their customer-centered potentials.

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The top CSFs factors for CRM could look as follows (in the order of descending importance): Top management support

•          CRM communication, strategy support

•          Knowledge management

•          Willingness to share information

•          Willingness to incorporate operational and business changes

•          Technological support

•          Customer orientation

•          Process change capabilities

•          Systems integration (Sheth & Shainesh 2001)

Success Factors

The list of the CSF mentioned earlier is used as the list of the basic categories, which managers and executives must analyze in detail in order to understand what specific CSF drive their operations and successes. As a result of interviews, the study develops a complex seven factor model which organizations and, probably, public management entities can use to improve their relationships with customers.

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These factors include compliance with standard operating procedures, ownership and accountability, callback information and billing issues, replacement process, customer contact process and queuing procedures. Whether these factors are easy to apply in public management and administration is yet to be discovered, but it is clear that this information sets the basis for discussing and evaluating the state of CRM. In this context, the study by Sheth & Shainesh (2001) seems the most important for the current study because the authors provide a comprehensive list of CRM success factors that can be readily applied: these include customer-centric strategies, commitments from people, improved processes, process redesign and software infrastructures necessary to implement CRM.

The critical success factors of Customer Relationship Management include top management support. It refers to the extent of the promotion of the information technology by management of the organization. It mostly starts with commitment from top management going down and depends on their commitment by system development and implementation. The top management should encourage participation. Management should also encourage management of knowledge, as this is the most valuable resource. Knowledge differs from information in that it is disseminated information.

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The Customer Relationship Management should have many channels and should be sensitive to customers’ needs. In addition, a website would virtually provide all the information and services. This would, otherwise, require going to the individual offices.

The organization structure affects its performance. The internal communication should work smoothly between all the personnel, regardless of whether they are facing customers or not. Managing such a relationship management program will require commitment from top management through to the various departments to increase the returns on customer information. Such collaborations increase morale and accelerate activities’ implementation. Nevertheless, implementation of technology will require changes in organizational structure. Furthermore, individual employees form the basis of customer relationships. There should also be some internal check on politicians to ensure a form of accountability to the customers.

Participation of the customers is also crucial if the organization is to come up with package that addresses the needs of the final user. In this perspective, it is also important to appreciate customers as a crucial part of organization rather than just consumers of services. Moreover, differences due to factors such as race, economic status, gender, etc. should be closely examined and considered. It is also important to consider those who do not have access to information technology and make special considerations for them.

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Channels Management

Traditionally, retail channels are interconnected, and it is very difficult to identify the most appropriate channels for products/services sales. There are many challenging questions, which occur with respect to channel management. For example, “To which channel should inventory be sent to balance inventory level with on-shelf availability? How should trade funds be allocated to drive profitable revenue growth?” (Channel Management). Nowadays, these questions arise, but very rarely attention is paid to a real-time view of sales and inventory development throughout different channels. Moreover, CPG companies are dependent on sell-in (what they ship) rather than sell through (a buying ability of the consumers), taking huge risks to overstock some channels.

Retail solutions should be always focused on collection of near-real time data and take into account the granular downstream data from retailers and correlate these data with retailers and internal information. It is possible to develop channel management in the following way: to make an effective analysis of channel management; to promote cross-retailer activities, to allocate cross-channel inventory in an efficient way (Taylor, Fawcett & Jackson 2004).

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The main advantages of channel management can be summarized in the following way: sales will increase promotion of products, resulting in a growth of sales and a potential investment return, and optimization of inventory allocation through many channels. Furthermore, it is possible to reduce weeks of supply and channel inventory and exert no negative impact on availability of products. Another important thing is that more effective promotions of goods through “cross-channel cannibalization and overall market dynamics” can contribute much to the sales growth. Forecasting accuracy should be improved in order to predict just consumer’s demands and not to focus on other external factors (Shemwell & Aun 2010).

Retail solutions enable the customers to implement a wide range of templates and algorithms, and to solve a challenging problem of channel management and make a right decision as soon as possible.  Moreover, a logical decision-making framework should be provided for facilitation of channel management and assortment decisions. For retail sales, a current state of the customer's wishes and desires is one of the dominant concerns. Therefore, decisions of channel management should be based on modern data and facts, and not on theoretical modeling and worn-out information (Hutt 2000). Retailers should pay attention to the downstream data (inventory and sales) and category data (from the customers) and focus on the data with the lowest level of granularity (a daily basis, SKU etc.).

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Nowadays, retailers can facilitate their operations by means of Internet-related  and multi-channel   Internet related retail, which “has evolved into an integral component of retail activity, with the prevailing retail business model advocating multi-channel strategies” and a special attention nowadays should be paid for “the impact of internationalization, in particular, cross-border activity with the US (facilitated, in part, by government de regulation) has increasingly been evident, with waves of the US retailers entering the Canadian market” (Hernandez). Retail strategies should be correlated with many issues; and even such trifle, as a layout of a shop can play an important role. Products’ allocation and their attractive appearance can be a decisive factor in the customer’s desire to purchase it. Both profitability information and restructuring needed are integrative components of the retail management development (Hutt).

The largest profit occurs in the trade of multichannel shoppers. At the same time, it is very difficult for the retailers to satisfy the needs of this particular group. An integrated shopping experience is of great demand nowadays. In case the retailers were aware of this strategy, it would be much easier to satisfy their needs. Every retailer should be able to give answer to the following question: “If the most valuable customer enters a retail outlet, will he/she choose a product, which is out-of-stock in the store from your Internet site?"  On the other hand, it can be difficult and problematic for a customer to look for a required product on the web site.


Therefore, operations of the retailers can be successful in case either real sales channel or virtual sales channel is selected (Solution Two: Multi-Channel Integration 2003). Modern customers have many options to select and purchase the product they need. It is of crucial importance for them to correlate their needs and demands with available and affordable supply of products or services they need. Very often retailers neglect cross-channel sales, and they cannot build or extend their brands. A possible strategic decision for the retailers is to enable the retailers to unlock the value of multichannel shopping and be focused on high profits.



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