Managing product assortment differentiation across online and offline marketing channels

Abstract

Embracing the advent of digital world, most of brands adopt concurrent usage of online and offline channels to reach end customers. The debate with regard to the synergistic or cannibalizing effects of online and offline channels is ostensive. However, the investigation and examination regarding how to effectively manage the online and offline channel to optimize brand’s overall sales profit remains rare. We introduce product assortment differentiation (PAD) as an online and offline channel management strategy. With the panel data of 281,413 observations of product sales across 36 months, we confirmed the inverted U-shape between PAD and sales performance. Moreover, with the yearly sales data and multi-informant survey data, we examined both its benefits of channel cooperation and costs of increasing competition for resources, unpacking the underlying mechanisms of the inverted U-shape relationship between PAD and overall sales performance.