Successful service retail channel expansions: The roles of technical and brand integration

• Service retail channel expansion is common in B2B markets, but involves substantial market failure risks.
• Concepts of risk, resources, control used to build a theoretical framework linking integration decisions to performance.
• Hypotheses tested using data on expansion to Internet banking during 1995 to 2000 by US retail banks.
• Develop technology for a new high-tech service retail channel in-house (technical integration); don't outsource.
• Develop brand for a new high-tech service retail channel from scratch (brand non-integration); don't extend old brand.

Service retail channel (SRC) expansion is common in B2B markets, but expansions into high-tech channels involve substantial market failure risks. Successful expansions create questions about the best way to integrate new and existing channels. Should the firm use its existing brand to market the new channel, or should it develop a new brand? Should the technology for the new channel be developed in-house or outsourced? The level of integration of both marketing and technical assets determines the perceived consumer benefits and market acceptance of high-tech SRCs. Using the concepts of risk, resources, and control, this study proposes a theoretical framework, tested with data about Internet banking in the United States. The results show that integration decisions have important, counterintuitive consequences. Specifically technical integration leads to higher perceived consumer benefits and thus greater market acceptance, whereas brand integration lowers the market acceptance of a new SRC.