Transcript Document
8
Distribution
Channels and
Global Markets
PowerPoint Presentation by
Ian Anderson, Algonquin College
Chapter 8
Copyright © 2010 by Nelson Education Limited.
8-1
Looking Ahead
After studying this chapter, you should be able to:
1. Explain the role of distribution in marketing.
2. Describe the major considerations in structuring a
distribution system.
3. Discuss global marketing.
4. Describe the initial steps of a global marketing effort.
5. Identify sources of trade and financing assistance.
Chapter 8
Copyright © 2010 by Nelson Education Limited.
8-2
The Role of Distribution Activities
in Marketing
• Distribution
Physically moving products and establishing intermediary
relationships to support such movement.
• Physical Distribution (Logistics)
The activities of distribution involved in the physical
relocation of products.
• Channel of Distribution
The system of intermediaries (business relationships)
established to guide the movement of a product.
…continued
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8-3
The Role of Distribution Activities
in Marketing
• Functions of Intermediaries
Perform the marketing function better.
Provide efficient distribution of the product.
Breaking bulk – sell to customers in smaller quantities.
Assorting – bringing together similar lines of goods.
Shifting risks.
Merchant middlemen - take title to the goods distributed.
Agents/brokers - distribute goods only.
…continued
Chapter 8
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8-4
The Role of Distribution Activities
in Marketing
• Types of Distribution Channels
Direct channel
• A distribution system without intermediaries
Indirect channel
• A distribution system with one or more intermediaries.
Dual distribution
• A distribution system with more than one channel.
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Alternative
Channels of
Distribution
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Exhibit 8-1
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Structuring a Distribution Channel
• Important Factors in Building a Distribution
Channel
Costs associated with establishing a direct
channel distribution
Coverage is increased through the use of indirect
channels of distribution.
Control is enhanced using a direct distribution
channel.
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Determining the Scope of
Physical Distribution
• Transportation—which mode to use?
Common carriers
• Transportation intermediaries available for hire to the
general public.
Contract carriers
• Transportation intermediaries that
contract with individual shippers.
Private carriers
• Lines of transport
owned by shippers.
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8-8
Determining the Scope of
Physical Distribution
• Storage
Lack of storage space is a common problem.
• Materials Handling
Protecting the firm’s output during warehousing .
• Specifying Responsibility for Delivery
Terms
Paying freight costs.
Selecting the carriers.
Bearing the risk of damage .
Selecting the modes of transport.
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8-9
Small Businesses as Global Enterprises
• Globalization
The expansion of international business,
promoted by converging market preferences,
falling trade barriers, and the integration
of national economies.
• Size does not limit a firm’s international
activity, and small companies often
become global competitors to take
advantage of their unique resources.
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8-10
Emerging Global Markets
Exhibit 8-2
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Before Going Global
• Decide if firm is up to the task of globalization.
– Firms need to obtain adequate, initial exporting knowledge
• Study the different cultural, political and business practices
in foreign markets.
– Identify viable sales prospects abroad
– Understand business protocols
• Be prepared to modify products
to meet design specifications
that may vary from country to
country.
– Select suitable target markets abroad
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8-12
Questions to Consider Before Going Global
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Exhibit 8-4
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Preparations for Global Marketing
• Researching a Foreign Market
Secondary sources of information
Department of Foreign Affairs (DFAIT)
Canadian Commercial Corporation (CCC)
Canadian International Development Agency (CIDA)
Statistics Canada
Business Development Bank
Export Development Canada
Canadian Trade Commissioner
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Export Services of the Department of
Foreign Affairs and International Trade
•
•
•
•
•
•
•
Export Information Kit
Export Counselling
World Information Network for Exporters (WINS)
International Trade Data Bank
Overseas Trade Fairs
Trade Leads and Trade Missions
Internet Resources
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8-15
Assistance for Global Enterprises
• Connections With International Customers
Trade Leads
Trade Missions
Trade Intermediaries
• Export management companies
• Export trading companies
• Export agents, merchants,
or remarketers
• Piggyback marketers
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8-16
Risk Levels and Levels of Involvement
Exhibit 8-5
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8-17
Strategy Options for Global Firms
• Foreign Licensing
Allowing a company in another country to purchase the
right to manufacture and sell a company’s products in
international markets
Licensee
• The company buying the licensing rights
Licensor
• The company selling the licensing rights
Royalties
• Fees paid by the licensee to the licensor
for each unit produced under a licensing contract
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8-18
Challenges to Global Business
• Political Risk
The potential for political forces in a country to
negatively affect the performance of businesses operating
within
• Economic Risk
The probability that a government will mismanage its
economy and thereby change the business environment in
ways that hinder the performance of firms operating
there.
• Exchange rates—the value of one country’s currency
relative to that of another country.
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Sources of Trade and Financing Assistance
• Financing and Information
Factoring Houses
Export Development Canada (EDC)
FITT (Forum for International Trade Training)
Private banks
• Letters of credit—an agreement issued by a bank to honour a draft or
other demand for payment when specified conditions are met.
• Bill of landing—a document indicating that a product has been shipped
and the title to that product has been transferred
Chapter 8
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