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
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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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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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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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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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Risk Levels and Levels of Involvement
Exhibit 8-5
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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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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
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