Transcript SUPPLY CHAIN MANAGEMENT Online/Distance Learning Course

CHANNELS OF DISTRIBUTION
Manufacturer
B2C Customer wants
detergent and goes
to Supermarket
Manufacturer
B2B Customer
purchases from
Dealer or
Distributor
Channels are sets of interdependent organizations that transfer
ownership of products as they move from producer to business
consumer or consumer.
Companies are learning that modern channel management may have
a large positive impact on increasing sales and profitability. They are
creating a new position for a channel manager.
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CHANNELS OF DISTRIBUTION:
SIX KEY FACTS – #1
•
– Every channel decision was made by your
organization!
– Every channel decision can be changed! If
something is not working as well as you would
like you can fix it.
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CHANNELS OF DISTRIBUTION:
SIX KEY FACTS – #1
• The need to control channels has increased
because of:
– Intensified competition and struggle for market share
–
– Demand may not only be unstable, but may be
declining
– Capital shortages may exist
– Need for personal selling and post-transaction service
– Growth requirements
– Supply and demand rules [economy of scale]
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CHANNELS OF DISTRIBUTION:
SIX KEY FACTS – #2
• It is very hard to sell what is not there. If your
product is not readily available, a consumer will
likely
– go somewhere else to find the product [B2B or B2C],
or
– buy a competitors product [B2B or B2C], or
– buy a substitute product [B2B or B2C], or
– not buy anything [B2C].
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CHANNELS OF DISTRIBUTION:
SIX KEY FACTS – #3
• Effective channels of distribution have a
multiplicative effect on sales!
1.
A firm has 10 sales people that can each handle 40 accounts.
10 * 40 = 400 Accounts
2.
A firm has 10 sales people that each handle 40 distribution
accounts. Each of the distribution sales people can handle 60
small accounts.
10 * 40 * 60 = 24,000 Accounts
3.
Even if the distribution sales people only give you 10% of their
time you sell to
10 * 40 * 60 * .1 = 2,400 Accounts
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CHANNELS OF DISTRIBUTION:
SIX KEY FACTS – #4
• A firm must have strong channels of distribution
that align with, and are the preferred channels
for, their markets [segments] if they are going to
have high market share.
– The channel of distribution must efficiently make the
product available to the types of resellers B2B
consumers want to use.
– The strongest resellers in the channel sell the most
branded material.
– There is a bias toward purchasing from a specific type
of reseller for a product class.
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CHANNELS OF DISTRIBUTION:
SIX KEY FACTS – #5
•
– There are many different types of resellers,
intermediaries, and others involved in
channels of distribution. What they often call
themselves and what they really do are often
different things. For example, look at the
roles dealers and distributors have in different
industries.
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CHANNELS OF DISTRIBUTION:
SIX KEY FACTS – #6
• Perhaps the best way to understand channel
relationships is to provide an analogy to various
types of friends.
– Initial
• Early, testing each other, building some trust, beginning the
relationship
– Growing
• Trust and the quality of the relationship grows ever more
rapidly
– Maturing
• Trust and the relationship are at a maximum
– Declining
• Trust is sometimes questioned. The future is uncertain.
– Ending
• Hopefully on a respectful note.
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CHANNELS OF DISTRIBUTION:
You must understand their functional level!
Manufacturer
DIRECT
INDIRECT
Company Sales Force
Manufacturer’s Reps
Wholesalers
Distributors
Retailers
Dealers
B2C Consumers
B2B Consumers
This is an example of a channel map. It is the best way to explain and show
your channels of distribution.
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CHANNELS OF DISTRIBUTION:
How do they fit with an SBU model?
Trucks
Cars
Tanks
TECHNOLOGIES /
PRODUCTS / SERVICES
MARKETS /
SEGMENTS
A
P
P
Delivery
L
I
Transportation
C
A
War
T
I
O
N
S
Business Consumer Government
Thus, the automotive market is composed of the business market segment
providing technologies/products [trucks]/services for fulfilling applications [delivery].
You can complete this for the consumer and government segments for practice.
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CHANNELS OF DISTRIBUTION:
They are the link that ties everything else together!
CHANNELS
PRODUCTS &
SERVICES
APPLICATIONS
MARKET[S]
SEGMENT[S]
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Channels enable the flow
of products and services
to the marketplace. So
they build on the previous
slide to make the
products and services
available where the
customer wants to
purchase them.
Channel maps become
increasingly complex as
your offering is made
available to more
segments as you can see
on the next slide.
THE ECONOMY AND NAICS:
BUSINESS CLASSIFICATION
• Understanding the economy and the types of
entities is critical to building a really good set of
channels of distribution.
• North American Industrial Classification System
[NAICS] for use in NAFTA
–
–
–
–
–
SUPPLY-ORIENTED SYSTEM
20 SECTORS
Around 1,200 INDUSTRIES [and growing]
NAFTA: 5 DIGITS + 6TH FOR COUNTRY CODE
COMPATIBLE WITH ISIC Rev. 3 [UN]
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THE ECONOMY AND NAICS:
What does an economy look like?
GROW OR MAKE
SELL
Agriculture
Manufacturing
Wholesale
11
31-33
42
Mining
Retail
21
44-45
Utilities
Transportation
22
48-49
Construction
23
GOV’T
SERVICE
Information
Finance
51
52
Real Estate
Professional
53
92
54
Management
Administration
55
56
Entertainment
61
Education
Public
Administration
Health
62
Accommodation
71
72
Other
81
An economy includes the four basic functions at the top. NAICS breaks those down into
sectors that are below the sector name. It goes on to finer classifications to accurately
measure the activity of a specific type of entity as you see on the next slide.
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THE ECONOMY AND NAICS:
READING NAICS TABLES
• 51
Economic sector
» Information
• 511
Economic sub-sector
» Broadcasting and Telecommunications
• 5111
Industry group
» Telecommunications
• 51111 Industry group
» Wireless Telecommunications Carriers
• 511111 U. S. Industry [specialized id – optional]
» Paging
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THE ECONOMY AND NAICS:
READING NAICS TABLES
• B2B CHANNELS – TYPES OF
DISTRIBUTORS
– You can find complete NAICS data at www.census.gov
• General Line
• Material handling / Material handling supplies
• Plastic
• MRO
• Electrical
• HVAC
• Plumbing
• Power distribution
• Medical instruments / Medical supplies
• Chemical / Food / Grocery / … many more
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CHANNEL MEMBERS:
TYPES OF RELATIONSHIPS
• Level of entity
– Vertical
• Between entities at two different levels of the channel.
– Lateral
• Between entities at the same level in the channel.
• Type of entity
–
–
–
–
–
–
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Consumer
Reseller
Sales force extension
Shareholders
Other vested interests
…
CHANNEL MEMBERS: TYPES
• Resellers
– purchase products, put them in their inventory, and
hope to resell them at a profit.
• EXAMPLES: Distributor, wholesaler, dealer, retailer, VAR, …
• Sales force extensions
– Add to your sales efforts. They are independently
owned and function under the direction of your sales
management.
• EXAMPLES: Manufacturer’s representatives, brokers, [sales]
agents, commission merchants, …
• …
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CHANNEL MEMBERS: TYPES
Resellers and Sales Force Extensions
Entity
Role
Inventory?
Financing?
Broker
Bring buyers and sellers
together
No
No
Manufacturer’s
representative
Represents several
manufacturers
No
No
Sales agent
Negotiates on the
producer’s behalf
No
No
Manufacturer
Products finished goods
or components for sale
Yes
Yes
OEM
Manufacturers and
assembles products into a
final unit
Yes
Yes
Distributor or
Wholesaler
Provides goods to other
resellers
Yes
Yes
Dealer or
Retailer
Carries goods for
purchase by consumers
Yes
Yes
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CHANNEL MEMBERS: TYPES
• Intermediaries
– are entities that provide assistance in a channel of
distribution.
• EXAMPLES: Order entry services, break-bulk and other
services, 3PLs, return-rework-repackage- relabel, fulfillment,
…
• Alternative entities
– Include many different types of alliances and
ventures. They may or may not include reselling and
being an extension of your sales force.
• EXAMPLES: Partnership [formal and informal], alliance,
affiliation, joint venture, subsidiary, …
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CHANNEL MEMBERS:
RESELLERS
MANUFACTURER
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• Manufacturers or importers or
primary providers
CHANNEL MEMBERS:
RESELLERS
MANUFACTURER
DISTRIBUTOR
or
WHOLESALER
• Manufacturers or importers or
primary providers
• Large resellers generally servicing
smaller resellers
– DISTRIBUTOR to DEALER for B2B
– WHOLESALER to RETAILER for B2C
• Can also be dealer direct, club, mail
order / catalog, …
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CHANNEL MEMBERS:
RESELLERS
MANUFACTURER
NATIONAL
or REGIONAL
RETAIL CHAIN
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• Manufacturers or importers or
primary providers
• Significant purchasing power for
multiple brands / stores
– Department store, mass merchandiser,
specialty store, category killer,
convenience store, off-price retailer,
supermarket, …
– Potentially club, mail order / catalog,
co-op, licensees, …
CHANNEL MEMBERS:
RESELLERS
MANUFACTURER
DISTRIBUTOR
or
WHOLESALER
DEALER
or
RETAILER
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• Manufacturers or importers or
primary providers
• Large resellers generally servicing
smaller resellers
• Generally smaller resellers
– Smaller retailers, franchisees, VARs,
…
– Rack jobbers
– Potentially licensees
– Beware of the DEALER label – is does
not always mean a small reseller!
CHANNEL MEMBERS:
RESELLERS
MANUFACTURER
DISTRIBUTOR
WHOLESALER
DEALER
or
RETAILER
[BUSINESS]
CONSUMER
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• Manufacturers or importers or
primary providers
• Large resellers generally servicing
smaller resellers
• Generally smaller resellers although
there are very large retailers
• Business [B2B] consumers of
various types
CHANNEL DECISIONS:
ELEMENTS OF SUCCESS
• Interdependency
– Weakest link concept – The channel is only as strong as its
weakest member.
• Shared objectives
– Channel coordination – The channel embraces coordination as a
way to gain efficiency and improve overall performance.
• Sets of normal behavior
– Understanding each other’s roles, cooperation and participation
are elevated. Less time is spend on conflict minimization, and
minor day-to-day issues.
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CHANNEL DECISIONS: DESIGN
Why use various types or multiple channels?
• Increase effectiveness [sales] in multiple
market segments
• Increase market [segment] coverage
• Fill channel gaps
• Improve service levels
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CHANNEL DECISIONS: DESIGN
When should I use resellers?
• LIKELY
– Product requires local inventory
– Product has horizontal market[s] or market
segment[s]
– Small product offering, unable to support a
direct sales force
– Product tends to have a low unit value [under
a few thousand dollars each]
– Customers are widely dispersed
– Local repackaging, sizing, or fabrication is
required
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CHANNEL DECISIONS:
HOW MANY CHANNELS?
• Key Issues
– Quality [preferred], control, cannibalization, …
• Multi-channel [dual] distribution
– Essentially the same item under a different
brand name [or model number]
• Tires, power tools, pc’s, paint, …
– It would be more appropriate to call this
multiple distribution or multiple channels.
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CHANNEL DECISIONS:
B2B DECISION FACTORS
• Corporate financial resources
– You cannot afford certain options [e.g., direct sales].
• Competitive strategies
– Competitors channel[s] may force certain options.
• Customer dispersion
– Customer size, support, and type of distribution
network are factors.
– Geographically dispersed customers usually require a
network of resellers.
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CHANNEL DECISIONS:
B2B DECISION FACTORS
• Availability of good intermediaries
– The best ones are already committed to competitors.
– What is their receptiveness to new product lines?
• Do they believe another line would dilute their efforts?
• Traditional channel patterns
– It is very difficult to go around established channels.
– Large customers are usually direct sales.
• Product characteristics
– Do they require technical competence in distribution?
– What are the warranty, repair, and service
requirements?
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CHANNEL DECISIONS: DESIGN
Roles, Expectations, Controls
• One way of improving performance of the resellers is to
have a comprehensive set of roles and expectations.
This will included what each channel member should do,
what you will do in return, and what you expect of each
other.
• This typically includes
1. a definition of the qualifications for each type of reseller, and,
2. the structure of the price schedules with special attention paid
to the terms and conditions of sale section.
• Completing the example on the next slide will get you
started. A good program will have fair expectations.
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CHANNEL DECISIONS: DESIGN
Roles, Expectations, Controls
MANUFACTURER “M”
EXPECTS OF RESELLER
“R”
PRODUCT
RESELLER “R” EXPECTS OF
MANUFACTURER “M”

Inventory for _____________

Large inventory—__________ out
of stock
PRICE
•
Market price ______________
•
Volume _____________
PLACE
•
Field ______________
•
Expert assistance when
___________
PROMOTION
•
Training of _____________
•
Collateral such as _____________
PROFITABILITY
•
_________________________
•
____________________
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CHANNEL DECISIONS:
DESIGN – EXAMPLES
• Will include
– market segmentation, gap analysis, and
target market segment[s], and
– Positioning of the firm / brand.
•
•
•
•
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Design the channel to meet segment demands.
Define optimal performance.
Select the best type[s] of channels.
Minimize conflict between and in channels of
distribution.
CHANNEL DECISIONS:
STRUCTURE
What type of VMS would best fit my situation?
Corporate
Subsidiary
or JV
Contractual
Resellers
Licensees [Franchisees]
Administered
-OpenNo agreement
Or should I use some combination of these?
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CHANNEL DECISIONS:
STRUCTURE
• What types of channel members are
needed?
– Resellers
– Licensees
– Franchisees
– Company-owned
– Some combination of these?
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CHANNEL DECISIONS:
STRUCTURE: TYPE OF SYSTEM
• Open system
– Allows members to enter or leave with relative ease
• This has a lot of training costs as well as customer perceived
turmoil in the sales representation.
• Closed system
– It is difficult to get in and those that are in rarely want to leave.
• This generally evolves into strong relationships and strong
representation in the marketplace.
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CHANNEL DECISIONS:
STRUCTURE
• Distribution intensity
– Between firms
– Between market[s] segment[s]
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CHANNEL DECISIONS:
DISTRIBUTION INTENSITY
•What type of
product fits
best?
•What type of
sales people are
required?
•What support is
required?
•What is the total
system cost?
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Intensive
Distribution
[Frito-Lay]
This is good for a product that
needs to be sold in as many
places as possible.
Exclusive
Distribution
[Lexan / Jaguar]
This is good for a product that
needs to be sold in a [set of]
highly qualified outlet[s].
Selective
Distribution
[Panasonic]
This is good for a product that
needs to be sold a lot of
places but the brand owner
needs to control the number
and quality of outlets.
CHANNEL DECISIONS:
A channel map is very effective in showing the flow of products/services to the market.
Candy
Company
Goods
Ordering & receipt
Mass Merchandiser
Candy & Tobacco
Wholesaler
Mass Merchandiser
Distribution Center
Small Retailer
[Convenience Store]
Mass Merchandiser
Retail Store
B2B MARKET
SEGMENT
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B2C MARKET
SEGMENT
CHANNEL DECISIONS:
SELECT THE BEST MEMBERS
• This is a defined process using qualitative
and quantitative analysis of each reseller
applicant. It reviews their
– Management skills
– Financial characteristics
– Physical facilities
– Objectives and policies
– Marketing skills / strengths
– And other considerations
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CHANNEL POWER
• is the ability of one channel member [A] to
get another channel member [B] to do
something B otherwise would not have
done.
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CHANNEL POWER:
GAINING COMPETITIVE ADVANTAGE
• Requires
– a clear position in the market.
• Use competitive maps and perceptual maps
– understanding the various types of channels
of distribution you employ and how they fit
together to attack the market segments.
• Dual [multiple] channels of distribution
• Non-traditional channels
• Channels to specialized [niche] markets
– Using technology to your advantage.
– Continually improving your cost position.
–…
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CHANNEL POWER:
BASES
• DEPENDENCE
– the degree to which one channel member depends
on the other, and/or
• INTERDEPENDENCE
– Pooled Interdependence
• Channel members operate independently, but their pooled
resources contribute to each partner's overall success.
– Cooperatives
– Sequential Interdependence
• Technology is pushed through a channel system from one
member to the next.
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CHANNEL POWER:
TYPES
• COERCIVE POWER is based on a
member's belief that another channel
member has the ability and willingness
punish him if he fails to yield to the
influence attempt.
• NONCOERCIVE POWER uses rewardoriented bases to influence channel
partners.
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CHANNEL DECISIONS:
RESOLVING CONFLICT
Horizontal Conflict
Occurs at the same level in a
channel.
Two dealers disagree in whose
territory an account actually
resides.
Vertical Conflict
Occurs between levels in a
channel.
The manufacturer disagrees with a
particular dealer's service
policies.
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CHANNEL DECISIONS:
PROACTIVE STRATEGIES
• Channel entropy – wasted efforts in the
channel of distribution.
• Use a proactive system versus a
defensive system for better
– Competitive interactions,
– Information sharing,
– Decision support systems and systems
integration, and/or
– Introduction of new products into existing
channels.
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CHANNEL DECISIONS:
PROACTIVE STRATEGIES
• Product differentiation
– Exclusive features for appeal to target markets
• Strategic pricing
– Larger price differentials, more exploitation
• Intermediary development
– Give intermediaries less incentive to cheat
• Marketing information systems
– Better unit tracking to identify sources of leaks
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CHANNEL DECISIONS:
PROACTIVE POSITIONS
•
A distributor calls to complain another distributor is getting a
better deal.
–
•
Answer = You explain that there is only one program for distributors. If another
distributor is doing or saying something that is inconsistent with the program that
is on them. Your sales representative may need to speak with that distributor.
You own a company and call to complain the manufacturer is
selling around you to a small account. [disintermediation]
–
•
Answer = The manufacturer should ask why you [the reseller] are not selling to
the small account in your territory since you have local sales representation, local
inventory, etc.
A distributor has many returns due to a bad lot.
–
•
Answer = You should quickly determine the problem area so it does not recur.
Then apologize for the inconvenience and exchange the inventory as soon as
possible at your expense.
A dealer wants to run an ad in a special supplement that doubles
their coop advertising allowance.
–
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Answer = Explain you will need to get approval from the marketing department as
this is not covered in the cooperative advertising program.
CHANNEL DECISIONS:
RETAINING CHANNEL MEMBERS
• You should probably not consider
changing channel members in any of
these situations.
– The member[s] is[are] doing a good job.
– The risk of changing a specific channel
member is too great.
– The channel members work well together,
their teamwork is evident.
–…
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CHANNEL DECISIONS:
MAKING CHANGES
• One should consider making changes in
existing channels of distribution for any of
the following reasons.
– Increase efficiency [lower [marginal] costs]
– Improve effectiveness [increase sales volume]
– Power: Minimize conflict; improve
coordination, increase cooperation, …
– Gain greater control over the channel[s]
– Increase our flexibility with channel members
– Improve the channel infrastructure
– Split and rebuild a channel
–…
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CHANNEL DECISIONS:
CHANNEL ANALYSIS
• Channel efficiency analysis
– is the ability to perform a function with a minimum of
expense and/or effort.
• An efficient channel would positively respond to
requests.
• Channel effectiveness analysis
– considers the strategic fit of a channel design with a
channel member’s overall marketing strategy.
• Do the ultimate customers prefer to purchase our
products from this type of reseller?
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CHANNEL DECISIONS:
TERMINATING CHANNEL MEMBERS
• Should have provable and well
documented valid reasons
– Important in Wisconsin, Louisiana, and
potentially Oklahoma
– Especially important in international business
• You should have a written track record of
issues and under-performance so you
have documentation over time.
• Understand the costs of replacement
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CHANNEL DECISIONS:
CREATING A NEW CHANNEL
• When should I consider adding a channel
of distribution?
– Expand into new markets or market segments
– Add service capabilities
– Increase efficiency [lower [marginal] costs]
– Improve effectiveness [increase sales volume]
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TRENDS AFFECTING CHANNELS:
B2B RESELLERS
• Increased outsourcing to 3PLs.
• Firms want to reduce the number of suppliers.
• Qualification of suppliers is becoming more and
more sophisticated.
• JIT and similar systems are required.
• Firms need to be electronically interconnected.
• Problem-solving teams are customary.
• Increased focus on strategic alliances of all
types including ventures, partnerships, …
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CHANNEL MANAGEMENT: BEST
PRACTICES
• Have a positive attitude: satisfy the customer!
• Plan and implement work with your partners Successful partners work closely in goods times
and bad. – Never abandon a partner at the first
sign of trouble.
• Never abuse power in negotiations.
• Having a limited number of channel members
usually increases trust and builds stronger
relationships. It is like joining a club!
• Set high ethical standards.
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SUPPLY CHAIN MANAGEMENT
SECTION 4
CHANNEL OF DISTRIBUTION RELATIONSHIPS
2 – CHANNELS OF DISTRIBUTION AND THE MARKETING MIX
ALAN L. WHITEBREAD
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CHANNELS & THE MARKETING MIX
• Channels of distribution greatly affect the
composition of the marketing mix [4 P’s].
– PRODUCT
– PLACE
– PROMOTION
– PRICE
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THE PRODUCT LIFE CYCLE [PLC]
Product development and the INTRODUCTION stage
What happens to …
INTRODUCTION
Sales
Evaluate roles
Study successes
Complete channel of
distribution
Costs
Sales
Profits
Marketing Objectives
Product
Profits
Watch the notes and each line as
you go through stages in the PLC.
Price
Place
Promotion
Time
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in this stage of the PLC?
THE PRODUCT LIFE CYCLE
Reevaluate coverage
Channel fit
INTRODUCTION
GROWTH
What happens to …
Sales
Costs
Profits
Sales
Marketing Objectives
Product
Profits
There are two points of inflection in the growth stage
to help you know where you are in the PLC. Notice
the things you should do in the growth stage.
Time
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Price
Place
Promotion
in this stage of the PLC?
THE PRODUCT LIFE CYCLE
What happens to …
Sales
INTRODUCTION
GROWTH
MATURITY
DECLINE
Costs
Profits
Marketing
Objectives
Sales
Product
Product
Development
Price
Place
Promotion
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Most new product introductions generally occur in the growth
stage as everyone fights for market share in the new product
market. As the market matures, products are dropped from
Time
the line.
THE PRODUCT LIFE CYCLE
Reevaluate coverage,
lines, new segments, P/L
INTRODUCTION
GROWTH
MATURITY
What happens to …
Sales
Costs
Profits
Sales
Product
Development
Profits
Competition is at a maximum in the maturity stage of the PLC.
Extreme price and promotion pressures exist. There may be a
lot of brand switching if there are not obvious customer
Time
benefits.
Marketing
Objectives
Product
Price
Place
Promotion
in this stage of
the PLC?
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THE PRODUCT LIFE CYCLE
Reduce channel members
Discontinue products
What happens to …
Sales
INTRODUCTION
GROWTH
MATURITY
DECLINE
Costs
Profits
Marketing
Objectives
Product
Product
Development
Sales
Profits
Price
Place
Promotion
There are two key questions. 1. When should you get out of
the product line. 2. How should we exit – divest or dissolve?
Time
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NEW PRODUCTS
• What is our corporate strategy?
–
•
–
is often talked about as a great
advantage. Initially you have 100% of the market and can
reap the benefits of the growth. However, the challenge is to
keep as much market share as possible over time. There are
few examples of first movers keeping >30% market share in
the maturity stage of the PLC.
– not first, but will quickly
introduce a product with additional features.
–
and will only introduce new
products when we are sure it is not a fad.
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NEW PRODUCTS
• Obtaining reseller cooperation comes from a
great marketing program that energizes the
channel and provides above average rewards
for all.
• Depending on the channel[s] you use, you may
have some difficult issues.
–
–
–
–
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Slotting allowance equivalent
Failure fee
OEM sales
Private label sales
THE PRODUCT CONCEPT
This simple version of the product concept
has three distinct parts.
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core
Product
or
Service
Features
Design
Warranty
Branded
Product
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Core
Product
AfterSale
Service
CORE – BRANDED – AUGMENTED
PRODUCT/CHANNEL MAP
CHANNEL MAP – FOR DISHWASHER
Basic purpose – clean dishes.
RETAILER FOR CORE
PRODUCT ONLY
The simplest product
model.
PRODUCT
DEFINITION[
S]
Plain metal, one cycle,
washer with only an on
button
CORE
PRODUCT
Very low selling price to
maximize volume for this
market segment
BRANDED
PRODUCT
DO NOT COMPLETE
AUGMENTE
D PRODUCT
DO NOT COMPLETE
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RETAILER FOR
BRANDED PRODUCT
DO NOT COMPLETE
RETAILER FOR AUGMENTED PRODUCT
CORE – BRANDED – AUGMENTED
PRODUCT/CHANNEL MAP
CHANNEL MAP – FOR DISHWASHER
RETAILER FOR CORE
PRODUCT ONLY
RETAILER FOR BRANDED
PRODUCT
The product you would expect to
find in an outlet.
PRODUCT
DEFINITION[S]
Plain metal, one cycle,
washer with only an on
button
FEATURES include multiple wash
rinse cycles, porcelain finish,
multiple colors, ergonomic, and
functional
Various DESIGN and load styles,
aesthetic
Quality parts and construction,
some warranty
Branded
Packaging to protect promote,
and reduce cognitive dissonance
CORE
PRODUCT
Very low selling price to
maximize volume for this
market segment
Not available
BRANDED
PRODUCT
DO NOT COMPLETE
AUGMENTED
PRODUCT
DO NOT COMPLETE
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Push brand, product knowledge
and sales training are required,
Promotes the product line
DO NOT COMPLETE
RETAILER FOR AUGMENTED PRODUCT
CORE – BRANDED – AUGMENTED
PRODUCT/CHANNEL MAP
CHANNEL MAP – FOR DISHWASHER
RETAILER FOR CORE
PRODUCT ONLY
RETAILER FOR BRANDED
PRODUCT
RETAILER FOR AUGMENTED PRODUCT
The product/service set that will make the customer the
happiest over the life of the product.
PRODUCT
DEFINITION[S]
Plain metal, one cycle,
washer with only an on
button
FEATURES include multiple
wash rinse cycles, porcelain
finish, multiple colors,
ergonomic, and functional
Various DESIGN and load
styles, aesthetic
Quality parts and
construction, some warranty
Branded
Packaging to protect promote,
and reduce cognitive
dissonance
Everything in the ACTUAL / BRANDED product plus
Credit
Delivery
Installation
After-sale service
Extended warranty and service
CORE PRODUCT
Very low selling price to
maximize volume for this
market segment
Not available
Not available
Push brand, product
knowledge and sales training
are required,
Promotes the product line
These brands / models are not available
BRANDED
PRODUCT
DO NOT COMPLETE
AUGMENTED
PRODUCT
DO NOT COMPLETE
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DO NOT COMPLETE
Excellent product knowledge, mandatory sales training,
retailer has a strong local reputation, full service retailer
providing credit, delivery, installation, after-sale and extended
warranty service, spare parts inventory, participates
vigorously in all promotions, excellent locations, frequently
asks to run local promotions, …
DEVELOPING THE PROMOTION MIX
• PUSH STRATEGY
– The most common approach goes to and
through channels to consumers.
Manufacturer
Reseller(s)
Consumers
Advertising, personal selling, promotions, and publicity.
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DEVELOPING THE PROMOTION MIX
• PULL STRATEGY
– A seldom-used approach goes to consumers
and comes back through channels hoping to
force resellers to carry the product.
Manufacturer
Reseller(s)
Consumers
Advertising, coupons, and sweepstakes.
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DEVELOPING THE PROMOTION MIX
PROMOTION OBJECTIVES
•
•
•
•
•
Stimulate Sales
Stabilize Sales
Differentiate Offerings
Accentuate Value
…
There are many different types of channel
promotions. Some of them are on the
following slides.
ALLW International
DEVELOPING THE PROMOTION MIX
TYPES OF CHANNEL PROMOTIONS
• CONSIGNMENT
– manufacturer financing of reseller inventory
• INVENTORY ADJUSTMENT
• SLOTTING ALLOWANCES
– one-time fees for initial product placement
[grocery]
• STREET MONEY
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DEVELOPING THE PROMOTION MIX
TYPES OF CHANNEL PROMOTIONS
•
– Manufacturers frequently pay for at least a portion of resellers
advertising of the manufacturers products through a cooperative
advertising program.
– A common program would be to pay for 10% of the pro-rated
space.
• For example, displays two manufacturers products equally on a full page ad
for $10,000. The reseller would apply for co-op advertising from both
manufacturers using the following formula.
– 10% * $10,000 * 50% = $500
– There are many special advertising allowances that function like
co-op advertising for market penetration, new product
introduction, new resellers, etc.
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DEVELOPING THE PROMOTION MIX
TYPES OF CHANNEL PROMOTIONS
• SLOTTING ALLOWANCES [LEGAL?]
• STREET MONEY
– lump sum promotion payments [LEGAL?]
• SALES PERSONNEL PROMOTIONS
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CUSTOMER VALUE:
THE VALUE PROPOSITION
• What are the sources of value the provide
meaningful customer benefits?
• Customer value affects
– Channel success rate
– Price strategy selection
– Pricing objective[s]
• Sales-based
– increase volume or market share
• Profit-based
– profits, ROI, EBITDA, …
• Status quo-based
– competitive, market
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CUSTOMER VALUE
AS SEEN BY THE B2C CONSUMER
NET PRICE
List price
Less: discounts
Quantity
Seasonal
Cash / coupon
Promotion
Less: Allowances
Trade-in value
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PRODUCT
Must BENEFITS +
be
less
than
the
Service
Quality
Brand / warranty
Repair
Packaging
Credit / financing
Delivery / availability
Incentives
CUSTOMER VALUE
AS SEEN BY THE B2B RESELLER
NET PRICE
List price
Less: Volume discounts
Quantity
Seasonal
Cash / coupon
Special
Less: Allowances
Trade-in value
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PRODUCT
Must BENEFITS +
be
less
than
the
Product
Service
Quality
Brand
Availability
Inventory
Promotional activity
PRICE STRATEGY & TACTICS:
THE PRICE-SETTING PROCESS
• Select strategic positioning, price objective[s],
and price strategy.
• Estimate demand and its price elasticity.
• Examine the cost-volume relationship.
• Examine competitive prices and strategies for
comparable and functionally similar products.
• Set the price schedule[s]. Remember the
market sets price ranges. You do not set price
based on costs as it may not provide a realistic
value equation for the consumer!
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PRICE STRATEGY & TACTICS:
BREAK-EVEN ANALYSIS
Cost in Dollars (millions)
A break-even analysis basically says you should make a certain amount of profit at a
certain volume level if you know your revenue, fixed and variable cost schedules. It is
good for analysis to see if you can make enough money to make it worth your time.
Total Revenue
Target Profit
($2 million)
12
10
8
6
4
2
Variable Cost
Fixed Cost
200
400
600
800
Sales Volume in Units [thousands]
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1,000
Total Cost
PRICE STRATEGY & TACTICS:
COST-PLUS PRICING
• PROVIDES A SET MARKUP OR MARGIN
• It has all of the following.
– You understand cost structure in depth.
– The Seller perceives price fairness.
– The Seller perceives less price competition.
– It is unrelated to market conditions.
– There is no customer orientation.
– There is no confidence in the acceptance rate.
– There are dangerous volume assumptions.
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PRICE STRATEGY & TACTICS:
MARKET-ORIENTED PRICING
• Going-rate Price Strategy
– Sets a price schedule to keep you in the same
relative position to your competitors based on
industry price schedules.
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PRICE STRATEGY & TACTICS:
MARKET-ORIENTED PRICING
•
–
• Set a low price to maximize sales. What would you do if one
of your competitors did this?
–
• Sets a high initial price that can generally decline slowly due
to intellectual property protection. This allows a quick
recovery of the new product development expense.
–
• This has planned and regular price reductions which occur
generally as new models are introduced. It places a heavy
burden on have new products on a regular schedule.
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PRICE STRATEGY & TACTICS:
RELATIONSHIP-ORIENTED PRICING
•
– Published
– Volume [Plotted]
• Use the Freedom of Information Act to get
competitive volume pricing data.
•
– Provided for services performed by the
customer
•
– Advertising, display, promotion
• Incentives
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PRICE STRATEGY & TACTICS:
OTHER PRICE ISSUES
• Price guarantees
– Price schedule[s]
• Prices per volume purchase
• Terms and conditions of sale for each customer
type
• Retail price posting
– Visible prices for consumers to see and
compare if they so desire.
•
– Pizza Hut delivery vs. take-out
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PRICE STRATEGY & TACTICS:
COMPETITIVE PRICE RESPONSE
• Market share leaders – number one or two
in market share.
– The relative price positions of these two firms
is usually not going to change so they react
quickly to each other’s moves.
– If the market share leader initiates price
changes all competitors will follow.
– If smaller companies initiate price changes,
the market share leaders will generally wait
and see what happens before making a
change.
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PRICE STRATEGY & TACTICS:
COMPETITIVE PRICE RESPONSE
• If you are not a market share leader then
the following is likely to be appropriate.
– If the market share leader initiates price
changes you must follow quickly.
– But, if non-leaders make changes, the best
approach is to wait and see what happens.
• The price change may not hold so you did not need to
change yours.
• The prices change is with much smaller firms so it really does
not impact you.
• The price change is limited to very few firms so you, and
others, do not need to change.
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STRUCTURING CHANNELS: TERMS
& CONDITIONS OF SALE
MEXICO BEARING INDUSTRY - 2000
Domestic Mfgs.
Foreign Mfgs. + subs.
Reseller
Price Level
Wholesalers (also
major importers)
$1.00
$1.25
Distributors
(11,000)
V. Large End-Users
(auto assembly, …)
53% of consumption
<(20-30% MU)
brands
$1.56
Retailers or Dealers
(20,000)
(20-30% MU)
Major End-Users
(few in number)
$1.95
Sm. & Med. End-Users
(???)
Copyright A. Whitebread 3/1/98, updated 12/1/00
ALLW International
STRUCTURING CHANNELS: TERMS
& CONDITIONS OF SALE
ACCOUNT TYPE
Regional distributor
Distributor
Retailer
Dealer
Consumer
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PAYMENT TERMS
Net _ days
Prompt pay
discount
DELIVERY TERMS
FOB [Ex works]
Time
Special charges
Shipping fees
Drop ship
SPECIAL TERMS
Inventory
adjustment
Minimum order size
PROMOTION &
INCENTIVES
Co-op advertising
Sales promotions
TYPES OF SALES FORCES
DIRECT SALES
TELESALES
NATIONAL
ACCOUNTS
DIRECT MAIL
OEM
CATALOG
INTERNET
RESELLER
PARTNERSHIPS
MANUF. REP’S
FRANCHISES
GOVERNMENT
LICENSEES
HOUSE
JOINT
VENTURES
These all have face-to-face
sales contact.
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These have no face-toface sales contact but
there may be other forms
of customer interaction.
Copyright A. Whitebread, 2001-2011
These can have any
combination of field and
direct marketing sales
forces.
TYPES OF SALES FORCES:
LARGE ACCOUNT MANAGEMENT
• CHARACTERISTICS OF OEM and
NATIONAL ACCOUNT SALES PEOPLE.
•
•
•
•
•
•
•
•
•
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Manage multiple projects
Extensive contacts throughout the client firm
Politically astute
Equally comfortable on the factory floor and in the
boardroom
Highly respected by their organization
Extensive product knowledge
Very self-sufficient
Organize and manage resources
Need little help with RFP and RFQ requests
TYPES OF SALES FORCES:
LARGE ACCOUNT MANAGEMENT
• CHARACTERISTICS OF B2B RESELLER
SALES PEOPLE
– Good product knowledge – some technical
– Sound sales skills learned in sales training
– Provider of information, sales and product
training
– Well-liked motivator
– Provide various types of assistance
• Customer issues
• Problem resolution
• Delivery schedules
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TYPES OF SALES FORCES:
LARGE ACCOUNT MANAGEMENT
• CHARACTERISTICS OF B2C RESELLER
SALES PEOPLE
– Good basic knowledge of products, planograms,
and retailing
– Sound sales skills through sales training
– Provider of information and training
– Well-liked motivator that is really good with
consumers
– Provide various types of assistance
• Customer issues
• Problem resolution
• Delivery schedules
ALLW International
TYPES OF SALES FORCES:
ISSUES
SALES
TYPE
CONTROL
FIELD
RESELLER
Some portion
of their
activities.
COST
?
PRIMARILY
LARGE
ACCOUNTS
Controllable
?
DIRECT MARKETING
ALTERNATIVE
EFFECTIVENESS
LEARNING
CURVE
PRIMARILY
SMALL
ACCOUNTS
?
?
?
?
There are several issues with structuring sales forces. One is the amount of accounts to be
covered by a field sales force which usually has a high cost. So they handle the large accounts.
What is a large account? Another issue involves the roles of resellers and of direct marketing. How
are accounts assigned? Who gets credit for the account? When, why, and how does it get
transferred to a reseller? And so on.
ALLW International
TYPES OF SALES FORCES:
SALES TRENDS
• Team selling to large accounts has given the
market leaders a tremendous sales advantage.
• The use of technology [some form of sales force
automation] can dramatically impact the role and
number of sales personnel whether they are
– direct sales people employed by your firm, or
– manufacturer’s representatives.
• The sales force mix is becoming more inside
and less outside people to handle the large
number of smaller accounts.
ALLW International
CHANNELS OF DISTRIBUTION:
You must understand their functional level!
Manufacturer
INDIRECT SALES TO CONSUMERS
DIRECT SALES TO CONSUMERS
Company Sales Force
Manufacturer’s Reps
Wholesalers
Distributors
Retailers
Dealers
B2C Consumers
Firms may use either
or any combination of
these sales groups.
The type of sales
force must be
compatible with your
channels and market
segmentation.
B2B Consumers
This is an example of a channel map with the sales function at the correct level.
ALLW International
ALLW International
SUPPLY CHAIN MANAGEMENT
SECTION 4
CHANNEL OF DISTRIBUTION RELATIONSHIPS
3 – CHANNELS: LEGAL AND ETHICAL ISSUES
Power, Conflict, and Resolution
ALAN L. WHITEBREAD
ALLW International
ANTI-TRUST LAWS
• Larger Companies know there is a fine line
between being competitive and preventing
competition.
• Smaller Companies need to understand their
options – antitrust laws can be a competitive
tool.
•
– Actions are OK if they are not anticompetitive.
• No bribery or coercion.
• Involve very small amounts or small market share
• Competition is now between intrabrand [resellers of the same
brand] vs. interbrand [resellers of different brands].
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ANTI-TRUST LAWS:
RANGE OF RESTRICTIONS
•
– The reseller will not sell outside of its assigned territory.
• Lesser restrictions
– Limiting which products resellers may sell.
• Area of primary responsibility
– The reseller not restricted to its primary territory.
• Profit pass-over arrangement
– A reseller reimburses another reseller for selling in their territory.
•
– Specifies the primary site of business and natural market area.
• Required investments
• Support activities
• Sales coverage
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ANTI-TRUST LAWS:
LEGISLATION
•
– Section 1-Eliminated restraint of trade and activities
that result in the interstate restraint of trade
• CASE LAW clarifies price fixing; pooling output [like
OPEC] and sharing markets.
– Section 2-Outlawed monopolization except
where patents provide a monopoly
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ANTI-TRUST LAWS:
LEGISLATION
•
– Section 1
• Added to antitrust practices
– Section 2
• Prohibited price competition that substantially lessens
competition [broader than the Sherman Act]
– Section 3
• Outlawed tying clauses and exclusive arrangements that
substantially lessens competition
– Section 7
• Forbid mergers that substantially lessen competition
– Section 8
• Prohibited interlocking Boards of Directors [interlocking
directorates] among competing firms, some M&A activity [see
also Cellar-Kefauver Act of 1950]
ALLW International
ANTI-TRUST LAWS:
LEGISLATION
•
– Established the FTC to investigate and judge
practices in the Sherman and Clayton Acts.
• Section 5
– Outlawed unfair methods of competition or deceptive
practices
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ROBINSON-PATMAN [1936]
•
– “goods of like [grade and] quality”,
• case law recognizes brand price differentials;
– where the effect “may substantially lessen
competition or tend to create a monopoly”;
– slotting allowances
• paid by manufacturers to get the product on the
retail shelf;
– in any line of commerce; or to
– injure, destroy, or prevent competition
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ROBINSON-PATMAN:
AND PURCHASING
• “…with any person who either grants or
knowingly receives benefit of such
discrimination.”
–
–
– Promotional allowances, …
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ROBINSON-PATMAN:
AND PURCHASING
• Meeting the competition
–
–
• Buyer incentives are at least an ethical
issue and may also be a legal one
[especially in some countries].
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ROBINSON-PATMAN:
CASE LAW
• Price discrimination must have a
significant effect on sales or market share
to be illegal.
• It does not require you to have proof you
did not violate its intent!
• Permits the rationalization of quantity
discounts.
• Allows you to offer different prices to
different types of resellers if there is a
significant difference in selling them.
ALLW International
ROBINSON-PATMAN:
ESCAPE PROVISIONS
• Escape provisions for items that are not
subject to this law
– 1-obsolete or perishable merchandise
– 2-differences in the cost of manufacture, sale,
or delivery
– 3-effected in good faith to meet a competitors
price
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U.S. LEGAL ISSUES:
TYING ARRANGEMENTS
• Tying arrangements
– 1-TYING CONTRACT
• If you buy this, you must also buy that.
–
• You must buy every item in the [product] line [only
illegal if the reseller cannot purchase competitive
products].
–
• Legal under the Sherman act, but be careful!
– 4-FRANCHISE AGREEMENTS
• With territories are legal.
ALLW International
U.S. LEGAL ISSUES:
RESELLER EMPLOYEES
• Incentives for resellers’ employees are
illegal where any of the following are true.
– The employer does not consent.
– Some type of lottery is involved.
– Competitive products are severely affected
and/or competition is lessened.
– The incentives are not available to competing
retailers’ personnel.
ALLW International
U.S. LEGAL ISSUES:
SPECIAL ATTENTION NEEDED
•
– Selection criteria –
• You have the right to sell to whom you choose.
– Not to sell to criteria
• You have the right to not sell to anyone.
ALLW International
U.S. LEGAL ISSUES:
SPECIAL ATTENTION NEEDED
• Selection and termination policies.
• You can not pay an uninvolved party for
the transaction!
• Designated product policies are usually
legal.
– Different terms, conditions, and access for
different product lines.
ALLW International
U.S. LEGAL ISSUES:
ENFORCEMENT
• Federal Trade Commission is responsible
for antitrust civil cases.
– The Bureau of Competition [U.S. antitrust]
– Office of International Affairs [international
antitrust]
• Department of Justice is responsible for
criminal cases.
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ETHICS
•
– Let the buyer beware
•
– Let the seller beware
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DISTRIBUTION AGREEMENTS:
TYPES OF LEGAL SYSTEMS
• The general rule for which legal system counts most in rank order
follows.
–
–
–
– This is not always true. You need expert legal advice for your
specific situation.
• There are different types of legal systems around the world which
are the basis for nearly all countries laws. Their implementation
varies greatly from country to country. Just because some place
used to be a colony does not mean their current laws are like the
former occupier of the country.
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CHANNEL ISSUE:
COMPARATIVE LEGAL SYSTEMS
• There are a few major legal systems around the world as well as
some mixed systems.
–
• is Roman based where laws passed by the legislature are
codified, and judges have little [if any] freedom to interpret
the law or adjust the penalty prescribed by law.
–
• employs judges to interpret the executive and legislative
branches and form revised laws base on their rulings
[opinions] based on statutes, legal precedent, written
documents, and oral agreements. Judges have considerable
freedom to interpret the laws, actions, and penalties. This is
the U.S. legal system.
ALLW International
CHANNEL ISSUE:
COMPARATIVE LEGAL SYSTEMS
• There are a few major legal systems around the world as well as
some mixed systems.
–
• is based on knowledge revealed by a God describing human
behavior. It often includes a code of ethics, morals and
customs.
–
• is a system of [generally unwritten] laws formed by custom
over time which describe acceptable behavior within the
group.
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DISTRIBUTION AGREEMENTS
• Probably the great majority of your
international business will be conducted
with some type of contract.
• Your knowledge of the law process will
serve you well in dealing with contracts.
Remember, it is only a base and you may
have to do something different in another
country.
ALLW International
DISTRIBUTION AGREEMENTS
•
• Some of the many types of contracts in channels of distribution
include
– Reseller contracts for
•
distributors, dealers, wholesalers, retailers, …
– Representative contracts for
•
any extension of your sales organizations
– Licensees and Franchises.
ALLW International
DISTRIBUTION AGREEMENTS
•
– Representative contracts for
•
any extension of your sales organizations
–
Manufacturer’s representatives, brokers, agents [be
very careful], freelance, …
– Direct employees
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DISTRIBUTION AGREEMENTS:
• UN Convention for the International Sale
of Goods [CISG]
– Effective January 1, 1988 CISG replaced the
United Nations Commission on International
Trade Law [UNCITRAL]
– It
• Involves places of business in different nations
• Is based on French Civil Code
• Is approved by ~62 member nations, ~ 8
organizations
ALLW International
DISTRIBUTION AGREEMENTS:
TYPES OF CONTRACTS
• There are many types of channel of
distribution contracts including
– Distributor / Dealer
– Wholesaler / Retailer
– Manufacturer’s representative
• Tying [franchises: full line purchases]
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DISTRIBUTION AGREEMENTS:
•
– It can invalidate some [or all] of the contract.
– It will likely affect all of the following.
• Imports
• Exports
• Types of business ownership and entities by
foreign nationals and corporations
• Maximum ownership per cent
• Board of Director composition
• Methods of conducting business
• Packaging and labeling
•…
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DISTRIBUTION AGREEMENTS:
PARTIES AND APPOINTMENT
• Parties must include full legal names and
addresses.
•
•
•
•
•
•
•
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Territory
Product / Service Offering
Limits
Term
Termination
The Reseller will usually get the benefit of the doubt if
you are not very specific with the appointment items.
DISTRIBUTION AGREEMENTS:
THE TERRITORY
• A detailed description of the “territory”
[geographic, product line, channel, account(s) or
other] to which the agreement applies. This
should include any logical extensions like new
products or new programs. It may also address
expansion and/or contraction of the territory.
•
• What are the rights of the exporter to add
resellers of other types in the defined territory?
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DISTRIBUTION AGREEMENTS:
EXCLUSIVITY
• Some statement is virtually required about
the territory and exclusivity.
– Indonesia allows only one distributor.
• So what do you do?
– Some countries imply exclusivity unless the
contract specifies differently.
– In some countries, exclusivity is not allowed.
ALLW International
DISTRIBUTION AGREEMENTS:
EXCLUSIVITY
• Exclusivity demands
– Loyalty
• No competitive products may be purchased
• Limited specified competitive products may be
purchased
• Conditions
– Performance
• Continually better
–
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DISTRIBUTION AGREEMENTS:
STATUS OF THE RESELLER
•
• Beware of the reseller being an
—
this is very sensitive on a country-bycountry basis—most are not. In general,
the only right to bind your company should
be with your express written approval.
ALLW International
DISTRIBUTION AGREEMENTS:
PRODUCT / SERVICE OFFERING
• Products and / or Services
– All, extensive, or limited product accessibility
– Supplier’s rights
– Reseller’s rights
– Distributors, dealers, wholesalers, retailers,
jobbers,
– Various types of agents, brokers,
representatives, …
ALLW International
DISTRIBUTION AGREEMENTS:
•
– The part of an agreement or contract that
specifies what each party will do.
• Duties of the Reseller
– Are there any reporting obligations? Be specific and
show examples.
– There should be a provision in the contract that the
reseller and its employees know about and will comply
with all requirements of the Foreign Corrupt Practices Act
[FCPA] and other applicable U.S. laws.
– The reseller and its employees will comply with the laws
of all countries where they will conduct business on
behalf of your company. Why?
.
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DISTRIBUTION AGREEMENTS:
PRICES AND TERMS
• PRICES
– What? How long are they good? How can they be
revised?
–
–
– Payment terms
• Where? When? How?
–
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DISTRIBUTION AGREEMENTS:
PRICES AND TERMS
• PRICE ADJUSTMENT CLAUSE
The part of the contract that allows prices to
be adjusted based on some point in time,
event, or other condition that has been
met.
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DISTRIBUTION AGREEMENTS:
PRICES AND TERMS
• Duration, Terms, and Conditions of Sale
– What is the initial duration of the contract and how
can it be extended in time?
–
– If there are any payments, commissions, or other
financial amounts due the reseller enclose specific
details. Note: some countries prohibit payment to
foreign bank accounts or other indirect methods.
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DISTRIBUTION AGREEMENTS:
BASIC REQUIREMENTS
• TRANSACTIONS
– Processes
• Ordering
• Shipping
– Responsibilities of the parties
– Taxes, government filings or approvals
• Who is responsible?
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DISTRIBUTION AGREEMENTS:
BASIC REQUIREMENTS
• PERFORMANCE CLAUSE
– This contract section specifies certain actions
must be accomplished [sometimes in a
certain manner] to fulfill the contract. It is
generally a condition of continuation or for
renewal of the agreement.
– Performance requirements
• Initial goals
• Subsequent targets
• Remedial measures
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DISTRIBUTION AGREEMENTS:
BASIC REQUIREMENTS
•
– where Buyer is provided assurances Seller
will repurchase slowly moving or dead [nonmoving] inventory using some predetermined
formula.
–
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DISTRIBUTION AGREEMENTS:
BASIC REQUIREMENTS
• INTELLECTUAL PROPERTY RIGHTS
– You own the intellectual property rights and
must make sure they are protected.
• Copyrights, patents, trademarks [brands and
marks], trade secrets
– This goes to a broader topic of licenses,
approvals, and registrations and who must
hold them in a country. Generally speaking,
you want them to be your property [for lack of
a better word] but want the reseller to file for
you.
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DISTRIBUTION AGREEMENTS:
BASIC REQUIREMENTS
• COMPLIANCE
– All agreements virtually must include the
agreement to comply with U.S. laws and
regulations. At a minimum that would include
all of the following.
• Federal Corrupt Practices Act [FCPA]
• International Anti-Bribery Act of 1998
• Export and import laws and regulations
ALLW International
DISTRIBUTION AGREEMENTS:
TERMINATION
• TERMINATION CLAUSE
– A legal clause that specifies duties and
obligations [if any] of each party at once a
contract is concluded or ended.
– Options
• With or without cause
• Special circumstances
ALLW International
DISTRIBUTION AGREEMENTS:
TERMINATION
• TERMINATION
– Varies greatly by country
• Belgium = normal costs + goodwill
• “Agent” – acting on behalf of the company
[usually binds the company]
• “Distributor” – acting independently with
the right to promote and sell the
company’s products
ALLW International
DISTRIBUTION AGREEMENTS:
TERMINATION
• BASIC REQUIREMENTS
– See the cost of enforcing contracts
[World Bank]
– Post-termination rights
– Dispute resolution
•
•
•
ALLW International
ALLW International
SUPPLY CHAIN MANAGEMENT
SECTION 4
CHANNEL OF DISTRIBUTION RELATIONSHIPS
4 – UNDERSTANDING AND MANA
ALAN L. WHITEBREAD
ALLW International
INTERNATIONAL DISTRIBUTION
•
•
•
•
•
Channel Structure
Distribution Patterns
Types of Resellers
Channel Selection
Channel Relationships
ALLW International
CHANNEL STRUCTURE
PRODUCERS
AND
CONSUMERS
PROVIDERS
CHANNELS PROVIDE UTILITY OF PLACE, TIME, POSSESSION, &
INFORMATION
ALLW International
CHANNEL STRUCTURE:
WHOLESALING INTERMEDIARIES
There are two basic types of intermediaries. Merchant wholesalers or resellers that
carry inventory and representatives [sales agents] that are extensions of your sales
forces.
-Take Title to Goods
-Independently owned
-Distributors / Dealers
-Fairly standard arrangements
-Independently owned
-Never take Title to Goods
-Help negotiate business
arrangements
-Be careful of payments !
ALLW International
Distributors - Wholesalers
Dealers - Retailers
Exporter
Export Trading Company
[possibly state controlled]
Agent
Broker
Export Broker
Export Management Company
Manufacturer’s Rep.
Freelance Sales Person
CHANNEL STRATEGY:
VERTICAL MARKETING SYSTEMS [VMS]
CORPORATE
Common Ownership at Different Channel Levels
CONTRACTURAL
Contractual Agreements Among Channel Members
ADMINISTERED
Leadership is Assumed by One or a Few Dominant
Members; Contracts are not common
ALLW International
CHANNEL STRATEGY:
VERTICAL MARKETING SYSTEMS [VMS]
International Vertical Marketing Systems [VMS]
Corporate
Subsidiary
or JV
More
Contractual
Resellers
Licensees [Franchisees]
Degree of
Direct
Control
Administered
No agreement
Less
International channels of distribution may use any possible combination of the
above systems. There is frequently significant region-to-region variation and
sometimes major country-to-country differences. Each business must build the
best combination for their needs.
ALLW International
CHANNEL STRATEGY
• Channel strategy describes the approach
to the target markets and/or target market
segments. The following are some of the
items to consider when creating your
channel strategy.
–
–
–
–
Market share / Market coverage [density of distribution]
Channel [Distribution] strategy
Channel roles, expectations, and controls
Others
•
•
•
•
ALLW International
Presence and continuity
Channel alignment, control, length, and leadership
Distribution and channel logistics
Profitability
CHANNEL STRATEGY
• To build good channels of distribution one
needs to understand the buying choices
and preferences of every channel level.
– For example, what choices do you have for
where to purchase a digital camera?
ALLW International
CHANNEL STRATEGY
• Use the market segments to determine
which sets of channels of distribution may
be the optimum one.
– One often finds that channel sets are not
optimized.
– This requires significant discussion with
existing channel members.
• Build a new channel of distribution
– Risky and expensive
– Consider an acquisition
ALLW International
CHANNEL STRATEGY:
DISTRIBUTION INTENSITY
INTENSIVE
Frito-Lay:
we need to have potato chips available everywhere.
SELECTIVE
Panasonic:
we need to select technically competent resellers.
EXCLUSIVE
Jaguar:
we need a single strong dealer in every territory.
Be careful – successful country exclusives are quite
rare!
ALLW International
CHANNEL MAP:
Understanding the channel flow
• A channel map provides a picture of the
flow of goods and/or services through the
various functional channel members.
• It is a great tool for explaining your
system, or system changes and why they
are needed. It is especially good for
explaining changes or new channels to
your sales organizations.
ALLW International
B2B [INDUSTRIAL] CHANNEL MAP:
Simple direct distribution
Manufacturer
Manufacturer’s
sales branch
Manufacturer’s
Internet site
B2B CONSUMERS
ALLW International
Manufacturer’s
representative
B2B [INDUSTRIAL] CHANNEL MAP:
Simple indirect distribution
Manufacturer
Manufacturer’s
sales branch
Manufacturer’s
Internet site
Manufacturer’s
representative
Many Types of Industrial Distributors [See NAICS]
May Resell to Many Types of Industrial Dealers
B2B CONSUMERS
ALLW International
CONSUMER CHANNEL MAP:
Simple complex distribution
Manufacturer
Manufacturer’s
Internet Site
Mass
Merchandiser’s
Internet Site
Wholesaler
Retail Store
Direct distribution
Indirect distribution
CONSUMERS
ALLW International
CHANNEL MAP:
STEPS AND LEVELS
Steps [arrows] are the number
of vertical lines between levels.
It is possible to have paths to
the market with different
numbers of steps and levels.
Domestic Mfgs.
Foreign Mfgs. + subs.
1
Wholesalers (also
major importers)
1
Levels [entities] are the number
of types of entities at various
functional levels.
V. Large End-Users
(auto assembly, …)
53% of consumption
2
2
Distributors
(11,000)
brands
3
3
3
Retailers or Dealers
(20,000)
Major End-Users
(few in number)
4
4
Sm. & Med. End-Users
(???)
5
Copyright A. Whitebread 3/1/98, updated 12/1/00
By reducing the number of steps and levels you may lower consumer cost.
ALLW International
CHANNEL MAP:
COMPLEX DISTRIBUTION
• Distribution in Japan is very different from that in
the U.S. because it has not evolved as rapidly. A
typical example would include the following.
– High density middlemen
• There is a usual average of 5-7 levels of distribution
between the manufacturer and consumer.
– High level of channel control
• Market access is restricted by national law.
– Business philosophy
• Full employment, life long employment [changing]
– Large-Scale retail store law
• Restricts construction of types of stores
ALLW International
CHANNEL MAP:
COMPLEX DISTRIBUTION
Automobile makers
affiliated parts firms
Automobile
makers
Dealers
Independent
parts firms
1
Repair parts
firms
1st-level
Wholesalers
Special agents
Cooperatives
This is a lateral
relationship and
is frequently a
Sub-dealers
problem!
2nd-level
Wholesalers
2
Small
Retailers
Large users
3
Gas
Stations
Automobile
Repair Shops
Small and Medium Size End users
This complex channel example has a lot of conflicts. This type of conflict where one level is
bypassing another one to make a sale is called disintermediation. One way to improve it would be
for the independent parts firms to restructure their channels to look like the next slide.
ALLW International
CHANNEL MAP:
COMPLEX DISTRIBUTION
Independent
parts firms unbranded
Independent
parts firms brand
Automobile
makers
brand
1st=level
Wholesalers
2nd-level
Wholesalers
Dealers
Small
Sub-dealers
Retailers
Gas
Stations
Large users
Automobile
Repair
Shops
Small and Medium Size End users
This is much less complex and much more manageable. It could be done by having clearly defined
roles and responsibilities , territory definitions, and structured terms and conditions of sale. There
are still some issues. But you should have much less channel conflict and more control over the
channel members.
ALLW International
CHANNEL ISSUE:
SELECTING CHANNEL MEMBERS
• SCREENING AND SELECTING
CHANNEL MEMBERS: CRITERIA
– Must fit the customer profile [characteristics]
– Meet minimum qualifications
– Use and acceptable sales style
– Possess product and market segment
knowledge
– Possess industry experience
– The product[s] will fit with existing product
lines
– They are willing and able to perform all
ALLW International
CHANNEL ISSUE:
SELECTING CHANNEL MEMBERS
• SCREENING AND SELECTING
CHANNEL MEMBERS: CRITERIA
[continued]
– Must be a team player
– Sales strategy: existing and potential fit
– Make some sales calls with their people to
verify sales skills
– Administrative / management fit
– Management orientation [long vs. short] and
chemistry
– Risk assessment
ALLW International
PROACTIVE CHANNEL
STRATEGIES
• Product differentiation
– Exclusive features for appeal to target
markets
• Strategic pricing
– Larger price differentials, more exploitation
• Intermediary development
– Give intermediaries less incentive to cheat
ALLW International
TYPES OF CHANNEL PROMOTIONS
• FREE GOODS
• CONSIGNMENT - manufacturer financing of
reseller inventory
• CONTESTS - for reseller and sometimes their
sales people
• COOPERATIVE ADVERTISING ALLOWANCES
• RESELLER LISTING - reseller listed in
manufacturer’s ad[s]
• DISPLAYS AND/OR DISPLAY ALLOWANCE
• TERMS OR INVENTORY FINANCING
• SALES PERSONNEL PROMOTIONS
ALLW International
CHANNEL ISSUE:
POWER & DIFFERENTIAL ADVANTAGE
•
–
• DIFFERENTIAL ADVANTAGE or
SUSTAINABLE COMPETITVE
ADVANTAGE CAN BE ANY OF THE
FOLLOWING.
–
–
–
–
–
ALLW International
Physical / experiential
Psychological [communication / perception]
Purchase environment
Total cost including price and terms of sale
Post-purchase satisfaction [cognitive dissonance]
CHANNEL ISSUE:
•
– For products purchased and shipped direct to
U.S, resellers are considered domestic sales,
even if ultimately destined for export.
– The U.S. Reseller is responsible as the
USPPI when forwarding product to any
foreign destination.
– This applies to shipments to any
•
•
•
•
ALLW International
CHANNEL ISSUE:
GRAY MARKETS
• A source of supply--a wholesaler usually in
another country.
• Low barriers to movement from market to
market—shipping costs, tariffs, quotas, …
• A significant price differential—pricing policies of
producers, exchange rates, acceptable margins.
• Manufacturer has not cleanly structured its
channels of distribution.
ALLW International
CHANNEL ISSUE:
CHANNEL PRICING
•
• Channel members offering unauthorized lower prices
in another country.
COUNTRY A
Manufacturer
COUNTRY B
50 Euros
Manufacturer
Price to Dealer
80 Euros
55 Euros
Dealer’s New Price to
Customers is 66 Euros
ALLW International
Master Distributor with a
low contract price.
CHANNEL ISSUE:
TRANSFER PRICING
• The price paid by another part of the
organization when the product crosses a
national border. There are three tests to
meet.
–
•
–
–
ALLW International
CHANNEL ISSUE:
TRANSFER PRICE CALCULATIONS
Standard cost
LANDED COST: Goods,
transportation, & insurance
Cost plus
Marginal cost
10.00
12.14
9.29
Tariff (complete)
(18%)
1.80
2.19
1.67
TLC (complete)
11.80
14.33
10.96
Tariff (parts)
(6%)
0.60
0.73
0.56
TLC (parts)
10.60
12.87
9.85
TLC Difference
-1.20
-1.46
-1.11
ALLW International
CHANNEL ISSUE:
U.S. LAWS APPLY WORLD-WIDE
•
–
• Anti-boycott Laws
– Cuba …
•
•
–
ALLW International
FOREIGN CORRUPT PRACTICES
ACT [FCPA] - 1977
• Prohibits American companies from making payments [anything of
value] to foreign officials knowing some or all of the funds will be
used for the purpose of obtaining, keeping, or directing business [to
themselves or an affiliated party] and it applies to all
• Employees and Agents
• Distributors
• Consultants
• Contractors
For current information see U. S. Department of Justice web site.
ALLW International
FCPA - DETAILS
• Also applies to foreign customers selling to a government.
• Any attempt to bribe is illegal.
• BEWARE OF ANYONE THAT
– does not want to keep records or has poor records, or
– is an agent and a government official, or
– has other third parties involved in the transaction [especially the
payments].
ALLW International
FCPA UPDATE
• The FCPA was amended by the International Anti-Bribery Act of
1998 to implement the anti-bribery conventions of the Organization
for Economic Cooperation and Development [OECD] Convention on
Combating Bribery of Foreign Officials in International Business
Transactions.
• The Act expands the FCPA's coverage to include all foreign
persons who commit an act in furtherance of a foreign bribe while in
the U.S.
• See the U.S. Department of Justice web site for more details.
ALLW International
ALLW International
SUPPLY CHAIN MANAGEMENT
SECTION 4
CHANNEL OF DISTRIBUTION RELATIONSHIPS
5 – INTERNATIONAL CHANNELS AND CHANNEL CONTRACTS
ALAN L. WHITEBREAD
ALLW International
INTERNATIONAL CHANNEL
CHARACTERISTICS
• International channels of distribution may be
longer and thus require a larger number of
intermediaries [wholesalers, distributors,
retailers, and others].
•
•
ALLW International
INTERNATIONAL COMMERCE:
INCOTERMS 2010
• To successfully conduct business around
the world a company needs to gain a good
understanding of INCOTERMS 2010,
documentation requirements, key channel
issues in international business, and a
host of other items dealing with
international marketing.
ALLW International
INTERNATIONAL COMMERCE:
INCOTERMS 2010
• 11 terms, 8 are common
• The 3 “D” terms should be used only with
experienced expert assistance!
• This is usually part of the Buyer – Seller
agreement
• To include in the Buyer – Seller agreement be
sure to state “INCOTERMS 2010” in the
contract.
• INCOTERMS 2010 is recognized by most
nations
• It is updated every 10 years .
ALLW International
INTERNATIONAL COMMERCE:
INCOTERMS 2010 – 4 CATEGORIES
•
–
–
–
–
ALLW International
INTERNATIONAL COMMERCE:
INCOTERMS 2010 – 4 CATEGORIES
•
Ex Works (EXW)
•
Free Carrier, Named Place (FCA)
– Seller's Premises or Named Place of Origin (FCA)
•
•
Free Alongside Ship, Named Port (FAS)
Free on Board, Named Port (FOB)
•
•
•
•
Cost and Freight, Port of Destination (CFR)
Cost, Insurance and Freight, Port of Destination (CIF)
Carriage Paid To, Named Place of Destination (CPT)
Carriage and Insurance Paid To, Named Place of Destination (CIP)
•
•
•
Delivered at Terminal (DAT)
Delivered at Place (DAP)
Delivered Duty Paid, Named Place of Destination (DDP)
ALLW International
INCOTERMS
• INCOTERMS do not
–
–
–
– Specify details of transfer, transport, and/or
delivery
•
ALLW International
EXPORT INTERMEDIARIES:
• At the beginning of the sales cycle they can
provide the exporter with guidance for
–
–
–
–
–
INCOTERMS
Freight costs and port charges
Insurance costs
Freight forwarder’s fees
And if applicable the cost of special documents and
fees
• Once the sales is made, they prepare all the
documents necessary to get the shipment to
your customer with minimal [if any] issues.
ALLW International
EXPORT INTERMEDIARIES:
CUSTOMS BROKER
• A customs broker can do everything a
freight forwarder can do and more.
– “… a Customs Broker prepares and files the necessary Customs
entries, arranges for the payment of duties found due, takes
steps to effect the release of the goods in Customs custody, and
represents their clients in custody matters. ”
http://www.itds.treas.gov/broker.html
•
ALLW International
INTERNATIONAL DOCUMENTATION
• The only acceptable way to complete
international documentation is to dot every
“i” and cross every “t”. Many items are
subject to proofreaders that charge fees to
correct discrepancies.
• Mistakes cost time, money, and customer
unhappiness.
ALLW International
INTERNATIONAL DOCUMENTATION
• Sarbanes-Oxley requires publicly traded
companies and their vendors to keep
import and export documents for up to
• GUIDELINES:
– [1] Keep all transaction records and correspondence.
This will help you if there is ever an issue about an
illegal or questionable diversion, re-export, or
transshipment of your product[s].
– [2]
ALLW International
INTERNATIONAL DOCUMENTATION
•
– [1] is a receipt for the items,
– [2] provides a detailed content of the
shipment, and
– [3] provides title to the items under certain
circumstances.
•
– Is a receipt for goods,
– evidence of the contract of carriage, and
– a document of title to the goods.
ALLW International
INTERNATIONAL DOCUMENTATION
•
– An offer to sell at the prices, terms, and
conditions listed on the document.
– The Buyer needs this invoice to prove intent
to purchase and arrange payment by Letter
of Credit [L/C] or similar financial instrument.
–
ALLW International
INTERNATIONAL DOCUMENTATION
•
–
–
–
–
–
–
ALLW International
For payment. Layout and content may be specified by
importing country.
The Commercial Invoice looks like the Pro Forma invoice but
acts as a Bill for Goods from Seller to Buyer.
The Buyer needs this invoice to prove ownership and arrange
payment. Customs examines the Commercial Invoice at the
time of delivery and may use it to assess import tariffs based
on the transaction value. It is signed.
Check with the U.S. Department of Commerce for specific
requirements [especially if you are shipping to a country for the
first time].
Be sure to include a statement about compliance with U.S.
laws and regulations on this document.
INTERNATIONAL DOCUMENTATION
• Commercial invoice trap example
– Your customer asks you to provide two different
Commercial Invoices. One is to go with the
shipment and mail the other one with a smaller
value to the customer.
• WARNING:
– The customer knows the mail copy will arrive
before the shipment. So they can use the
mailed copy to pay less duty.
– This is illegal. Never provide invoices at
different amounts for the same goods!
ALLW International
INTERNATIONAL DOCUMENTATION
• Certificate of Origin [simple]
– A simple attest that the product was made in that country.
– It is issued by the local Chamber of Commerce.
•
ALLW International
INTERNATIONAL DOCUMENTATION
•
– Filed through the Automated Export System
[AESDirect]
– Required for every shipment of $2,500 or more.
– Identifies types and quantities of product being
shipped.
– Used by the Bureau of the census for statistics.
– Always include the following statement.
• “The commodities, technology or software were exported from the
United States in accordance with the Export Administration
Regulations. Diversion contrary to U.S. laws is prohibited.”
ALLW International
INTERNATIONAL DOCUMENTATION
•
– “No license required” [NLR]
–
• Required for specific goods [ECCN] and/or specific destinations.
• Contact the BIS Exporter Counseling Staff at U.S. Department of
Commerce for details.
ALLW International
INTERNATIONAL DOCUMENTATION
• Export Packing List
– This document itemizes your product in imperial and
metric weights, unit of measure, quantity of each
package, and how it is carried; i.e., box, crate, drum,
etc.
– Units of measure on all international documents
should always be the same. Never mix terms as that
may delay the shipment and cost to correct it.
•
– It must be
• negotiable in the same currency as the transaction and
• specifically identify the insurance coverage concerning all risks of
the credit it covers.
ALLW International
INTERNATIONAL CYCLES:
ARE AFFECTED BY
• WAIT TIMES
– For a complete set of order documents
– Inserting the order into the production
schedule and producing it
• EXTENDED TRANSPORTATION TIMES
– Ports
– Ship arrival, loading, transit, and unloading
ALLW International
INTERNATIONAL CYCLES:
ARE AFFECTED BY
• VERIFICATIONS AND INSPECTIONS
– Customs
– Other inspections required by the importing
country or customer
• POLITICS
– Fall, 2005
– 80,000,000 clothing items were impounded at
EU entry points because import limits were
exceeded.
ALLW International
INTERNATIONAL CYCLES:
AN OCEAN SHIPMENT TO THE U.S.
Container Security
Initiative [CSI]
Participating
Port
Manifest goes to
Homeland Security
24 hours before
loading.
Container is loaded
onto a truck which
passes through at
least one detection
device.
U.S. Customs and
Border Protection at
participating
port
verify information
and provide an OK to
load.
At sea, the manifest
is sent to the U.S.
Coast Guard.
≥96 hours before
entering the U.S. the
ship identifies itself
and all crewmembers
Coast Guard inspects
the ship.
Customs verifies only
U.S. bound
containers are
offloaded.
Coast Guard allows
entry or intercepts
ship far offshore
For additional information see http://www.cbp.gov/xp/cgov/border_security/international_activities/csi/
ALLW International
TRANSPORTATION:
COST FACTORS
• Dollar cost vs. Total cost
• Distance
• Density
– Cube out or weigh out?
• Handling
– Refrigeration, cranes, …
• Liability
– Susceptibility to damage, perishability, theft,
HAZMAT, value per pound
ALLW International
TRANSPORTATION:
CONTAINER TYPES
• Dry freight
– General purpose container
• High cube
– 9’6” high vs. standard 8’6” for additional volume
• Reefer or insulated or refrigerated
– For cooling, freezing, or heating of foods or
chemicals
ALLW International
TRANSPORTATION:
•
• There is a fixed minimum liability.
– The air carrier liability is a fixed minimum of
$20 per kilogram [$9.07 per U.S. pound].
The shipper must declare and pay for
the higher value to receive additional
insurance protection.
– Williams Dental v. Air Express: The plaintiff
[Williams Dental] declared a higher value of
the shipment and is entitled to collect.
ALLW International
TRANSPORTATION:
•
– Sets a $75,000 death or personal injury limit
[expressed in national currency equivalents of
an amount of gold].
• Awards may be exceeded if the airline is
found to be “reckless”.
ALLW International
TRANSPORTATION:
MOTOR TRANSPORT
• All motor carriage in Europe and into Asia
is subject to the Convention on the
Contract for International Carriage of
Goods by Road [CMR] Convention.
• The CMR establishes documentation
requirements for the motor carrier Bill of
Lading.
• Liability is limited to 8.33 Special Drawing
Rights [SDRs] per kilogram [~ $5 per U.S.
pound].
ALLW International
FEDERAL SECURITY
DEVELOPMENTS
•
– Currently 20 nations and 44 ports including all 20 of the
world’s largest ports.
• Read some articles of interest on http://www.cbp.org or details about
the CSI program.
• Review the slide presentation on http://www.cbp.org .
– Identify and pre-screen high-risk U.S. inbound containers
at the port of departure or the U.S. port for
• physical examination or
• non-intrusive inspectional [NII] equipment [gamma-ray
or X-ray imaging] and radiation detection equipment
ALLW International
FEDERAL SECURITY
DEVELOPMENTS
• U.S. Customs Trade Partnerships Against
Terrorism [C-TPAT]
– Provide the highest level of security through close
cooperation with the owners of the supply chain,
importers, carriers, brokers, warehouse operators and
manufacturers through a detailed self-assessment
process.
–
– For C-TPAT details see http://www.cbp.org .
ALLW International
FEDERAL SECURITY
DEVELOPMENTS
•
– All aircraft entering or operating within the
U.S. with a take-off weight of 12,500 pounds
or more must
• provide for screening of all property, cargo, carryon and checked baggage, and other articles, that
will be carried aboard a passenger aircraft
operated by a domestic or foreign air carrier; and
• establish a system to screen, inspect, or otherwise
ensure the security of freight that is to be
transported in all-cargo aircraft as soon as
practicable.
ALLW International
INSURANCE:
LIABILITY VERSUS CLAIM
• Liability determines the dollar value of the
claim.
• The claim is the process for recovering
compensation for a loss.
ALLW International
INSURANCE:
TYPES
• MARINE / CARGO INSURANCE
– The shipper may obtain insurance policies
tailored to their specific needs. The
standard policy provides only some
protection!
– The most common insurance is an "all-risk“
policy. Coverage begins when transportation
commences and continues until the goods
are delivered at the destination.
ALLW International
INSURANCE:
TYPES
•
–
• All risks except standard war, strike, and other clauses.
• The next slide contains the items that are usually not covered
by an all-risk policy.
• Make sure you understand what is not covered by your
particular policy!
–
• Covers a partial or total loss by sea.
–
• Covers a total loss only!
ALLW International
INSURANCE:
TYPES
• A standard all-risk marine insurance policy usually does
not cover the following.
–
–
–
–
–
–
–
–
–
Delay
Vice, willful misconduct, or other illegal activity
War
Strikes, riots, civil disobedience, terrorism
Use of atomic or nuclear weapon
Ordinary loss or wear
Insufficient or unsuitable packaging
Unseaworthy vessel at the time of loading
Insolvency or default of the vessel owners / operators
– You can always get additional coverage through attaching
riders to you policy. See your insurance carrier.
ALLW International