Transcript International Marketing

INTERNATIONAL MARKETING 6e
Chapter 13
Channels and Distribution
Strategies
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In International Distribution
 The
firm sells to its customers:
• directly through its own sales force
• indirectly through independent intermediaries
• indirectly through an outside distribution system
with regional or global coverage
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13-2
Channel Structure
 How
to structure the distribution channels is
the most important long-term marketing mix
decision a firm may make.
 Channel structures are designed to manage
multidirectional (horizontal and vertical)
connections in
• physical movement of
goods and services
• transactional title flows
• information
communications flows
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13-3
Channel Configurations
Manufacturer
Manufacturer
Originator
Agent
Agent
Agent
Agent
Wholesaler
Wholesaler
Retailer
Retailer
Retailer
Retailer
Agent
Industrial
Distributor
Industrial
Distributor
Consumer
Industrial User
Consumer
Products
Industrial
Products
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Agent
Agent
Consumer /
Industrial User
Services
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Channel Design Considerations
 Customer
characteristics
• What do they need, why, when, and how?
 Distribution
culture
• The structural linkages and functional
characteristics of existing channels
 Competition
• What channels does the competition use?
 Company
objectives
• Determined by company objectives for market
share and profitability.
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13-5
Channel Design Considerations
 Character
• The nature of the product impacts the design of
the channel. The channel must match the
positioning of the product in the market.
 “Capital”
• ... describes the financial requirements for setting
up a channel system.
 “Cost”
• … is the expenditure incurred in maintaining a
channel once it is established.
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13-6
Channel Design Considerations
 Coverage
• the number of areas in which a product is
represented and the quality of that representation.
 Types
of coverage
• Intensive
• Selective
• Exclusive
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13-7
Control
 The
use of intermediaries will result in some
loss of market control.
 Control correlates with the type of product or
service being marketed.
 The marketer’s ability to exercise power
determines the extent of control.
 Types of power
• reward, coercive, legitimate, referent, expert
 Careful
communication with foreign
intermediaries is needed to make them aware
of the marketer’s control intentions.
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13-8
Continuity
 Channel
decisions are the most long-term of
the marketing mix decisions.
 Care must be taken in choosing the right type
of channel.
 Establishing continuity is the marketer’s
responsibility
 Continuity is expressed through visible
market commitment.
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13-9
Communication
 ...provides
the exchange of information that is
essential to the functioning of the channel.
 Types of “distances” that cause
communication problems:
•
•
•
•
•
Social distance
Cultural distance
Technological distance
Time distance
Geographical distance
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13-10
Intermediaries
 Types
of intermediary relationship
• Distributorship
• Agency
 Type
of exporting function
• Indirect exporting
• Direct exporting
• Integrated distribution
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Intermediaries
 Sources
for Finding Intermediaries
• Distributor inquires
• Governmental agencies
– Commerce Department’s Trade Opportunities Program
– U.S. Exporters Yellow Pages
• Private sources
– Trade directories
 Screening
Intermediaries
• Performance
• Professionalism
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13-12
Selection of Intermediaries
Agents
 Foreign (Direct)
•
•
•
•
•

Brokers
Manufacturer’s Reps
Factors
Managing agents
Purchasing Agents
Domestic (Indirect)
•
•
•
•
•
Brokers
Export Agents
EMCs
Webb-Pomerene
Commission agents
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Distributors
 Foreign (Direct)
• Distributors/dealers
• Import jobbers
• Wholesalers/retailers

Domestic (Indirect)
•
•
•
•
Domestic wholesalers
EMCs
ETCs
Complementary
marketers
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The Distributor Agreement
 Typical
terms include
• Contract duration
– Typically short periods initially
• Geographic and customer boundaries
– Well-defined territories and channels
• Compensation
– Methods for determining payment amounts and how and
in what currency payment is to be made.
• Products and conditions of sale
– Products to be sold; terms and conditions of sales
• Means of communication between parties
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13-14
Channel Management
 Coordinating
two independent entities with
shared goals
 The relationship needs to be managed for the
long term
 Factors complicating channel management
• Ownership
• Geographic, cultural, and economic distance
• Different rules of law
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13-15
Channel Adjustment and Termination
 Typical
reasons for channel adjustment
• Growth and changes in the international
marketer’s distribution approach may eliminate a
channel.
• Conflict of interest and a lack interest or
performance by the intermediary may require a
channel modification.
 Termination
conditions are the most important
considerations in the distribution agreement
and must be spelled out clearly.
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13-16
Gray Markets (Parallel Importation)
Arguments for:
 The right to “free trade”
 Consumers benefit from
lower prices
 Discount distributors
have found a profitable
market niche
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Arguments against:
 Gray marketers take
unfair advantage of
trademark owner’s
marketing and
promotion
 Parallel imports deceive
consumers by not
meeting product
standards or
expectations of aftersale service
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The Solution to the Gray Market Problem?
A
contractual relationship that
ties businesses together.
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13-18
E-Commerce
 Any
worldwide web strategy must be tied
closely to the company’s overall growth
strategy in international markets.
 Companies must come to terms with issues
related to security, privacy, and access to
global networks, at the same time,
promoting global
commerce over
the Internet.
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