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Welcome to
INTERNATIONAL MARKETING
Prof. Dr. Christina Sichtmann
Course objectives
 Understanding of the relevance and the main
management decisions connected with the international
marketing process
 Knowledge of the factors that influence the selection of
markets and the international market selection process
 Understanding strategic and managerial issues related
to international marketing
 Developing decision-making skills for the successful
formulation, implementation and control of international
marketing strategies
 Ability to design and conduct an international marketing
research study (e.g., your Bachelorarbeit).
Prof. Dr. Christina Sichtmann
A note on:
Cheating, plagiarism , and other
instructional offences are not tolerated
and can have severe penalties
Prof. Dr. Christina Sichtmann
You should not take this course if…
 You are not open-minded, committed and (highly!)
motivated.
 You want an easy life.
 All students should carefully read the course outline for full
course details.
Prof. Dr. Christina Sichtmann
Rules of communication
 Please use e-mail ([email protected]) only for
precise questions that cannot be answered through other means.
 Do not use e-mail for the following questions:
− questions about deadlines (available online)
− questions about your grade (When they are ready I will
publish them)
− any question that should be better solved in a face-top-face
meeting (e.g., lengthy questions or complicated issues)
Prof. Dr. Christina Sichtmann
Class Behaviour
 For the sake of smooth and more efficient classes, please try to
respect the following:
 Be on time and do not leave the class unless urgent
 Do not eat in class
 Do not use your mobile phone in class
 Show respect and good manners towards your classmates and
teachers
 Do not use your laptop computer for other things but to make
notes
Prof. Dr. Christina Sichtmann
Assessment
50 %
Group Project: Country Market Analysis Report
50 %.
Final Exam: 30th of November (duration: 50 minutes)
Prof. Dr. Christina Sichtmann
Country Market Analysis and Report
 Group work (5-6 students per group)
 Analysis of the market environment for a specific product
 DO NOT develop a marketing strategy!
 DO NOT assume a specific company/product
 Analysis the market from a generic perspective
 Report: 10 pages (excl. references, appendix), English,
double-spaced, see guidelines
 Deadline: December 16t, 2016 to be sent to
[email protected]
Prof. Dr. Christina Sichtmann
Assessment
50 %
Group Project: Country Market Analysis Report
50 %.
Final Exam: 30th of November (duration: 50 minutes)
Prof. Dr. Christina Sichtmann
Group project: Groups
Please find yourself together in groups of 5-6
people
Please organize yourself! (Exchange e-mail
addresses!)
Prof. Dr. Christina Sichtmann
Literature
Textbook:
Pervez Ghauri/Phillip Cateora (2014). International Marketing, 4/e, McGrawHill, ISBN:
0077148150
There is a possibility to rent the textbook for 360 days:
Additional selected cases and readings will be provided during the course.
Teaching Slides:
Will be provided via email
Prof. Dr. Christina Sichtmann
Learning Resources
Session Slides
Case
Studies
Session Notes
Student
Essential
Reading
(Textbook)
Prof. Dr. Christina Sichtmann
Further
Reading
Your Instructor
Newspapers,
Magazines…
Organization of Learning
 You do not learn for the teacher but for yourself!
 Sessions serve to deepen your understanding of the topic of
internationalization strategies as well as to discuss selected topics in
more detail
 It is essential to read the relevant literature in order to prepare and
wrap-up the sessions and to be able to participate in the discussions
during the sessions.
 I offer you to do things – it is your own choice if you do them!
 Preparation of a session is essential to follow the session and to
participate in the case studies, exercises etc. discussed in class.
 Wrap-up of the course may help you to internalize topics discussed in
class, understand issues that you have not understood and integrate
topics with topics formerly discussed in this course or in other courses.
Prof. Dr. Christina Sichtmann
Factors that led to growth of international trade
 Interdependence of world economies and the globalisation of
production and consumption
 Growth of regional free-trade areas
 Free-trade area: Where products can move freely, without
tariffs and restrictions
 EU, NAFTA, ASEAN and APEC
 More purchasing power throughout the world
 Evolution of large emerging markets
 Availability of advanced methods of communication
and transportation
Prof. Dr. Christina Sichtmann
1
Growth of world trade and output since 1950
[Index (1950=100)]
3300
World merchandise export
2900
2500
2100
1700
1300
World GDP
900
500
Source: Ghauri and
100
Cateora 2010, p. 32
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Prof. Dr. Christina Sichtmann
2
Nationality of the world’s 100 largest industrial
corporations (by country of origin)
Source: Ghauri and
Cateora 2010, p. 33
Prof. Dr. Christina Sichtmann
3
Number of Trade Agreements put in force by the
WTO
Number
20
15
10
5
0
1958
1963
1968
1973
1978
1983
1988
1998
2003
Source: WTO 2010
[Year]
Prof. Dr. Christina Sichtmann
1993
4
2008
EU member states
Source: Cateora/Ghauri (2014)
Prof. Dr. Christina Sichtmann
5
Trade agreements outside the EU
Source: Gersemann
and Handschuh 2003
Prof. Dr. Christina Sichtmann
6
Forms of economic integration in regional markets
Prof. Dr. Christina Sichtmann
7
Definition of Global Marketing
The firm’s commitment to coordinate its marketing activities
across national boundaries in order to find and satisfy global
customer needs better than the competition. This implies that
the firm is able to:
 develop a global marketing strategy, based on similarities
and differences between markets;
 exploit the knowledge of the headquarters (home
organization) through worldwide diffusion (learning) and
adaptations;
 transfer knowledge and ‘best practices’ from any of its
markets and use them in other international markets.
Prof. Dr. Christina Sichtmann
8
Forces for Global Coordination/Integration
 Removal of trade
barriers
 Global customers
 Relationship
management
 Standardized
worldwide technology
Prof. Dr. Christina Sichtmann
 Worldwide markets
 Global village
 Worldwide
communication
 Global cost drivers
9
Forces for Market Responsiveness
 Cultural differences
 Regionalism/protectionism
 Deglobalization trend
Prof. Dr. Christina Sichtmann
10
EPRG framework of business activities
•

•

•

•

Ethnocentric Orientation
home country is superior; foreign countries are similar
Polycentric Orientation
each host country is unique; foreign countries are different
Regiocentric Orientation
similarities within a region; ethnocentric or
polycentric view of the rest of the world
Geocentric Orientation
world view: similarities and differences in home and host
countries
Prof. Dr. Christina Sichtmann
11
8
Trade Barriers
 Encourage the development of domestic industry and protect existing
industry
 Imposed against imports and foreign businesses
 Types - Tariffs, quotas, boycotts, monetary, non-tariff and market barriers
 Monetary barriers: Putting monetary restrictions on trade
 Market barriers: Imposed in an attempt to promote domestic industry
 Used as revenue-generating taxes or to discourage the importation of
goods
 Arbitrary and discriminatory, requiring constant administration and
supervision
 Used as reprisals against protectionist moves of trading
partners
Prof. Dr. Christina Sichtmann
12
Types of Trade Barriers
Economic Barriers
Protectionistic Barriers
Behavioural Barriers
Country Risks
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13
Categories of trade barriers
Tariff barriers:
• Specific
• Ad valorem
• Discriminatory
Prof. Dr. Christina Sichtmann
Non-tariff barriers:
• Quotas
• Embargoes
• Administrative
delays
• Local-content
requirements
14
27
Country risk ratings
Source: Ghauri and
Cateora 2010, p. 131
Scores are based on
indicators from three
categories: currency risk,
sovereign debt risk and
banking risk (Standard 6
Poor‘s, Fitch Ratings 2009)
Prof. Dr. Christina Sichtmann
14
27
Distribution of international trade
3,6 %
6,7 %
Northern America
17,1 %
6,8 %
3,3 %
3,3 %
4,2 %
2,7 %
Latin America
5,4 %
0,9 %
Europe
43,0 %
29,7 %
0,5 %
0,1 %
0,1 %
3,2 %
4,6 %
Asia
25,5 %
0,5 %
11,9 %
Africa
2,0 %
0,4 %
0,2 %
0,3 %
0,6 %
0,3 %
Prof. Dr. Christina Sichtmann
15
Source: WTO 2008
Hofstede’s culture dimensions
Power distance
Uncertainty avoidance
Time perspective
Individualism
Masculinity
Prof. Dr. Christina Sichtmann
16
Hofstede’s results
Source: Ghauri and
Cateora 2010, p. 80
Prof. Dr. Christina Sichtmann
17
Usage of the Hofstede Dimensions
Source: https://geerthofstede.com/germany.html
Prof. Dr. Christina Sichtmann
18
The firm
Environment
Step 1: Selection of segmentation criteria
Step 2: Development of segments
Step 3: Screening of segments
Step 4: Microsegmentation
Market entry
Prof. Dr. Christina Sichtmann
19
Which of them are
most important?
International Market Selection
Process
The firm
Environment
Step 1: Selection of segmentation criteria
Step 2: Development of segments
Fine-grained screening
Step 3: Screening of segments
Step 4: Microsegmentation
Market entry
Criteria that can be used for this
analysis
Prof. Dr. Christina Sichtmann
20
Practical application
Prof. Dr. Christina Sichtmann
21
Country Attractiveness Evaluation
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22
Waterfall Approach
Advanced
countries
Gross national product
per capita
High
Developing
countries
Less developed
countries
Low
Time
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23
Shower Approach
Advanced
countries
Prof. Dr. Christina Sichtmann
Developing
countries
24
Less developed
countries
The Marketing Planning Process
Business mission
Marketing Audit
Marketing
Analysis
SWOT analysis
Marketing
planning at
the business
level
Marketing objectives
Marketing Mix
Decisions
Marketing
Implementation
Core strategy
Marketing mix decisions
Organization and implementation
Control
Prof. Dr. Christina Sichtmann
25
Marketing
planning at
the product
level
Global versus International Marketing
Management (I)
Prof. Dr. Christina Sichtmann
26
Sales and
Profits
Product Life Cycle (PLC)
Time
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27
Use and Limitations of the PLC
Use
• Product termination
• Growth projections
• Marketing objectives and
strategies over the PLC
• Product planning
Limitations
•
•
•
•
Fads and classics
Marketing effects
Unpredictability
Misleading objective and strategy
prescriptions
Prof. Dr. Christina Sichtmann
28
Global versus International Marketing
Management (II)
Prof. Dr. Christina Sichtmann
29
Target Marketing
Select
target market
Differentiation
Market
Segmentation
Opportunities
& Threats
Prof. Dr. Christina Sichtmann
30
Tailor
marketing mix
B2C: Market Segmentation
Segmentation Criteria
Behavioural
Psychographic
Profile
Benefits sought
Lifestyle
Demographic
Purchase occasion
Personality
Socio-economic
Purchase behaviour
Geographic
Usage
Perceptions/beliefs/values
Prof. Dr. Christina Sichtmann
31
Requirements for Effective Segmentation
 Measurability
 Accessibility
 Substantiality
 Actionability
Prof. Dr. Christina Sichtmann
32
Evaluating Market Segments
Competitive
Factors
Market
Factors
Environmental
Factors
Attractiveness
of Segment
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33
Selecting Market Segments
Undifferentiated
Marketing mix
Entire market
Marketing mix 1
Segment 1
Marketing mix 2
Segment 2
Marketing mix 3
Segment 3
marketing
Differentiated
marketing
Segment 1
Focused marketing
Customized
marketing
Prof. Dr. Christina Sichtmann
Marketing mix
Segment 2
Segment 3
Marketing mix 1
Customer 1
Marketing mix 2
Customer 2
Marketing mix 3
Customer 3
34
Global versus International Marketing
Management (III)
Prof. Dr. Christina Sichtmann
35
Advantages of Standardization Over Adaptation
 Economies of scale in production and marketing
 Savings in advertising
 Uniform international image
Prof. Dr. Christina Sichtmann
36
Factors Influencing International Marketing Strategy
Prof. Dr. Christina Sichtmann
37
The Planning Process: Phase 1
Preliminary analysis and screening - Matching company/country needs
Company
character
Home country
constraints
•
•
•
•
Host country
constraints
Strategic
Objectives
• Political Planning • Economic
Resources
• Legal
• Political/Legal
Organisation
Competitive
A systematised• Economic
way of relating to• the
future
Financial
• Others
• Level of
limitations
technology
• Management
• Culture
and marketing
• Structures of
skills
distribution
• Products
• Geography
Prof. Dr. Christina Sichtmann
38
The Planning Process: Phase 2
Adapting the marketing mix to target markets
Product
Price
Promotion
• Extent of
adaptation
• Brand
name
• Packaging
• Service
• Warranty
• Credit
• Discounts
• Positioning
• Advertising
• Personal
selling
• Media
• Message
• Sales
promotion
Prof. Dr. Christina Sichtmann
39
Distribution
• Logistics
• Channels
The Planning Process: Phase 3 and Phase 4
Phase 3 - Developing the
marketing plan development
•
•
•
•
•
Situation analysis
Objectives and goals
Strategy and tactics
Budgets
Action programmes
Prof. Dr. Christina Sichtmann
Phase 4 - Implementation
and control
•
•
•
•
•
40
Objectives
Standards
Assign responsibility
Measure performance
Correct errors
Export Modes
Hollensen 2011, p. 336
Prof. Dr. Christina Sichtmann
41
Intermediate Entry Modes
Hollensen 2011, p. 357
Prof. Dr. Christina Sichtmann
42
Hierarchical Entry Modes
Hollensen 2011, p. 386
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43
Evaluation of Entry Modes
Risk
Capital
investmen
t
Control
Autonomy
very limited
low
low
low
low
very intensive
low to medium
low
high
high
medium
medium
low
medium
low
Licensing
very limited
medium
low
medium
low
Franchising
very limited
medium
low
medium
low
Joint Venture
very intensive
high
high
medium
medium
Management
Contracting
very intensive
low
low
high
High
Foreign sales
branch
very intensive
high
high
high
high
Acquisition
very intensive
high
high
high
high
Greenfield
investment
very intensive
high
high
high
high
Entry
Mode
Indirect export
Direct export
Contract
manufacturing
Local
contacts
Prof. Dr. Christina Sichtmann
44
Memorable logos
Prof. Dr. Christina Sichtmann
45
Influence of Familiarity with brands
Prof. Dr. Christina Sichtmann
46
Siegel and Gale 2015
Logo Evolution
Prof. Dr. Christina Sichtmann
47
Global branding
Expanding local brands
Born Global Brands
Expanding successful local brands
on international markets
Creating global brands from the start
Used by the majority of companies
Rarely applied in practice. Rapidly build
world brand, same name, same
positioning, Economies of scale
+ Less risky, less expensive
+ Fast
- High risk of failure
- Slow
Prof. Dr. Christina Sichtmann
48
Adopted from Schuiling and Lambin 2003
Global vs. local brands
Global brand
Local brand
= „brands that consumers can
find under the same name in
multiple countries with generally
standardized and centrally
coordinated marketing strategies“
(Özsomer 2012, p. 72)
= „developed for and tailored to
the unique needs and desires of
local markets“ (Özsomer 2012, p.
73)
 wide availability, recognition
and geographical reach
 aspirations of achievement,
excitement and happiness
 convenience and low risk
 environmental and ethical
responsibility
 uniformity and standardization
 adaptation to local preferences
and culture
 uniqueness and originality
 pride of representing the local
area and culture
 high awareness and
availability in local market
Prof. Dr. Christina Sichtmann
49
Global branding
„Global brands are brands that consumers can find under the same name in
multiple countries with generally similar and centrally coordinated marketing
strategies“ (Steenkamp, Batra, andAlden 2003)
A global brand is „defined as a brand that shares common meaning across
cultures”[1], has „centrally coordinated marketing strategies“[2] and „whose
positioning, advertising strategy, personality, look, and feel are in most
respects the same from one country to another“[3].
[1] cf. Sousa (2000), Global Branding, p. 21.
[2] cf. Steenkamp, Batra, and Alden (2003), How Perceived Brand Globalness Creates Brand Value, p. 53.
[3] cf. Aaker and Joachimsthaler (1999), The Lure of Global Branding, p. 137
Prof. Dr. Christina Sichtmann
50
Global Consumer Culture Positioning
Brands as a symbol
of a given global
consumer culture
Prof. Dr. Christina Sichtmann
51
Local Consumer Culture Positioning
Brands as an intrinsic
part of a local culture
Prof. Dr. Christina Sichtmann
52
Foreign Consumer Culture Positioning
 Brand mystique built
around a specific foreign
culture
 Associates the brand‘s
users, use occassions, or
product origins with a
foreign country or culture
Prof. Dr. Christina Sichtmann
53
Influencing Factors
Prof. Dr. Christina Sichtmann
54
Hollensen 2011, p. 455
Standardization and adaptation of the
international marketing mix
Prof. Dr. Christina Sichtmann
55
Hollensen 2011, p. 456
Marginal costs and lost marginal revenue
marginal costs
lost marginal revenue
sum of costs
complete
differentiation
Prof. Dr. Christina Sichtmann
complete
standardization
56
Johansson 2009, p. 404
The Reality
In reality few marketing mixes
are totally standardized.
 Useful rule is to standardize
where you can, stay local
where you must.
 Standardization can create
massive economies of scale
but full standardization can be
difficult.
 Adaptation allows local tastes
and preferences to be met
but increases costs.
Prof. Dr. Christina Sichtmann
57
The Difficulties
 Culture and consumption patterns
 Language differences
 Regulations
 Media availability and promotional references
 Organizational structure and culture
Prof. Dr. Christina Sichtmann
58
Brand Name Difficulties
Pronunciation
 Daewoo
 Sony: formerly Tokyo Tsushin Kogyo
Negative associations:
 Fiat regata: Sweden „grumbler“ (Nörglerin)
 Fiat uno: Finnish „fool“ (Trottel)
 Mitsubishi: Pajero, Spanish „mollycoddle“ (Weichei)
 Audi: étron„dung pile“ (Misthaufen)
 Porsche 911: bad association after 9-11
Meaningful
 „Drink 10“ for a juice is meaningful while „High C“ is not
 Douglas –„come in and find out“
 Patents -Chinese computer firm „Legend“ turned into LENOVO
(LE from Legend, Novo = New)
Prof. Dr. Christina Sichtmann
59
Brand Name Difficulties
Prof. Dr. Christina Sichtmann
60
Ghauri/Cateora (2014)
Factors Influencing Standardization/Adaptation
of Product Attributes
Prof. Dr. Christina Sichtmann
61
Usunier/Lee (2013)
Study: Adaptation
What difference between countries would compel you to adapt the
marketing mix of the brand?
Type of Difference
% of managers naming type as
reason for adaptation
Legal Differences
55
Competition
47
Consumption Habits
41
Distribution Structure
39
Brand Awareness
38
Lifestyle Differences
25
Cultural Differences
25
Prof. Dr. Christina Sichtmann
62
Adopted from Kapferer 2004
Study: Standardization
Which facets of the brand mix are most often globalised?
Brand Facet
% of pan-European Brands
Logotype, Trade mark
93
Brand name
81
Product features
67
Packaging
53
...
29
Advertising Positioning
...
10
Sales Promotion
Prof. Dr. Christina Sichtmann
63
Adopted from Kapferer 2004
Reported Levels of Standardization and Adaptation
Prof. Dr. Christina Sichtmann
64
Usunier/Lee (2013)
Factors influencing the standardization/
adaption decision in pricing
Firm-level
factors
Market factors
Image ability to
pay
(1)
(2)
consumer affinity to
preferences arbitrage
(3)
(4)
costs
(5)
competitive
factors
competitive re-imports
environment
(6)
(7)
environmental
factors
tax
inflation and
differences
differences in distribution
currency
risks
channels
(8)
(9)
(10)
Backhaus/Voeth 2010, p. 152
Prof. Dr. Christina Sichtmann
65
Consumer Preferences
 Knowledge of demand elasticity and price is crucial
 Demand elasticity: Demand for a product changes
due to minor changes in the price
 For undifferentiated products, competition is more on
pricing
 For differentiated products, brand names and an
image of high quality are important
Prof. Dr. Christina Sichtmann
66
Parallel Imports
Definition:
When products are imported into a country without the consent of the
brand owner
 are a result of price adaptation (when prices are
lower in one country than in another)
 are lucrative when wide margins exist between prices
for the same product in different countries
 occur when price difference are greater than the cost
of transportation between two markets
Prof. Dr. Christina Sichtmann
67
Pricing Strategies Under Varying Currency Conditions
Prof. Dr. Christina Sichtmann
68
Tax differences
[VAT in %]
Dänemark
25
Schweden
25
Ungarn
25
Polen
22
Finnland
22
Irland
21
Belgien
21
Lettland
21
Litauen
21
Bulgarien
20
Italien
20
Österreich
20
Portugal
20
Slowenien
20
Tschechische Republik
20
Estland
20
Frankreich
19,6
Deutschland
19
Griechenland
19
Niederlande
19
Rumänien
19
Slowakische Republik
19
Malta
18
Vereinigtes Königreich
17,5
Spanien
16
Zypern
15
Luxemburg
15
Prof. Dr. Christina Sichtmann
69
Backhaus/Voeth 2010, p. 164
Tax differences
tax
(25%)
20
Net price
80
tax
(33%)
25
Gross
WTP
country A
Prof. Dr. Christina Sichtmann
Net price
75
country B
70
Backhaus/Voeth 2010, p. 166
Price Escalation
Definition:
Increase in price when products move from one country to another
Factors leading to it:








Taxes, tariffs and administrative costs
Inflation and exchange variation
 Exchange variation: Variation in the exchange rate of two currencies
Exchange-rate fluctuations
 Hedging: Insuring against a negative currency rate
Varying currency values
Middleman costs
Transportation costs
Lack of price control in overseas market
 Price control: Prices are regulated/fixed by an authority
Retailer mark-ups: Profit margin of the retailer
Prof. Dr. Christina Sichtmann
71
Transfer pricing (I)
Definition:
Company uses selective prices for internal transactions
Benefits:




Lowering duty costs
 Shipping goods into high-tariff countries at minimal transfer prices so
duty base and duty are low
Reduction of income taxes in high-tax countries
 Overpricing goods transferred to those countries
Facilitation of dividend repatriation
To show more or less profit as required
Objectives



Maximising profits for the corporation as a whole
Facilitating parent-company control
Offering management at all levels a basis for maintaining, developing and
receiving credit for their own profitability
Prof. Dr. Christina Sichtmann
72
Transfer pricing (II)
Arrangements for pricing goods for intracompany transfer
 Sales at the local manufacturing cost plus a standard
mark-up
 Sales at the cost of the most efficient producer in the
company plus a standard markup
 Sales at negotiated prices
 Arm’s-length sales using the same prices as quoted to
independent customers
Prof. Dr. Christina Sichtmann
73
Decision Factors
Communication
effectiveness
Cost Drivers
Standardization/
Adaptation
Prof. Dr. Christina Sichtmann
74
Optimal Degree of Standardization
Marginal cost savings (C)
Marginal Decrease in Effectiveness (Ei)
C
E
standardization
Optimal degree of standardization
Backhaus/Voeth, p. 189
Prof. Dr. Christina Sichtmann
75
Global vs Local Advertising
 Global Campaigns: standardized ad for all countries (in
English)
 Global Theme Approach:
 One standardized advertising theme in all countries, while the
execution of the theme can be adapted for single countries
and thus vary across countries
 Regional Campaigns:
 Advertising campaign is developed for a group of countries
(e.g. Pan-European campaigns).
 Local Campaigns:
 Advertising campaigns are developed on a country-basis.
Prof. Dr. Christina Sichtmann
76
Example: Standardized Campaign
Prof. Dr. Christina Sichtmann
77
Example: Global Advertising Theme
Prof. Dr. Christina Sichtmann
78
Challenges of international advertising
 Legal and tax considerations
 Language
 Cultural diversity
 Production and cost limitations
Prof. Dr. Christina Sichtmann
79
Claims and actual understanding
Endmark 2015
Prof. Dr. Christina Sichtmann
80
Claims and actual understanding
Cateora/Ghauri (2014)
Prof. Dr. Christina Sichtmann
81
Basic Ways to Enter a Foreign Market
 Internal expansion
 Merger or takeover of a host country firm
 Franchising
 Joint Ventures
 Non-controlling interest in a host country firm
Prof. Dr. Christina Sichtmann
82
Distribution Structure Channels (I)
Supplier-oriented distribution structure
 Importer controls a fixed supply of goods
 Limited supply of goods are sold at high prices to small
number of affluent customers
 Involves limited number of middlemen
 Middleman: Businessman, other than producer and
consumer, involved in exchange of goods
 Distribution systems are local and not national in scope
Prof. Dr. Christina Sichtmann
83
Distribution Structure Channels (II)
European distribution structure
 Transit documents have been simplified and custom
formalities have been eliminated
 Firms are using centralised distribution centres
 Just-in-time (JIT) production and purchasing methods
have gained popularity
 Just-in-time (JIT): Deliveries made at a time when the
component is to be used and not before
 Elimination of trade barriers has increased Pan-European
franchising
Prof. Dr. Christina Sichtmann
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Distribution Structure Channels (III)
Distribution structure in the USA
 Huge size of the market has led to large-sized retailers
who buy direct from manufacturers
 Many manufacturers have their own distribution channels
or retail stores
Distribution structure in Japan
 High density of middlemen
 Traditional structure serves consumers who make small,
frequent purchases at small, conveniently located stores
Prof. Dr. Christina Sichtmann
85
Distribution Structure Channels (IV)
Distribution structure in Germany
 Channel control – Manufacturers
 Depend on wholesalers to provide various services to
others in the distribution network
 Control wholesalers and other middlemen to ensure
marketing support for their products and to exclude
competitors from the channel
 Business philosophy - Emphasis is on loyalty, harmony and
friendship
 Supports long-term dealer/supplier relationships that
are resistant to change
Prof. Dr. Christina Sichtmann
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Choice of Foreign Distribution Channels
Control
Consumers
and their
characteristics
Culture
Continuity
Character
9 C‘s
Necessary
capital
Coverage
Competition
Prof. Dr. Christina Sichtmann
Costs
87