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International Marketing
Chapters 14
International Marketing
Channels
Introduction
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Getting the product to the target market can be a costly
process
Forging an aggressive and reliable channel of
distribution may be the most critical and challenging
task facing the international firms
Each market contains a distribution network with many
channel choices.
In some markets the distribution structure is multilayered, complex, inefficient, even strange
Competitive advantage will reside with the marketer
best able to build the most efficient channel
Channel-of-Distribution Structures
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The distribution process includes the physical handling and
distribution of goods, the passage of ownership (title), and the
buying and selling negotiations between producers and
middlemen and between middlemen and customers
Each country market has a distribution structure through which
goods pass from producer to use
Within this structure are a variety of middlemen whose
customary functions, activities, and services reflect existing
competition, market characteristics, tradition, and economic
development
Channel structures range from those with little developed
marketing infrastructure such as those found in many emerging
markets (import oriented distribution) to the highly complex,
multi-layered system found in Japan and the mass marketing
distribution system of the US.
Japanese Distribution Structure
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Distribution in Japan has long been considered the most
effective non-tariff barrier to the Japanese market The Japanese
distribution structure is different enough from its U.S. or
European counterparts
It has four distinguishing features:
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a structure dominated by many small
middlemen dealing with many small
retailers—high density of middlemen,
channel control by manufacturers,
a business philosophy shaped by a
unique culture, and
laws that protect the foundation of the
system—the small retailer
Distribution Systems: Japan and the US
A Comparison of Retail Structures
Channel Control in Japanese Distribution Systems
Control is maintained through the following elements:
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Inventory financing with credits
extending for several months.
Cumulative rebates
Merchandise returns that are allowed
to the manufacturer.
Promotional support to intermediaries
in the form of displays, advertising
layouts, and management education
programs
Distribution Patterns
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Distribution patterns are always evolving and new patterns are
developing and marketing channels are not the same throughout
the world
Some general distribution patterns that are similar globally include:
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Middlemen Services
Product Line Breadth
Costs and Margins
Channel Length
Nonexistent Channels
Blocked Channels
Stocking
Power and Competition
Retail Patterns
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International retailing shows even greater diversity in its
structure than does wholesaling
Some general retailing patterns include:
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Retail Size Patterns
Direct Marketing
Resistance to Change
Alternative Middleman Choices
Retail Comparisons
Home-Country Middlemen
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Home-country middlemen, or domestic middlemen, provide
marketing services from a domestic base and find foreign
markets for products for local manufacturers
Frequently used types of domestic intermediaries include:
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Manufacturers’ Retail Stores
Global Retailers
Export Management Companies
Trading Companies
U.S. Export Trading Companies
Complementary Marketers
Manufacturer’s Export Agent
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Home-Country Brokers
Buying Offices
Selling Groups
Webb-Pomerene Export Associations
Foreign Sales Corporation
Export Merchants
Export Jobbers
Export Management Company
Foreign-Country Middlemen
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Some of the more important foreign-country middlemen, who
find markets for foreign manufacturers include:
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Manufacturer’s Representatives
Distributors
Foreign-Country Brokers
Managing Agents and Compradors
Dealers
Import Jobbers, Wholesalers, and
Retailers
Factors Affecting Choice of Channels
The following points should be addressed prior to selecting intermediaries:
1. Identify specific target markets within and across
countries.
2. Specify marketing goals in terms of volume, market
share, and profit margin requirements.
3. Specify financial and personnel commitments to the
development of international distribution.
4. Identify control, length of channels, terms of sale, and
channel ownership
Six Cs of Channel Strategy
Channel strategy itself is considered to have the following six specific strategic
goals:
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Cost
Capital Requirements
Control
Coverage
Character
Continuity
Locating Middlemen
Firms seeking overseas representation should compile a list of middlemen from
such sources as the following:
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Commercially published directories
Foreign consulates
Chamber-of-commerce groups located abroad
Other manufacturers producing similar but
noncompetitive goods
Middlemen associations
Business publications
Management consultants
U.S. Department of Commerce
Selecting Middlemen
In selecting middlemen, the following steps should be used.
1.
Screening based on the
following criteria:
(a) reputation
(b) creditworthiness
(c) markets served
(d) products carried
(e) number of stores
(f) store size
2.
The Agreement that
details terms of the
contract and the
functions to be
performed on behalf of
the foreign
manufacturer
Motivating Middlemen
There is a clear correlation between the middleman’s motivation and sales
volume
Motivational techniques may be grouped into
five categories:
(1) financial rewards
(2) psychological rewards
(3) communications
(4) company support, and
(5) corporate rapport
The Internet
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E-commerce is used to market business-to-business services, consumer
services, and consumer and industrial products via the World Wide Web
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The Internet is an important distribution method for multinational companies
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When using the internet for distribution
purposes, the following factors should be
considered:
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Culture
Adaptation (especially of language)
Local contact information
Payment form
Delivery
Promotion