Download Chapter 13 - MBA Program Resources

Global Marketing
Management
A European Perspective
GLOBAL LOGISTICS AND
CHANNEL DECISIONS
Warren J. Keegan
Bodo B. Schlegelmilch
Overview
The Nature of Global Logistics and Channel
Decisions
In-Bound and Out-Bound Logistics
International Channel Strategies
Characteristics Impacting on Channel Design and
Strategy
Global Trends in Channel Design and Strategy
Summary
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 2
Learning Objectives
Recognise the complexity of global logistics
Know the key decisions within in-bound logistics and
the factors impinging on these decisions
Learn about out-bound logistics and know which tasks
need to be taken care of in this respect
Know which characteristics influence the design of
distribution channels for international markets
Know how new developments reshape international
distribution
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 3
The Nature of Global Logistics and
Channel Decisions I
International distribution encompasses two areas
of responsibility:
Channel management
identifying, selecting and supporting distribution partners
distribution partners bridge the gap between manufacturer and
customer
Global logistics
ensuring adequate supply
the right products are made available to customers when and
where they want them
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 4
The Nature of Global Logistics and
Channel Decisions II
The value chain
Information &
Research
Target Marketing
Selection
Purchasing
Inbound
Logistics
Product Policy &
Strategy
R&D
Pricing Policy &
Strategy
Assembly &
Manufacturing
Distribution Policy
& Strategy
Outbound
Logistics
Communication
Policy & Strategy
Marketing
Installation & Testing
Service
Margin
- Messages, appeals
- Media Strategy & Plan
- Advertising Plan
- Promotion Plan
- Personal Selling
- Direct Marketing Plan
- Direct Mail
- Telemarketing
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 5
The Nature of Global Logistics and
Channel Decisions III
The value chain provides a useful framework for
integrating various organisational activities related
to global distribution
Today, distribution activities are becoming
increasingly intertwined, i.e.
sourcing material and parts for production
taking care of product shipment
selecting suitable distribution partners
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 6
In-Bound Logistics I
In-bound logistics describes the process of moving
products and materials from suppliers to the
factory
Six factors must be taken into account
factor costs and conditions
transport costs
country infrastructure
political risk
market access
currency issues
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 7
In-Bound Logistics II
Factor costs and conditions
land
labour, including the cost of workers
manufacturing and production
professional and technical
management
capital cost
The cost of these factors depends on
availability
relative abundance
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 8
In-Bound Logistics III
World factor costs that affect manufacturing
industrialised countries
factor costs are tending to equalise
industrialising countries (Singapore, other Pacific
Rim countries)
offer significant factor costs savings
offer an increasingly developed infrastructure and
political stability
Russia and other countries
lower factor costs (especially wages) are offset by limited
infrastructure development and greater political
uncertainty
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 9
In-Bound Logistics IV
Transport Costs
Country Infrastructure
Political Risk
Market Access
Foreign Exchange
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 10
Out-Bound Logistics
Moving products from
customers
It involves aspects of
the
factory
to
transportation,
inventory control,
order processing and
warehousing
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 11
International Channel Strategies
The purpose of marketing channels is to
create utility for customers
place
time
form
information
Two forms of channel strategy
direct involvement
indirect involvement
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 12
Characteristics Impacting on
Channel Design and Strategy I
Customer characteristics
customer number, geographic distribution, income,
shopping habits, reactions to different selling methods
Product characteristics
perishability, service requirements or unit price
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 13
Characteristics Impacting on
Channel Design and Strategy II
Middleman characteristics
attitude towards the manufacturer
selection and care of distributors and agents
distributor and agent performance
termination
Environmental characteristics
economic, social and political dimensions
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 14
Global Trends in Channel Design
and Strategy I
Global Retailing
today
future
Direct Marketing
distribution system, where sales to customers are
carried out via telephone, mail or door-to-door
one-on-one approach is effective for products which
need demonstration or complex explanation
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 15
Global Trends in Channel Design
and Strategy II
E-Commerce and International Distribution
Strategies
Design of appropriate distribution systems
E-Tailing
describes the increasing trend of retail operations
globalising via the Internet
presenting and selling a product range over the
Internet gains increasing importance
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 16
Global Trends in Channel Design
and Strategy III
Alternative Channel Responses
C
h
a
n
n
e
lD
e
c
isio
n
E
le
c
tr
o
n
ic
C
o
m
m
e
r
c
e
M
a
n
u
fa
c
tu
re
r
D
ire
c
t
P
h
y
sic
a
l
D
istr
ib
u
tio
n
E
x
istin
g
R
e
ta
ile
rO
n
lin
e
T
ra
d
itio
n
a
l
R
e
ta
ile
r
C
y
b
e
rm
e
d
ia
ry
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 17
Summary
Channel decisions are difficult to manage globally
A global marketer must
tailor the marketing program to different types of
channels
or introduce new retail concepts
Retailing will see an increasing trend towards
globalisation of operations
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 18