International Marketing Channels and Distribution Strategies In International

International Marketing Channels and Distribution Strategies

In International Distribution, the Firm Sells to its Customers: 4 through its own sales force 4 through independent intermediaries 4 through an outside distribution system with regional or global coverage Channel Structure Should be Designed to Manage 4 physical flow of goods and services 4 transactional flow 4 informational flow Copyright © 1999 by Harcourt Brace & Company All rights reserved

Channel Design 4 Customer characteristics 4 Distribution culture 4 Competition Company Objectives Character 4 Determined by 4 The nature of the product impacts company objectives the design of the channel. for market share and 4 The channel must match the profitability positioning of the product in the market. Copyright © 1999 by Harcourt Brace & Company All rights reserved

“Capital”: . . . describes the financial requirements for setting up a channel system. “Cost”: . . . is the expenditure incurred in maintaining a channel once it is established. Coverage: the number of areas in which a product is represented and the quality of that representation Copyright © 1999 by Harcourt Brace & Company All rights reserved

Types of Coverage 4 Intensive 4 Selective 4 Exclusive 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. Copyright © 1999 by Harcourt Brace & Company All rights reserved

Types of Power: 4 reward 4 coercive 4 legitimate 4 referent 4 expert Copyright

Continuity 4 Channel decisions are the most long-term of the marketing mix decisions. 4 Care must be taken in choosing the right type of channel. 4 Establishing continuity is the marketer’s responsibility 4 Continuity is expressed through visible market commitment. Communication 4. . . provides the exchange of information that is essential to the functioning of the channel Copyright © 1999 by Harcourt Brace & Company All rights reserved

Types of “Distances” that Cause Communication Problems: 4 Social distance 4 Cultural distance 4 Technological distance 4 Time distance 4 Geographical distance Copyright © 1999 by Harcourt Brace & Company All rights reserved

Selection of Intermediaries 4 Types of Intermediaries 4 Agents 4 Distributors Copyright © 1999

Agents 4 Foreign (Direct) 4 Domestic (Indirect) 4 Brokers 4 Manufacturer’s Reps 4 Export Agents 4 Factors 4 EMCs 4 Managing agents 4 Webb-Pomerene 4 Purchasing Agents 4 Commission agents Copyright © 1999 by Harcourt Brace & Company All rights reserved

Distributors 4 Foreign (Direct) 4 Domestic (Indirect) 4 Distributors/dealers 4 Domestic wholesalers 4 Import jobbers 4 EMCs 4 Wholesalers/retailers 4 ETCs 4 Complementary marketers Copyright © 1999 by Harcourt Brace & Company All rights reserved

Types of Distribution: 4 Indirect exporting 4 Direct exporting 4 Integrated distribution Sources for Finding Intermediaries Government agencies Private sources Criteria For Screening Intermediaries 4 Performance 4 Professionalism Copyright © 1999 by Harcourt Brace & Company All rights reserved

The Distributor Agreement Includes: 4 Contract duration 4 Geographic boundaries 4 Methods of compensation and payment 4 Products and conditions of sale 4 Means of communication between parties Copyright © 1999 by Harcourt Brace & Company All rights reserved

Channel Management 4 Coordinating two independent entities with shared goals 4 The relationship needs to be managed for the long term Factors in Channel Management 4 Ownership 4 Geographic, cultural, and economic distance 4 Different rules of law Gray marketers take unfair advantage of trademark owner’s marketing and promotion 4 Parallel imports deceive consumers by not meeting Copyright © 1999 by Harcourt Brace & Company product standards or Allexpectations of after-sale service rights reserved

Arguments for Gray Markets 4 The right to “free trade” 4 Consumers benefit from lower prices 4 Discount distributors have found a profitable market niche Solution: A Contractual Relationship that Ties Businesses Together. Copyright © 1999 by Harcourt Brace & Company All rights reserved

Typical Reasons for the Termination of the Channel Relationship: 4 Changes in the international marketer’s distribution approach 4 Lack or perceived lack of performance by the intermediary 4 Termination conditions are the most important considerations in the distribution agreement and must be spelled out clearly! Copyright © 1999 by Harcourt Brace & Company All rights reserved

Typical Export Documents Include: 4 Bill of Lading 4 Shipper’s Export Declaration 4 Shipper’s Declaration of Dangerous Goods 4 Consular Invoice 4 Certificate of Origin 4 Import License 4 Foreign Exchange License Copyright © 1999 by Harcourt Brace & Company All rights reserved

Guidelines for Dealing with Customs: 4 Knowledge and experience in dealing with a specific country’s Customs Service 4 Sufficient preparation of all required documents Support Agencies for International Shipments 4 International freight forwarder 4 Customs broker 4 Common carrier Copyright © 1999 by Harcourt Brace & Company All rights reserved