Post on 28-Dec-2015
International Marketing:Chapter 15 Key Concepts
• Japanese Distribution System & Four Characteristics– High density of middlemen– High level of channel control– Unique business philosophy– Large-scale retail store law
• Six factors affecting channel choices– Cost– Capital– Control– Coverage– Character– Continuity
• Home-country middlemen• Foreign country middlemen• Government-affiliated middlemen• Challenges of Channel Development• Internet-the most important international distribution trend
Channels of Distribution
• Each country market has a unique distribution structure
• Distribution process includes:–Physical handling and distribution of goods–Passage of ownership–Buying and selling negotiations • between producers and middlemen• between middlemen and customers
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Channels of Distribution in Developing Countries
• Traditional, import-oriented channels– Importer-wholesaler performs most marketing functions– Limited supply of products is sold at high prices to affluent
customers– Demand exceeds supply– Mass distribution not necessary
• Implications for foreign marketers:– Local distribution systems– Distribution system not integrated nationally– Nonexistent or underdeveloped marketing infrastructure
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Primary Characteristics ofJapanese Distribution Systems
High density of middlemenHigh level of channel controlUnique business philosophyLarge-scale retail store law
Retail Patterns of DistributionGreater Diversity Than Wholesaling
• Size patterns– Great diversity in size– No adequate way to reach small retailers– Large retailers growing in developing countries
• Direct marketing– By mail, telephone, catalogs, or door-to-door– Works well in affluent markets with underdeveloped
channels– Amway & Avon expanding dramatically
• Resistance to change– Many laws exist to protect the entrenched
Alternative Middleman Choices
• Seller must exert influence over two sets of channels– home country– foreign market country
• Agent middlemen – represent the principal rather than themselves– work on commission
• Merchant middlemen– take title to the goods and buy and sell on their own
account– tend to be less controllable
Home-Country Middlemen
• Manufacturer’s retail stores (Disney, etc.)• Global retailers (Wal-Mart, IKEA, etc.)• Export management companies (EMC)• Trading companies• U.S. export trading companies• Complementary marketers• Manufacturer’s export agent• Webb-Pomerene Export Associations• Foreign Sales Corporation
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Foreign-Country Middlemen
• Variety in most countries is similar to U.S.
• Dealing directly can be advantageous
– shorter channels
–moves manufacturer closer to the market
• More important foreign-country middlemen:
–manufacturer’s representatives
– foreign distributors
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Government-Affiliated Middlemen
• Marketers must deal with foreign governments
• Government purchasing offices
– Procure products & services for the government’s own use
– Work at federal, regional, and local levels
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Factors Affecting Choice of Channels
• International marketers need a clear understanding of market characteristics and must have established operating policies before beginning the selection of channel middlemen
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Challenges of Channel Development
• Locating Middlemen
• Selecting Middlemen
• Motivating Middlemen
• Terminating Middlemen
• Controlling Middlemen