int mrkt chennels
TRANSCRIPT
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Copyright 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following
address: Permissions Department, Harcourt, Inc., 6277 Sea Harbor Drive, Orlando, Florida 32887-6777.
INTERNATIONAL MARKETING 6eINTERNATIONAL MARKETING 6e
Channels and DistributionChannels and DistributionStrategiesStrategies
Chapter 13Chapter 13
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--22
In International DistributionIn International Distribution
The firm sells to its customers:The firm sells to its customers: directly through its own sales forcedirectly through its own sales force
indirectly through independent intermediariesindirectly through independent intermediaries
indirectly through an outside distribution systemindirectly through an outside distribution system
with regional or global coveragewith regional or global coverage
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--33
Channel StructureChannel Structure
How to structure the distribution channels isHow to structure the distribution channels isthe most important longthe most important long--term marketing mixterm marketing mix
decision a firm may make.decision a firm may make.
Channel structures are designed to manageChannel structures are designed to manage
multidirectional (horizontal and vertical)multidirectional (horizontal and vertical)connections inconnections in
physical movement ofphysical movement of
goods and servicesgoods and services
transactional title flowstransactional title flows
informationinformation
communications flowscommunications flows
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--44
ChannelConfigurationsChannelConfigurations
ManufacturerManufacturer ManufacturerManufacturer Originator Originator
ConsumerConsumer Industrial User Industrial UserConsumer /Consumer /
Industrial UserIndustrial User
AgentAgent
AgentAgent
AgentAgent
AgentAgent
AgentAgentAgentAgent
AgentAgent
WholesalerWholesaler
WholesalerWholesaler
RetailerRetailer
RetailerRetailer
RetailerRetailer
RetailerRetailerIndustrialIndustrial
DistributorDistributor
IndustrialIndustrial
DistributorDistributor
ConsumerConsumer
ProductsProducts
IndustrialIndustrial
ProductsProducts
ServicesServices
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--55
Channel Design ConsiderationsChannel Design Considerations
Customer characteristicsCustomer characteristics What do they need, why, when, and how?What do they need, why, when, and how?
Distribution cultureDistribution culture
The structural linkages and functionalThe structural linkages and functional
characteristics of existing channelscharacteristics of existing channels
CompetitionCompetition
What channels does the competition use?What channels does the competition use?
Company objectivesCompany objectives
Determined by company objectives for marketDetermined by company objectives for market
share and profitability.share and profitability.
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--66
Channel Design ConsiderationsChannel Design Considerations
CharacterCharacter The nature of the product impacts the design ofThe nature of the product impacts the design of
the channel. The channel must match thethe channel. The channel must match the
positioning of the product in the market.positioning of the product in the market.
CapitalCapital ... describes the financial requirements for setting... describes the financial requirements for setting
up a channel system.up a channel system.
CostCost
is the expenditure incurred in maintaining a is the expenditure incurred in maintaining achannel once it is established.channel once it is established.
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--77
Channel Design ConsiderationsChannel Design Considerations
CoverageCoverage the number of areas in which a product isthe number of areas in which a product is
represented and the quality of that representation.represented and the quality of that representation.
Types of coverageTypes of coverage
IntensiveIntensive SelectiveSelective
ExclusiveExclusive
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--88
ControlControl
The use of intermediaries will result in someThe use of intermediaries will result in someloss of market control.loss of market control.
Control correlates with the type of product orControl correlates with the type of product or
service being marketed.service being marketed.
The marketers ability to exercise powerThe marketers ability to exercise powerdetermines the extent of control.determines the extent of control.
Types of powerTypes of power
reward, coercive, legitimate, referent, expertreward, coercive, legitimate, referent, expertCareful communication with foreignCareful communication with foreign
intermediaries is needed to make them awareintermediaries is needed to make them aware
of the marketers control intentions.of the marketers control intentions.
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--99
ContinuityContinuity
Channel decisions are the most longChannel decisions are the most long--term ofterm ofthe marketing mix decisions.the marketing mix decisions.
Care must be taken in choosing the right typeCare must be taken in choosing the right type
of channel.of channel.
Establishing continuity is the marketersEstablishing continuity is the marketersresponsibilityresponsibility
Continuity is expressed through visibleContinuity is expressed through visible
market commitment.market commitment.
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1010
CommunicationCommunication
...provides the exchange of information that is...provides the exchange of information that isessential to the functioning of the channel.essential to the functioning of the channel.
Types ofdistances that causeTypes ofdistances that cause
communication problems:communication problems:
Social distanceSocial distance
Cultural distanceCultural distance
Technological distanceTechnological distance
Time distanceTime distance
Geographical distanceGeographical distance
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1111
IntermediariesIntermediaries
Types of intermediary relationshipTypes of intermediary relationship DistributorshipDistributorship
AgencyAgency
Type of exporting functionType of exporting function
Indirect exportingIndirect exporting
Direct exportingDirect exporting
Integrated distributionIntegrated distribution
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1212
IntermediariesIntermediaries
Sources for Finding IntermediariesSources for Finding Intermediaries Distributor inquiresDistributor inquires
Governmental agenciesGovernmental agencies
Commerce Departments Trade Opportunities ProgramCommerce Departments Trade Opportunities Program
U.S. Exporters Yellow PagesU.S. Exporters Yellow Pages Private sourcesPrivate sources
Trade directoriesTrade directories
Screening IntermediariesScreening Intermediaries
PerformancePerformance ProfessionalismProfessionalism
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1313
Selection of IntermediariesSelection of Intermediaries
AgentsAgents Foreign (Direct)Foreign (Direct)
BrokersBrokers
Manufacturers RepsManufacturers Reps
FactorsFactors
Managing agentsManaging agents
Purchasing AgentsPurchasing Agents
Domestic (Indirect)Domestic (Indirect)
BrokersBrokers
Export AgentsExport Agents EMCsEMCs
WebbWebb--PomerenePomerene
Commission agentsCommission agents
DistributorsDistributors Foreign (Direct)Foreign (Direct)
Distributors/dealersDistributors/dealers
Import jobbersImport jobbers
Wholesalers/retailersWholesalers/retailers
Domestic (Indirect)Domestic (Indirect)
Domestic wholesalersDomestic wholesalers
EMCsEMCs
ETCsETCs
ComplementaryComplementarymarketersmarketers
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1414
The Distributor AgreementThe Distributor Agreement
Typical terms includeTypical terms include Contract durationContract duration
Typically short periods initiallyTypically short periods initially
Geographic and customer boundariesGeographic and customer boundaries
W
ellW
ell--defined territories and channelsdefined territories and channels
CompensationCompensation
Methods for determining payment amounts and how andMethods for determining payment amounts and how and
in what currency payment is to be made.in what currency payment is to be made.
Products and conditions of saleProducts and conditions of sale
Products to be sold; terms and conditions of salesProducts to be sold; terms and conditions of sales
Means of communication between partiesMeans of communication between parties
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1515
Channel ManagementChannel Management
Coordinating two independent entities withCoordinating two independent entities withshared goalsshared goals
The relationship needs to be managed for theThe relationship needs to be managed for the
long termlong term
Factors complicating channel managementFactors complicating channel management OwnershipOwnership
Geographic, cultural, and economic distanceGeographic, cultural, and economic distance
Different rules of lawDifferent rules of law
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1616
Channel Adjustment andTerminationChannel Adjustment andTermination
Typical reasons for channel adjustmentTypical reasons for channel adjustment Growth and changes in the internationalGrowth and changes in the international
marketers distribution approach may eliminate amarketers distribution approach may eliminate a
channel.channel.
Conflict of interest and a lack interest orConflict of interest and a lack interest orperformance by the intermediary may require aperformance by the intermediary may require a
channel modification.channel modification.
Termination conditions are the mostTermination conditions are the most
important considerations in the distributionimportant considerations in the distributionagreement and must be spelled out clearly.agreement and must be spelled out clearly.
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1717
Gray Markets (Parallel Importation)Gray Markets (Parallel Importation)
Arguments for:Arguments for: The right to free tradeThe right to free trade
Consumers benefit fromConsumers benefit from
lower priceslower prices
Discount distributorsDiscount distributorshave found a profitablehave found a profitable
market nichemarket niche
Arguments against:Arguments against: Gray marketers takeGray marketers take
unfair advantage ofunfair advantage of
trademark ownerstrademark owners
marketing andmarketing and
promotionpromotion
Parallel imports deceiveParallel imports deceive
consumers by notconsumers by not
meeting productmeeting product
standards orstandards orexpectations of afterexpectations of after--
sale servicesale service
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1818
The Solution to the Gray Market Problem?The Solution to the Gray Market Problem?
A contractual relationship thatA contractual relationship thatties businesses together.ties businesses together.
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Copyright 2001 by Harcourt, Inc. All rights reserved.Copyright 2001 by Harcourt, Inc. All rights reserved. 1313--1919
EE--CommerceCommerce
Any worldwide web strategy must be tiedAny worldwide web strategy must be tiedclosely to the companys overall growthclosely to the companys overall growth
strategy in international markets.strategy in international markets.
Companies must come to terms with issuesCompanies must come to terms with issues
related to security, privacy, and access torelated to security, privacy, and access toglobal networks, at the same time,global networks, at the same time,
promoting globalpromoting global
commerce overcommerce over
the Internet.the Internet.