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International Marketing Channels


Chapter 11 International Marketing Channels Getting the product to the target market can be a costly process Forging an aggressive and reliable channel of ... – PowerPoint PPT presentation

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Title: International Marketing Channels

Chapter 11
International Marketing Channels
Chapter Learning Objectives
1. The variety of distribution channels and how
they affect cost and efficiency in marketing
2. The Japanese distribution structure and what
it means to Japanese customers and to competing
importers of goods
3. How distribution patterns affect the various
aspects of international marketing
Chapter Learning Objectives
4. The growing importance of e-commerce as a
distribution alternative
5. The functions, advantages, and disadvantages
of various kinds of middlemen
6. The importance of middlemen to a products
success and the importance of selecting and
maintaining middlemen
  • 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 whose structures are
  • In some markets the distribution structure is
    multi-layered, complex, inefficient, even strange
  • Competitive advantage will reside with the
    marketer best able to build the most efficient

Channel-of-Distribution Structures
  • 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
  • Channel structures range from those with little
    developed marketing infrastructure such as those
    found in many emerging markets to the highly
    complex, multi-layered system found in Japan

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Japanese Distribution Structure
  • 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
  1. a structure dominated by many small middlemen
    dealing with many small retailershigh density of
  2. channel control by manufacturers,
  3. a business philosophy shaped by a unique culture,
  4. laws that protect the foundation of the
    systemthe small retailer

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Channel Control in Japanese Distribution Systems
Control is maintained through the following
  1. Inventory financing with credits extending for
    several months.
  2. Cumulative rebates
  3. Merchandise returns that are allowed to the
  4. Promotional support to intermediaries in the form
    of displays, advertising layouts, and management
    education programs

Distribution Patterns
  • 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
  1. Middlemen Services
  2. Product Line Breadth
  3. Costs and Margins
  4. Channel Length
  5. Nonexistent Channels
  6. Blocked Channels
  7. Stocking
  8. Power and Competition

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Retail Patterns
  • International retailing shows even greater
    diversity in its structure than does wholesaling

Some general retailing patterns include
  1. Retail Size Patterns
  2. Direct Marketing
  3. Resistance to Change
  4. Alternative Middleman Choices

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Home-Country Middlemen
  • Home-country middlemen, or domestic middlemen,
    provide marketing services from a domestic base
    and find foreign markets for products for local

Frequently used types of domestic intermediaries
  1. Manufacturers Retail Stores
  2. Global Retailers
  3. Export Management Companies
  4. Trading Companies
  5. U.S. Export Trading Companies
  6. Complementary Marketers
  7. Manufacturers Export Agent

8. Home-Country Brokers 9. Buying Offices
10. Selling Groups 11. Webb-Pomerene Export
Associations 12. Foreign Sales Corporation
13. Export Merchants 14. Export Jobbers
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Foreign-Country Middlemen
  • Some of the more important foreign-country
    middlemen, who find markets for foreign
    manufacturers include
  1. Manufacturers Representatives
  2. Distributors
  3. Foreign-Country Brokers
  4. Managing Agents and Compradors
  5. Dealers
  6. Import Jobbers, Wholesalers, and Retailers

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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
  1. Cost
  2. Capital Requirements
  3. Control
  4. Coverage
  5. Character
  6. Continuity

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Locating Middlemen
Firms seeking overseas representation should
compile a list of middlemen from such sources as
the following
  1. Commercially published directories
  2. Foreign consulates
  3. Chamber-of-commerce groups located abroad
  4. Other manufacturers producing similar but
    noncompetitive goods
  5. Middlemen associations
  6. Business publications
  7. Management consultants
  8. U.S. Department of Commerce

Selecting Middlemen
In selecting middlemen, the following steps
should be used.
  • 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
middlemans 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
  • E-commerce is used to market business-to-business
    services, consumer services, and consumer and
    industrial products via the World Wide Web
  • The Internet is an important distribution method
    for multinational companies
  • When using the internet for distribution
    purposes, the following factors should be
  • Culture
  • Adaptation (especially of language)
  • Local contact information
  • Payment form
  • Delivery
  • Promotion

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