international distribution channel2

8/3/2019 International Distribution Channel2

http://slidepdf.com/reader/full/international-distribution-channel2 1/24

INTERNATIONAL

DISTRIBUTION CHANNEL

BY:DEBANGSHU S. ROY

DIVYA SHARADLAVEENA SACHDEVAPREETI KUKREJATANUJ KALRAVAIBHAV VISHNOI

5/1/20121



Distribution channel: system ofmarketing institutions that promotes

the physical flow of goods andservices, along with ownership title,from producers to consumer or

business user; also called aMarketing channel.

5/1/20122



5/1/20123



Distribution Physically moving products and establishing

intermediary relationships to support such movement.

Physical Distribution (Logistics) The activities of distribution involved in the physical

relocation of products.

Channel of Distribution The system of intermediaries (business relationships)

established to guide the movement of a product.

The Role of Distribution Activitiesin Marketing

5/1/20124



Functions of Intermediaries

• Perform the marketing function better.

• Provide efficient distribution of the product.

• Breaking bulk – sell to customers in smallerquantities.

• Assorting – bringing together similar lines ofgoods.

• Shifting risks.

• Merchant middlemen - take title to the goodsdistributed.

•Agents/brokers - distribute goods only. 5/1/20125



Types of Distribution Channels

Direct channel

A distribution system without intermediaries

Indirect channel

A distribution system with one or moreintermediaries.

Dual distribution

A distribution system with more than one channel.

5/1/20126



AlternativeChannels

ofDistributio

n

5/1/20127



Dell

Dell Computer:A Direct Sellerof Computers

5/1/20128



Global Perspective

Global Perspective: “500 Million Sticks of Doublemint Today – Billions Tomorrow”

Most challenging aspect of selling the gum for

Doublemint is how to get the gum through China’sdistribution channels:

“Mastering the distribution system is the singlemost important challenge of China’s economicrevolution”

Finding reliable distributors is a challenge Many are state owned and have little incentive

to push one brand over another

Doublemint gum found a way to distribute their

products effectively thru China Note: Doublemint has a 91% market share in

5/1/20129



Selection of channel

The selection of distribution is affected by many of factors,

which play significant role while choosing the channel fordistribution. It may include the buying pattern of consumer,type of the product is perishable, or auto mobile, weight andbulk and it also depends on the company's resources.

The main affecting factors are following:

Organization objectives

Mode of TransportType of productNature and extent of marketExisting channel for comparable productBuying habit of customersChannel Availability 5/1/201210



Alternative Middlemen Choices

Classification of Middlemen Agent Middlemen

Do not take title to the goods distributed

Less risk (manufacturer assumes risk)

Merchant Middlemen

Take title of goods being distributed (manufactures have less control) Motivated by profit, tend to be less loyal to one brand

Alternative Types of Middlemen: 1. Home-Country Middlemen

2. Foreign-Country Middlemen

5/1/201211



International Channel-of-DistributionAlternatives

Home Country

Domestic produceror marketer sells toor through

Open distribution viadomestic wholesalemiddlemen

Export managementcompany or companysales force

Exporter ImporterForeign agentor merchantwholesalers

Foreignretailers

Foreignconsumer

The foreign marketer orproducer sells to or through

Foreign Country

5/1/201212



Alternative Middlemen Choices—

Home Country

• Global Retailers

• Export Management Companies

• Manufacturers Export Agent

• Home-Country Brokers

• Export Merchants

• Piggy Back

5/1/201213

• They’re located in Firm’s own country. • Provide marketing services from a domestic base.• Employed by marketers with less international salesvolume and inexperienced with foreign markets.



HOME COUNTRY MIDDLEMEN

GLOBAL RETAILERSWAL-MART, ROEBUCK are booming domestic middlemen forinternational middlemen.Companies adhering to the laid requirements gain access to Overseasmarkets of Argentina, Brazil, canada, etc.

EXPORT MANAGEMENT COMPANIESThey work under name of manufacturers and function as a low cost,independent marketing department.For firms with relatively small international volume or which are unwillingto involve personnel in international function.

A washington DC company marketing 10 US Orthopedics manufacturerproducts worldwide.

5/1/201214



MANUFACTURER’S EXPORT AGENT

•An agent firm provides selling service for manufacturers.•Operates on a straight commission basis and covers only oneor two markets.•Provides services similar to EMCs and does business in their

own name.

HOME COUNTRY BROKERS

•They perform low cost agent services.•Perform function of bringing bringing buyers and sellerstogether.•They specialise in one or more particular commodity and forthe same maintain contact with major producers and

purchasers. 5/1/201215



5/1/201216

EXPORT MERCHANTS•Intermediaries who take title to and possession of theproducts they carry

•Responsible for shipping and marketing the products in thetarget market•Carry competing brandsExamples:

export jobber, who carries commodity goods, but does

not take physical possession of the goods.

PIGGYBACK MARKETING

• channel innovation that has grown in popularity• One manufacturer distributes product by utilizing anothercompany’s distribution channel

• Requires that the combined product lines becomplementary and appeal to the same customer



Alternative Middlemen Choices—

Foreign Country

• Distributors

• Foreign Country Brokers

• Managing Agents

• Dealers

• Wholesalers and

Retailers

5/1/201217



5/1/201218

• Distributor

Is a merchant middlemen with close cooperation to themanufacturer

Functions are- control over prices, inventories, servicing.

• Agent

Conducts business within a foreign nation under

contract arrangement with parent country.Compensation is on the basis of cost plus a specified %of profits of the managed company.

• Brokers

Foreign brokers are part of small brokerage firms

operating in a country.

Function in good continuing relationships with customersand speedy market coverage at low costs



5/1/201219

• Dealers

Independent merchant middlemen with the supplier companyhaving equity in it. Ex- Massey fergusson and caterpillartractor company

• Wholesalers and RetailersEngage in direct importing for their own outlets and for

redistribution to smaller middlemen.Large retailers perform wholesaling to local shops and

dealers.



Factors that affect choice of Channels

The “6 C’s” need to be considered:

1. Cost

Investment cost of developing channel; and cost of maintaining

channel 2. Capital requirements

How much capital is required

3. Control

How much control is desired Example: company’s own sales force exerts most control vs.

using middlemen

5/1/201220



Factors that affect choice of Channels(Cont.)

The “6 C’s” need to be considered (cont):

4. Coverage Full market coverage, or targeted coverage to densely populated

areas…

5. Character Channel of the distributions system must meet the “character of

the company” seeking to do business

6. Continuity

Will there be longevity issues How to build loyalty with middlemen is much more difficult than

a company’s own sales force

5/1/201221



Locating, Selecting, Motivating andTerminating Middlemen

Factors affecting locating middlemen: Things to look for:

Financial stability, managerial stability, productivity, reputation, etc.

Sources to use: U.S. Dept. of Commerce, foreign consulates, commercially published

directories

Selecting Middlemen

Two steps 1. Screening

2. Developing the “Agreement”

5/1/201222



Locating, Selecting, Motivatingand Terminating Middlemen (Cont.)

Motivating Middlemen Common methods used to motivate middlemen:

Financial rewards, psychological rewards, communications, company

support and corporate rapport Terminating Middlemen

Must consider things such as: Legal protection

Control over middlemen

Controlling Middlemen Control over the system (distribution network)

Control over the middlemen Volume of sales, market coverage, services offered, pricing, advertisement,

payment of bills and profitability.5/1/201223



5/1/201224

international distribution channel2

Documents