International marketing channels

(chapter 14)

By : Pooralizadeh , Pajang & Alirahimi

Chapter learning objectives1- 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 competing importers of goods.

3- How distribution patterns affect the various aspects of international marketing.

Chapter learning objectives4-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 product’s success and the importance of selecting and maintaining middlemen.

Important points o Channel structure

o Distribution patterns

o Alternative middlemen choices

o Factors that affect choice of channel

o The Internet

channel structureTypes of channel structures:

A-Import-oriented distribution structure.

B-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.

channel structureThe Japanese distribution has four distinguishing features:

1. a structure dominated by many small middlemen dealing with many small retailers—high density of middlemen,

2. channel control by manufacturers, 3. a business philosophy shaped by a

unique culture,4. laws that protect the foundation

of the system—the small retailer.

channel structureB-Japanese distribution structure: 1- high density of middlemen

inventory financing

2- channel control cumulative rebates

merchandising returns promotional support

3- business philosophy

Distribution patterns General patterns:• Middlemen services• Line breadth• Costs and margins• Channel length• Non-existent channels• Blocked channels• Stocking• Power and competition

Distribution patterns Retail patterns:

• Size patterns

• Direct marketing

• Resistance to change

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

4

International Channel-of-Distribution Alternatives

Home Country

Domestic producer or marketer sells to

or through

Open distribution via domestic wholesale

middlemen

Export management company or company

sales force

Exporter ImporterForeign agent

or merchant wholesalers

Foreign retailer

s

Foreign consumer

The foreign marketer or producer sells to or through

Foreign Country

Alternative middlemen choices Agent middlemeno Do not take title to the goods distributed.o Less risk.

merchant middlemeno take title of goods being distributed.o motivated by profit, tend to be less loyal to

one brand.

Alternative middlemen choices Alternative types of middlemen:

o Home-country middlemen.

o Foreign-country middlemen.

o Governmental middlemen.

Home-country middlemenGlobal retailersThe Export Management Company(EMC)Trading companiesComplementary marketersManufacturer Export Agent(MEA)Home country brokersBuying officesGroup salesExport merchants

Foreign-country middlemenManufacture’s representativesDistributorsForeign-country brokerManagement agentsDealersImporter, Wholesalers & Retailers

Factors that affect choice of channelsCost(cost of developing and maintaining

channel)

Capital requirementsControlCoverageCharacterContinuity

The internet Cost reduction using B2B internet:

1- it reduces procurement costs, making it

easier to find the cheapest supplies.

2- it cuts the cost of processing the

transactions.

3- it makes possible tighter inventory

control.

The internetThings the “E-vendor” must be sensitive to and adapt to:

oCultureoTranslationoLocal contactoPaymentoDeliveryopromotion