Lecture International marketing (14/e) - Chapter 14

Chapter 14 - Products and services for businesses. What you should learn from chapter 14: The importance of derived demand in industrial markets, how demand is affected by technology levels, characteristics of an industrial product, the importance of ISO 9000 certification, the growth of business services and nuances of their marketing, the importance of trade shows in promoting industrial goods, the importance of relationship marketing for industrial products and services.

I n t e r n a t i o n a l M a r k e t i

n g

International Marketing Channels

Discussed questions

1 What are the major decisions facing Marketing

Managers when dealing with distribution channel?

2 What are the major functions of channel

distribution?

3 Review the key variables that affect the marketer’s

choice of distribution channels

4 Account, as best you can, for the differences in

Discussed questions

independent export department? Compare advantages and disadvantages of EMC and company own marketing

department?

they are when the stage of development of an economy

improves.

3 Discuss the role of internet as channel distribution in

international marketing context? Provide examples to

illustrate your point

14-3

Three major decisions of

Distribution Channel

• Channel Design

• Channel Management

• Physical Distribution

What Should You Learn?

cost and efficiency in marketing

Japanese customers and to competing importers of goods

the importance of selecting and maintaining middlemen

Global Perspective –

A Single Stick of Doublemint Today – 18 Billion Tomorrow

• A product must be made accessible to the target

market at an affordable price

• Getting the product to the target market

• Forging an aggressive and reliable channel of

distribution

marketer

Channel-of-Distribution Structures

• All consumer and industrial products eventually

go through a distribution process

• Each country market has a distribution structure

How a Distributor Increases Efficiency

Channel Member Functions

15-9

• A manufacturer selling a physical

product and services might require

15- 11

International Channel-Distribution Alternatives

Import-Oriented Distribution Structure

• In an import-oriented or traditional distribution

structure:

– Importer controls a fixed supply of goods

– Marketing system develops around the philosophy of selling a

limited supply of goods at high prices to a small number of

affluent customers

Import-Oriented Distribution Structure

• Demand exceeds supply

• The customer seeks the supply from a limited

number of middlemen

• Distribution systems are local

• Few countries fit the import-oriented model

Japanese Distribution Structure

1 A structure dominated by many small

middlemen dealing with many small retailers

2 Channel control by manufacturers

3 A business philosophy shaped by a unique

culture

4 Laws that protect the foundation of the system

Comparison of Distribution Channels between the United States and Japan

High Density of Middlemen

• Not unusual for consumer goods to go through

three or four intermediaries before reaching the consumer

• Japan has a large number of independent

groceries and bakers (94.7% or all retail stores)

• U.S emphasis is on supermarkets, discount

food stores, and department stores

Retail Structure in Three Countries

Business Philosophy

• Emphasizes loyalty, harmony, and friendship

• Supports long-term dealer-supplier relationships

• The cost of Japanese consumer goods are

among the highest in the world

• Japanese law gives the small retailer enormous

advantage over the development of larger stores

Large-Scale Retail Store Law

and Its Successor

• Daitenho – the Large-Scale Retail Store Law

government

and Industry (MITI)

• Replaced by the Large-Scale Retail Store

Location Act of June 2000

Changes in the Japanese Distribution System

• Structural Impediments Initiative

• Deregulation

• Wal-Mart

• “New” retailers

• The Internet

Trends: From Traditional

to Modern Channel Structures

• European retailers merging with former competitors and other countries to form Europe-wide enterprises

• Foreign retailers attracted by high margins and prices

• The Internet may be most important distribution

trend

• Covisint: General Motors, Ford Motor, DaimlerChryler

• GlobalNetXchange: Sears, Roebuck, Carefour

• E-commerce: Amazon.com

• 7-Eleven competes with FedEx and UPS

General Distribution Patterns

Retail Structure in Selected Countries

Exhibit 14.3

Alternative Middleman Choices

• Seller must exert influence over two sets of

channels

• Agent middlemen – represent the principal

rather than themselves

• Merchant middlemen – take title to the goods

and buy and sell on their own account

How Does an EMC Operate?

Exhibit 14.5

Home-Country Middlemen

• Home-country brokers

• Buying offices

• Selling groups

• Webb-Pomerene export associations

• Foreign sales corporation

• Export merchants

Government-Affiliated Middlemen

• Marketers must deal with governments in every

country of the world

• Government purchasing offices

government’s own use

• Efficiency of public sector versus the private

sector

Factors Affecting Choice of Channels

Locating, Selecting, and Motivating Channel Members

• E-commerce is more developed in U.S

than in rest of world

• B2B enables companies to cut costs

Concerns for e-Vendors

Summary

alternatives for developing a distribution system

structuring of international distribution systems

• The Internet is challenging traditional channels, offering

a wider range of possibilities for entering foreign markets