Chapter 15: International marketing channels

the distribution process includes (3 things)

- the physical handling and distribution of goods

- the passage of ownership

- from a marketing standpoint: the buying and selling between producers and middlemen to the end user

channel of distribution

- product must be made accessible to the target market at an affordable price

- must build a reliable channel of distribution

trends: from traditional to modern channel structures

- traditional structures appear in many places

- channel structures are giving way to new forms, alliances, and processes

distribution patterns

- the traditional system will not change overnight

- nearly all international firms used some type of middleman

alternative middlemen choices

- a marketer's options range from assuming the entire distribution activity to depending on intermediaries for distribution of the product

channel selection must be given considerable though because?

once a channel has been chosen it is difficult to change and if the decision was wrong this could result in delayed future growth

The channel process includes?

all activities beginning with the manufacturer and ending with the final consumer

what is a manufacturer's retail store

important channel of distribution for a large number of manufacturers is the owned retail store

global retailers

global retailers like IKEA, Sears, Costco, etc. expand their global coverage they are becoming major domestic middlemen for international markets

the 6 Cs if channel strategy

-cost

- capital requirements

- control

-coverage

- character

- continuity

the two kind of channel costs are?

- the capital or investment cost of developing the channel

- the continuing cost to maintain it

what are the costs of the middlemen?

transporting and storing the goods, breaking bulk, providing credit, local ads, sales reps, and negotiations

critical elements of capital requirements

capital requirements and cash flow patterns with using a certain middleman

- use of distributors or dealers may lessen the capital investment

control

the more involved a company is with the distribution the more control it exerts

as channel grow longer...?

the ability to control price, volume, promotion, and type of outlets diminish

coverage

a major goal is full market coverage of sales obtainable in each market, secure a reasonable market share, and attain satisfactory market penetration

to achieve maximum coverage a company may have to?

- use different channels

- its own sales force in one country

- manufacturers' agents in another

- and use merchant wholesalers in another

continuity

- most middlemen have loyalty to their vendors

- knowing this when someone leaves the distribution line they might feel that they lost their distribution in that area

channel management and its importance

- many companies have failed to develop international markets by their inability to build appropriate systems of channels

what does the construction of the middleman network include?

-seeking potential middlemen

- selecting those who fit the company's requirements

- establishing working relationships with them

locating middlemen

a checklist for choosing middlemen differs depending on the middlemen being used and the nature of their relationship with the company

checklist for picking middlemen are built on

-productivity

- financial strength

- managerial stability

- capability

selecting middlemen screening process should include

- email or letter including product information and distributor requirements in the native language

- follow up with the best respondents with more specific information about coverage, size of the firm, number of sales people, etc.

- check of credit and references

personal check of the most promising firms

how to motivate middlemen?

-financial rewards

- psychological rewards

- communications

- company support

- corporate rapport

how to control middlemen?

- the sales volume objective

- inventory turnover ratio

- number of account per area

- growth objective

-price stability objective

- quality of publicity

when using the internet for distribution purposes the following factors should be considered (6 items)

- culture

- adaptation

- local contact information

- payment

-delivery

- promotion