Chapter 15: International Marketing channels

Distribution Process

The physical handling of goods, the passage of ownership (title), and especially important form a marketing viewpoint- the buying and selling negotiations between the producers and middlemen and between middlemen and customers.

Distribution structure

The system, present in every country market, through which goods pass from producer to user, within the structure are a variety of middlemen.

Large-scale retail store law

A Japanese regulation (Daitenho) designed to protect small retailers from large competitors. It required any store larger than 5,382 square feet to obtain prefecture government approval to open, expand, stay open later, or change operating days. Proposals were reviewed by MITI and required local retailer agreement, a process that could take several years.

Agent middlemen

Foreign market intermediaries who represent a manufacturer and earn a commission by arranging sales abroad, without ever buying or owning the goods themselves.

Merchant middleman

Foreign intermediaries who buy and take legal ownership (title) of a manufacturer's goods to resell them for a profit. They take full ownership and assume the financial risk.

Home-country middlemen

Intermediaries located in the producer's home country who handle international sales and marketing services. Also known as domestic middlemen, they are ideal for companies that are inexperienced in foreign trade or have a small sales volume.

Export management company EMC

An outside firm that acts as the export department for a manufacturer. It manages international marketing and sales under the manufacturer's name, making it ideal for firms with small export volumes or limited foreign trade experience.

Trading companies

Business entities that accumulate, transport, and distribute the goods form many countries

Exporting trading company ETC

An act allowing producers of similar products in the US to form an export trading company; created a more favorable enrichment for the formation of joint export ventures, in part by removing antitrust disincentives to trade activities.

Complementary marketing

When companies with excess marketing capacity in different countries or with a desire for a broader product line take on additional lines for international distribution commonly called piggybacking.

Channel of distribution (marketing channel)

sets of interdependent organizations involved in the process of making a product or service available for use or consumption, as well as providing a payment mechanism for the provider.

what are the characteristics of the channel?

• consists of organizations

• continuous monitoring

• certain distribution objectives guiding their activities

Who has the most effective, non tariff barrier of distribution?

Japan

What is Japan so good?

has four distinguishing features: (1) a structure dominated by many small middleman dealing with many small retailers, (2) channel control by manufacturers, (3) a business philosophy shaped by a unique culture, and (4) laws that protect the foundation of the system – the small retailer.

The most efficient and effective manner in which to place a product into the hands of the customer is one way to define ____.

Channel of distribution

Intensive distribution

Intensive distribution floods the market with products by selling them using any and all available outlets.

Selective distribution

A more targeted approach. instead of selling to any and all outlets, companies winnow down their distribution network to a limited number of outlets in a particular geographical area. “middle ground strategy”

what are the two major benefits of selective distribution?

It allows companies to select best-performing outlets and intensively train their staff how to effectively market the product

Exclusive distribution

distribution is severely restricted to just one wholesaler, retailer or distributor in a geographic area.

The retail industry is designed to create ________.

contact efficiency for consumers

what are intermediaries?

are an extremely crucial element of a company’s product distribution channel

Agents/Brokers

individuals or companies that act as an extension of the manufacturing company. Their main job is to represent the producer to the final user in selling a product. Thus, while they do not own the product directly, they take possession of the product in the distribution process

Wholesalers

They are independently owned, and they own the products that they sell. They buy in bulk, and store the products in their own warehouses and storage places until it is time to resell them

Distributors

they take ownership of the product, store it, and sell it off at a profit to retailers or other intermediaries. However, the key difference is that they ally themselves to complementary products

Retailers

purchase products from market intermediaries and sell them directly to the end user for a profit.

Channel Design

the amount of intermediaries a channel wants

he intermediary that does not take title to the product; but is responsible for bringing buyers and sellers together and negotiating the terms of the transaction is the _______.

agent/broker

Supply chain management

the process of man aging the movement of the raw materials and parts from the beginning of production through delivery to the consumer

Inbound Logistics

manages everything related to the incoming flow of resources that the company needs to produce its goods or services.

Outbound Logistics

focused on two issues: storage and transportation.

The distribution channel addresses what aspect of the marketing mix?

What place the product will be sold

_____ are considered to be the foundation of the Japanese distribution system.

Small retailers

Some general retailing patterns include:

Retail size patterns, direct selling, and resistance to change

What factors limit the ability of the internet when marketing globally?

Culture

The intermediary that buys products from wholesalers, agents or distributors and then sells them directly to the end user for a profit is known as a _______.

Retailer

True or False. Physical distribution refers to the inflow of raw materials, parts, and supplies to the firm.

False

Prior to Apple and Google, Coca Cola held the title of number one brand in the world for decades with a brand value of _______.

71 billion

Which of the following are frequently encountered trade restrictions?

Tariffs, exchange permits, and product standards