Marketing
Evonth
Podcast2Distributionchannels.pptxSession 7 – Podcast 2: Distribution channels
BUS 343 International Marketing
1
Channel structure
To reach consumers, all products require a distribution process which includes:
physical handling and movement of product
transfer of ownership of the product
negotiation of transactions between the producer of the product; the intermediary; and the final consumer of the product
Structure of channels can differ between countries, from basic to multi-layered
2
Channel configuration
3
Selecting the right channel
Identify the specific target market in each country
Set marketing goals for required sales volume; market share; and profit margins
Specify resources (financial and staffing) that will be committed to setting up the channel
Identify channel length; terms of sale; and ownership, all of which will depend on the level of control required by the firm
Channel design and relationships
5
Selection of intermediaries
Distributor relationship:
buys the product
completes marketing service
Agent relationship:
does not physically handle the goods
operates on commission basis
6
Sources for finding intermediaries
Governmental agencies, for example, Austrade
Private sources:
trade directories
websites
7
The distributor agreement
Contract duration
Geographic boundaries
Payment
Expenses
Communication
8
Agent and Merchant Middlemen
Agent middlemen
Manufacturer assumes trading risk but retains the right to:
Merchant middlemen
Take title to manufacturers’ goods and assume trading risks
Less controllable than agent middlemen
Work on commission
Arrange for sales in the foreign country
Do not take title to the merchandise
Establish policy guidelines and prices
Require agents to provide sales records and customer information
Provide import and export wholesaling functions involved in purchasing for their own account and selling in other countries
Criticism - Do not represent the best interests of a manufacturer
Grey markets
Authentic and legitimately manufactured trademark items produced and purchased abroad, but imported or diverted to the country by bypassing designated channels
Price segmentation and exchange rate fluctuations allow unauthorised importers to exist
10
E-commerce
Marketing and advertising tool
Order-taking capabilities
Building own international distribution networks
Interactive relationships
Response and delivery challenges
Governmental role
11
International logistics
The design and management of a system that controls the flow of materials into, through and out of international corporations
Just-in-time (JIT) delivery
Electronic data interchange (EDI)
Early supplier involvement (ESI)
Efficient customer response (ECR) systems
12
International logistics: The concepts
The systems concept
Total-cost concept
Trade-off concept
13
The impact of international logistics
Costs between 10 and 30 per cent of an order
Growing demand
Fuel costs
Increased security requirements
New dimensions:
geographical distances
currency variations
varying entry regulations
additional intermediaries
14
International transportation issues
Established transportation network in industrialised nations:
major infrastructural variations internationally
Important to learn about existing and planned infrastructures abroad
Availability and quality of transportation mode
Frequency of transportation services
15
International transportation issues
Availability of Modes
Choice of Modes
16
The international shipment: Documentation
Bill of lading
Shipper’s export declaration
Shipper’s declaration for dangerous goods
Consular invoice
Certificate of origin
Import licences
Foreign exchange licences
17
Factors in deciding on level of inventory to maintain
Order cycle time
Need to reduce order cycle time and increase its consistency without an increase in total costs
Customer service levels
Inventory as a strategic tool
18
International storage issues
‘A’ products stocked in all distribution centres
‘B’ products stored only in selected locations
‘C’ products with low demand stocked only at headquarters
Foreign trade zones
19
International packaging issues
Instrumental in getting merchandise to ultimate destination in safe, maintainable and presentable condition
Responsibility of shipper of goods
Closely linked to overall strategic plans
20
Concept check
After studying this topic, you should be able to understand and explain:
Understand and evaluate possible market entry strategies
Understand the factors influencing foreign direct investment
Identify preferred design and structure of channels of distribution
Understand the role and function of intermediaries
