INTERNATIONAL MARKETING 6e Chapter 13 Channels and distribution Strateqies Copyright 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc, 6217 Sea Harbor Drive, Orlando, Florida 32887-6777
Copyright © 2001 by Harcourt, Inc.. All rights reserved. Requests for permissions to make copies of any part of the work should be mailed to the following address: Permissions Department, Harcourt, Inc., 6277 Sea Harbor Drive, Orlando, Florida 32887-6777. INTERNATIONAL MARKETING 6e Channels and Distribution Strategies Chapter 13
In international distribution The firm sells to its customers directly through its own sales force indirectly through independent intermediaries indirectly through an outside distribution system with regional or global coverage Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-2 In International Distribution The firm sells to its customers: • directly through its own sales force • indirectly through independent intermediaries • indirectly through an outside distribution system with regional or global coverage
Channel structure How to structure the distribution channels is the most important long-term marketing mix decision a firm may make n Channel structures are designed to manage multidirectional (horizontal and vertical connections in physical movement of goods and services transactiona/ title flows information communications flows Copyright 2001 by Harcourt, Inc. All rights reserved 13-3
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-3 Channel Structure How to structure the distribution channels is the most important long-term marketing mix decision a firm may make. Channel structures are designed to manage multidirectional (horizontal and vertical) connections in • physical movement of goods and services • transactional title flows • information communications flows
Channel configurations Manufacturer Manufacturer Originator Agent Pg nt Agent Agent Wholesaler Wholesaler Retailer Agent Industrial Agent Retailer Distributor Retailer Retailer Industrial Distributor Agent Consumer Consumer ndustrial User Industrial U Consumer Industrial Services Products Products Copyright 2001 by Harcourt, Inc. All rights reserved 13-4
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-4 Channel Configurations Manufacturer Manufacturer Originator Consumer Industrial User Consumer / Industrial User Agent Agent Agent Agent Agent Agent Agent Wholesaler Wholesaler Retailer Retailer Retailer Retailer Industrial Distributor Industrial Distributor Consumer Products Industrial Products Services
Channel Design Considerations Customer characteristic What do they need why do they need when do they need How do they need Copyright 2001 by Harcourt, Inc. All rights reserved 13-5
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-5 Channel Design Considerations Customer characteristic: • What do they need ? • why do they need ? • when do they need ? • How do they need ?
Channel Design Considerations Distribution culture The structural linkages and functional characteristics of existing channels Competition What channe/s does the competition use? n Company objectives Determined by company objectives for market share and profitability Copyright 2001 by Harcourt, Inc. All rights reserved 13-6
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-6 Channel Design Considerations Distribution culture • The structural linkages and functional characteristics of existing channels Competition • What channels does the competition use? Company objectives • Determined by company objectives for market share and profitability
Channel Design Considerations n Character The nature of the product impacts the design of the channe the channel must match the positioning of the product in the market “ Capita describes the financial requirements for setting up a channel system “Cost is the expenditure incurred in maintaining a channe/once it is established Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-7 Channel Design Considerations Character • The nature of the product impacts the design of the channel. The channel must match the positioning of the product in the market. “Capital” • ... describes the financial requirements for setting up a channel system. “Cost” • … is the expenditure incurred in maintaining a channel once it is established
Channel Design Considerations n Coverage the number of areas in which a product is represented and the quality of that representation Types of coverage Intensive Selective Exclusive Copyright 2001 by Harcourt, Inc. All rights reserved 13-8
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-8 Channel Design Considerations Coverage • the number of areas in which a product is represented and the quality of that representation. Types of coverage • Intensive • Selective • Exclusive
Control The use of intermediaries will result in some loss of market control Control correlates with the type of product or service being marketed The marketer's ability to exercise power determines the extent of control Types of power reward, coercive, legitimate, referent, expert Careful communication with foreign intermediaries is needed to make them aware of the marketer' s control intentions Copyright 2001 by Harcourt, Inc. All rights reserved 13-9
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-9 Control The use of intermediaries will result in some loss of market control. Control correlates with the type of product or service being marketed. The marketer’s ability to exercise power determines the extent of control. Types of power • reward, coercive, legitimate, referent, expert Careful communication with foreign intermediaries is needed to make them aware of the marketer’s control intentions
Continuity n Channel decisions are the most long-term of the marketing mix decisions Care must be taken in choosing the right type of channel Establishing continuity is the marketers responsibility Continuity is expressed through visible market commitment Copyright 2001 by Harcourt, Inc. All rights reserved 13-10
Copyright © 2001 by Harcourt, Inc. All rights reserved. 13-10 Continuity Channel decisions are the most long-term of the marketing mix decisions. Care must be taken in choosing the right type of channel. Establishing continuity is the marketer’s responsibility Continuity is expressed through visible market commitment
