UBI-GM-Presentation14.050112-place pps

International Marketing Channels Chapter 14 McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved. PowerPoint presentation prepared by: Alfred Lowey-Ball Associate Professor of Marketing UBI-United Business Institutes Brussels, Belgium Chapter Outline • Doublemint in China • Channel of distribution structures • Import oriented • Japanese • From traditional to modern structures • Distribution patterns • General • Retail • Alternative middlemen choices • Home-country • Foreign-country • Government-affiliate • Factors afecting choice of channel • Cost Coverage • Capital Character • Control Continuity • Locating, selecting & motivating middlemen • Doublemint in China • Channel of distribution structures • Import oriented • Japanese • From traditional to modern structures • Distribution patterns • General • Retail • Alternative middlemen choices • Home-country • Foreign-country • Government-affiliate • Factors afecting choice of channel • Cost Coverage • Capital Character • Control Continuity • Locating, selecting & motivating middlemen Chapter Learning Objectives 1. The variety of distribution channels and how they affect cost and efficiency in marketing 1. The variety of distribution channels and how they affect cost and efficiency in marketing 2. The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods 2. The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods 3. How distribution patterns affect the various aspects of international marketing 3. How distribution patterns affect the various aspects of international marketing 4. The growing importance of e-commerce as a distribution alternative 4. The growing importance of e-commerce as a distribution alternative 5. The functions, advantages, and disadvantages of various kinds of middlemen 5. The functions, advantages, and disadvantages of various kinds of middlemen 6. The importance of middlemen to a product’s success and the importance of selecting and maintaining middlemen 6. The importance of middlemen to a product’s success and the importance of selecting and maintaining middlemen Introduction • Getting the product to the target market can be costly • Forging an appropriate channel of distribution is one of the most critical tasks facing the international firms • Each market contains a distribution network with many channel choices whose structures are unique and in the ST fixed • In some markets the distribution structure is multi- layered, complex, and inefficient. • Competitive advantage will go to the marketer with the most cost effective channel Channel-of-Distribution Structures • The distribution process includes the physical handling and distribution of goods, the passage of ownership (title), and the buying and selling negotiations among producers, middlemen and customers • Each country market has a unique distribution channel structure • Within these structures are a variety of middlemen whose customary functions, activities, and services reflect existing competition, market characteristics, traditions and economic development • Channel structures range from those with little developed infrastructure such as those found in many emerging markets to the highly complex, multi-layered system found in Japan Import-oriented distribution structure 1. Seller’s market, little consumer choice 2. Distribution systems local rather than national in scope 3. Marketing infrastructure—warehousing, ad agencies, mkt research—is non-existent because importer does it all. • The importer controls a fixed amount of goods from abroad and the distribution system developed around the philosophy of a seller’s market dedicated to a few affluent customers. • The importer controls a fixed amount of goods from abroad and the distribution system developed around the philosophy of a seller’s market dedicated to a few affluent customers. Japanese Distribution Structure 1. a structure dominated by many small middlemen dealing with many small retailers—high density of middlemen 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 Japanese distribution system is quite different from that in the US or EU, with following four distinguishing features: • The Japanese distribution system is quite different from that in the US or EU, with following four distinguishing features: Japanese vs US distribution McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved. • MITSUKOSHI, a giant upscale department store, founded in 1611, high quality, broad choice of products, provides a total life style experience to shoppers • Provides a total life experience: « i-shoku-ju » to shoppers • Pricey, together with the small neighborhood retailer and supporting distribution networks controls retailing in Japan • Sales declining, new discount stores are entering the market, dealing directly with the manufacturers Will Mitsukoshi survive in its present form?? MITSUKOSHI in Japan Comparison of Retail Structures