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Chapter 14 - Products and services for businesses. What you should learn from chapter 14: The importance of derived demand in industrial markets, how demand is affected by technology levels, characteristics of an industrial product, the importance of ISO 9000 certification, the growth of business services and nuances of their marketing, the importance of trade shows in promoting industrial goods, the importance of relationship marketing for industrial products and services.
International Marketi ng 14th Edition P h i l i p R C a t e o r a M a r y C G i l l y John L Graham International Marketing Channels Chapter 14 McGrawHill/Irwin International Marketing 14/e Copyright © 2009 by The McGrawHill Companies, Inc. All rights reserved Discussed questions What are the major decisions facing Marketing Managers when dealing with distribution channel? What are the major functions of channel distribution? Review the key variables that affect the marketer’s choice of distribution channels Account, as best you can, for the differences in channel patterns which might be encountered in a highly developed country and an underdeveloped country 14-2 Discussed questions What is EMC? Why is the EMC sometimes called an independent export department? Compare advantages and disadvantages of EMC and company own marketing department? Explain how and why distribution channels are affected as they are when the stage of development of an economy improves Discuss the role of internet as channel distribution in international marketing context? Provide examples to illustrate your point 14-3 Three major decisions of Distribution Channel • Channel Design • Channel Management • Physical Distribution 14-4 What Should You Learn? • The variety of distribution channels and how they affect cost and efficiency in marketing • The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods • How distribution patterns affect the various aspects of international marketing • The growing importance of e-commerce as a distribution alternative • The functions, advantages, and disadvantages of various kinds of middlemen • The importance of middlemen to a product’s success and the importance of selecting and maintaining middlemen 14-5 Global Perspective – A Single Stick of Doublemint Today – 18 Billion Tomorrow • A product must be made accessible to the target market at an affordable price • Getting the product to the target market – Can be a costly process • Forging an aggressive and reliable channel of distribution – The most critical and challenging task facing the international marketer • Competitive advantage – For the marketer best able to build the most efficient channel from among the alternatives available 14-6 Channel-of-Distribution Structures • All consumer and industrial products eventually go through a distribution process – Physical handling and distribution of goods – Passage of ownership – Buying and selling negotiations between producers and middlemen – Buying and selling negotiations between middlemen and customers • Each country market has a distribution structure – Goods pass from producer to user 14-7 How a Distributor Increases Efficiency Intermediaries reduce the number of contacts & the work 15- Copyright ©2009 Pearson Education South Asia Pte Ltd Channel Member Functions 15-9 Three types of channels: • A manufacturer selling a physical product and services might require three channels: A sales channel A delivery channel A service channel 15- 10 Trends: From Traditional to Modern Channel Structures • European retailers merging with former competitors and other countries to form Europe-wide enterprises • Foreign retailers attracted by high margins and prices • The Internet may be most important distribution trend • Covisint: General Motors, Ford Motor, DaimlerChryler • GlobalNetXchange: Sears, Roebuck, Carefour • E-commerce: Amazon.com • 7-Eleven competes with FedEx and UPS 14-23 General Distribution Patterns • Middlemen services • Line breadth • Costs and margins • Channel length • Nonexistent channels • Blocked channels • Stocking • Power and competition 14-24 Retail Distribution Patterns • Size patterns • Direct marketing • Resistance to change 14-25 Retail Structure in Selected Countries Exhibit 14.3 14-26 Alternative Middleman Choices • Seller must exert influence over two sets of channels – One in the home country – One in the foreign-market country • Agent middlemen – represent the principal rather than themselves • Merchant middlemen – take title to the goods and buy and sell on their own account 14-27 Home-Country Middlemen • Manufacturer’s retail stores • Global retailers • Export management companies • Trading companies • U.S export trading companies • Complementary marketers • Manufacturer’s export agent 14-28 How Does an EMC Operate? Exhibit 14.5 14-29 Home-Country Middlemen • Home-country brokers • Buying offices • Selling groups • Webb-Pomerene export associations • Foreign sales corporation • Export merchants • Export jobbers 14-30 Foreign-Country Middlemen • Manufacturer’s representatives • Foreign Distributors • Foreign-country brokers • Managing agents and compradors • Dealers • Import jobbers, wholesalers, and retailers 14-31 Government-Affiliated Middlemen • Marketers must deal with governments in every country of the world • Government purchasing offices – Procure products, services, and commodities for the government’s own use – Work at federal, regional, and local levels • Efficiency of public sector versus the private sector – Wal-Mart did better than FEMA after Hurricane Katrina 14-32 Factors Affecting Choice of Channels • Cost • Capital requirements • Control • Coverage • Character • Continuity 14-33 Locating, Selecting, and Motivating Channel Members • Locating middlemen • Selecting middlemen – Screening – The agreement • Motivating middlemen • Terminating middlemen • Controlling middlemen 14-34 The Internet • E-commerce – Business-to-business (BSB) services – Consumer services – Consumer and industrial products • E-commerce is more developed in U.S than in rest of world • B2B enables companies to cut costs – Reduces procurement costs – Allows better supply-chain management – Makes possible tighter inventory control 14-35 Concerns for e-Vendors • Culture • Adaptation • Local contact • Payment • Delivery • Promotion 14-36 Summary • The international marketer has a broad range of alternatives for developing a distribution system • Three primary alternatives for using agent middlemen – – – Agent middlemen Merchant middlemen Government-affiliated middlemen • Channel structure varies – – Nation to nation Continent to continent • Information and advice are available relative to the structuring of international distribution systems • The Internet is challenging traditional channels, offering a wider range of possibilities for entering foreign markets 14-37 ... channel A service channel 1 5- 10 Consumer Marketing Channels 1 5- 11 International Channel-Distribution Alternatives 1 4-1 2 Import-Oriented Distribution Structure • In an import-oriented or traditional... Power and competition 1 4-2 4 Retail Distribution Patterns • Size patterns • Direct marketing • Resistance to change 1 4-2 5 Retail Structure in Selected Countries Exhibit 14. 3 1 4-2 6 Alternative Middleman... Manufacturer’s export agent 1 4-2 8 How Does an EMC Operate? Exhibit 14. 5 1 4-2 9 Home-Country Middlemen • Home-country brokers • Buying offices • Selling groups • Webb-Pomerene export associations