Welcome to class of International Distribution by Dr. Satyendra Singh University of Winnipeg Canada

International Distribution Factors Affecting Choice of Channels Locating and Managing Channel Members Internet Intermediary Choices –Home –Foreign –Government

Factors Affecting Choice of Channel… Objectives –Volume, market share, profit, control, length of channel, terms of sales –The 5 C’s of distribution Character of your Company and the market –Perishable items, complexity of sales requires, SAS, value of the product –Own sales force vs. distributor’s, aggressive managers (NY, fast cities) Coverage –Distribution intensity, 100%! Has impact on market share/penetration/$ –Several channels may be needed (full service vs. no service) –2-3 cities may be enough (Paris 30% of France population vs. NY only 5%) –More distributors are needed in US than France to achieve the same market share Continuity –Serious issue if family-owned channel. Coca-cola lured Pepsi’s distributor in Brazil –May not carry the line with less margin

Factors Affecting Choice of Channel Control –Own/short channel  more control on price, volume, promotion –Enthusiastic  invest time to promote your product Cost –Developmental and maintenance costs –Transporting and sorting, breaking bulk, provide credit, local advertising, sales representation, negotiations –If possible, set up your own channel  own sales force –However other costs remain same– consignments, loan, floor plans, etc.

Locating and Managing Channel Members Locating –Tradeshow, governments (DFAIT), third party recommendations, websites Selecting –Trustworthy, references, finances, size of firm, experience, resources –Go to foreign market and see the channel members Motivating –Financial, psychological rewards (trip to head office, recognition), communications (newsletter, new product info.), corporate rapport Controlling –Measurable performance indicators  sales volume, market share, inventory turnover, accounts per area… Terminating –Easy in US, not in international markets  may claim up to 10% of sales as compensation x no of years served

Internet Culture –Polite words, color, –70% user Sweden vs. 1% in China vs. 40% France –Need broad-band, China allows only access to approved websites Adaptation –Global or local –50,000 pages! Translation in +50 languages! Local Contact –Customer enquiries, product return, payment where credit card is not possible, delivery of the purchased product Promotion –Website is a store; we need to bring customers there –Search engine registration, banners display, press release, local news group, … –Different marketing strategy in EU– more privacy by law –Vacation packages are more popular in the UK than US –Germany may be interested in different destinations than Canadians

Intermediary Choices

Intermediary Choices… Home-Country Intermediaries –Global retailer Ikea, Wal-Mart, Costco, Toys “R” Us… –Export Management Companies Usually works on commission (but may buy merchandize) Good for small companies – does not want to have own people Minimum investment, no commitment But no deep distribution ATM Export Management, MARAC Enterprizes –Trading Companies Not very popular in US/Canada Generally in developed countries Accumulate, transport and distribute in many countries Strategies Ontario association of trading houses

Intermediary Choices… Home-Country Intermediaries –Home-Country Brokers Bring buyer and seller together Low-cost agent service, Does not have continuing relationship –Buying Offices Does not provide selling services Grey marketing! Does not provide continuing source of representation –Selling Group Works under government sanctions Canadian wheat board

Intermediary Choices… Foreign-Country Intermediaries –Producers’ retail stores Tim Horton, Nygard International… –Distributors May be exclusive rights High degree of dependence Long-term continuous basis Control over price, promotional efforts, inventories, servicing –Foreign Country broker –Dealers Very powerful within a geographic areas Retailers – consumers Dealers– industrial and capital items

Intermediary Choices Government-Affiliated Intermediaries –Government purchasing offices National, Regional and Local levels –Selling to governments is complex and competitive –Good understanding of governments Keep an eye on government spending –Be on the government buyer’s list Military supplies Office supplies Construction –Can be very lucrative