Lecture 5 Distribution International Context

The challenges The distribution channel decision is fundamental as it affects all aspects of the international marketing strategy. Compettive advantage. (na) 2

We need to consider Selection of foreign country intermediaries. How to build a relationship with intermediaries. How to deal with the varying types of retailing infrastructure across international markets. How to manage the logistics of physically distributing products across foreign markets. 3

Direct vs Indirect  Advantages vs disadvantages that developing a company-owned international sales forces. Grater control Customer relationship Identifying new opportunities. Large resources commitment. Lack of new market. Exit cost / market exit. 4

Selection of foreign country intermediaries. Indirect and direct channel. Using outside sales agents company´s sales forces. Direct channel offer more control. When requires a hight level of services before and after sale. Indirect channel require less investment. Indirect channel less control. 5

6 FIRM CUSTOMER FIRM CUSTOMER DIRECT INDIRECT

Indirect channel 7

Channel Selection Market characteristics Finland – 4 wholesaleres Japan – 300,000 wholesalers Market fragmentation. Ex. Internet retailing. Objectives Long term vs short term. 8

Channel Selection Capital required and costing Relative cost of each channel, cashflow, capital required. Coverage needed. 100% coverage of the market? Own sales may be too expensive. 9

Channel Selection. Control, continuity and communication. Competitive advantage in providing a quality services – direct channel. Selection intermediaries. Geographic coverage, services requires, native sales forces. Sales volume potential, financial strenght, size and quality sales forces, reputation, marketing communication services. 10

Build a relationship in foreign market channel. Motivating international marketing intermediaries. Finding out the needs and problems. Offering support Building continuing relationship.  Profit margin available  Guarranty of exclusive territories.  Marketing communication assistance.  Financial assistance.  Regular contact. 11

Build a relationship in foreign market channel. Controlling intermediaries in international markets. Development wirtten plans with clearly objectives and regular report.  Sales turnover per year.  Number of accounts.  Market share.  Growth rate.  Price charged. 12

Build a relationship in foreign market channel. Channel updating Firms need to ensure that as they increase their involvement in global markets they are able to adapt and update their channel strategy accordingly.  Pros and cons posterior changes in channel strategy 13

Trends in retailing in international markets. The differing patterns of retailing around the world. Low concentration ratios of retailers ownership give more power to the manufacturer. 14

Trends in retailing in international markets. Traditional retailing. Asia, Latin America and Japan. Level Integration technology is low. Small-scale family retailing business. Concentration operators is weak. 15

Trends in retailing in international markets. Intermediary retailing. Italy, Spain Independent business. Tendency towards concentration. Importance of wholesalers. 16

Trends in retailing in international markets. Structured retailing. North Europe High level concentration. High level technology. Great level of productivity per employee. 17

Trends in retailing in international markets. Advance retailing. US, Germany and UK. Interactive customer marketing. Mass customisation. Data Mining. Effective consumer response 18

Trends in retailing in international markets. 19

Trends in retailing in international markets. The power in many international markets is moving from the supplier to the customer. Multimedia technology has provided a number of opportunities in international markets. The major impact has been the ability of the internet to enable small and medium-sized companies. 20

The management of the physical distribution of goods.  The logistical approach vs physical distribution. Physical distribution transport, storage, packing, loading / unloading and distribution; TACTIC Logistical approach ; Logistics is instead linked to the area of ​​ procurement, production and sales. Thus, logistics has no limits and should be handled from the point of view of a business manager. STRATEGY 21

The management of the physical distribution of goods. Customer service Customers who are distant might more concerned about the guarantees of reliable rapid availability. Consumers are demanding ever-quicker delivery. 22

The management of the physical distribution of goods. Information technology Developments in information technologiy are critical. It is estimated that moe than three in four companies actively involved in international markets have introduced multinational computer symtems for logistics processes and international electronic data interchange. EDI, RFID.  Na ( ikea case) 23

The management of the physical distribution of goods. The restructuring of physical distribution operations. The logistics approach is to analyse customer requirements and to review what competitors are providing. Customers are interested in deliveries time, zero defect, supplier willingness to meet emergency needs or replace damaged goods. JUST IN TIME. 24

The management of the physical distribution of goods. The use of intermediaries From traditional intermediaries simply offer transportation by land, sea an air. To Specialized intermediaries with a wide range of services. Build to order (BTO) 25

The management of the physical distribution of goods. The export processing zones. Components may be imported into the zone duty free and tax free to be processed or manufactured into the finished product or stored for onward distribution and re-exported without any liability of import duties or other taxes. 26

Zara Case study 27