International Marketing Channels and Distribution Strategies

In International Distribution, the Firm Sells to its Customers: 4through its own sales force 4through independent intermediaries 4through an outside distribution system with regional or global coverage Channel Structure Should be Designed to Manage 4physical flow of goods and services 4transactional flow 4informational flow

Channel Design 4Customer characteristics 4Distribution culture 4Competition Company Objectives 4Determined by company objectives for market share and profitability Character 4The nature of the product impacts the design of the channel. 4The 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. Coverage: the number of areas in which a product is represented and the quality of that representation

Types of Coverage 4Intensive 4Selective 4Exclusive 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: 4reward 4coercive 4legitimate 4referent 4expert

Continuity 4Channel decisions are the most long-term of the marketing mix decisions. 4Care must be taken in choosing the right type of channel. 4Establishing continuity is the marketer’s responsibility 4Continuity is expressed through visible market commitment. Communication 4...provides the exchange of information that is essential to the functioning of the channel

Types of “Distances” that Cause Communication Problems: 4Social distance 4Cultural distance 4Technological distance 4Time distance 4Geographical distance

Selection of Intermediaries 4Types of Intermediaries 4Agents 4Distributors

Agents 4Foreign (Direct) 4Brokers 4Manufacturer’s Reps 4Factors 4Managing agents 4Purchasing Agents 4Domestic (Indirect) 4Brokers 4Export Agents 4EMCs 4Webb-Pomerene 4Commission agents

Distributors 4Foreign (Direct) 4Distributors/dealers 4Import jobbers 4Wholesalers/retailers 4Domestic (Indirect) 4Domestic wholesalers 4EMCs 4ETCs 4Complementary marketers

Types of Distribution: 4Indirect exporting 4Direct exporting 4Integrated distribution Sources for Finding Intermediaries Government agencies Private sources Criteria For Screening Intermediaries 4Performance 4Professionalism

The Distributor Agreement Includes: 4Contract duration 4Geographic boundaries 4Methods of compensation and payment 4Products and conditions of sale 4Means of communication between parties

Channel Management 4Coordinating two independent entities with shared goals 4The relationship needs to be managed for the long term Factors in Channel Management 4Ownership 4Geographic, cultural, and economic distance 4Different rules of law Gray marketers take unfair advantage of trademark owner’s marketing and promotion 4Parallel imports deceive consumers by not meeting product standards or expectations of after-sale service

Arguments for Gray Markets 4The right to “free trade” 4Consumers benefit from lower prices 4Discount distributors have found a profitable market niche Solution: A Contractual Relationship that Ties Businesses Together.

Typical Reasons for the Termination of the Channel Relationship: 4Changes in the international marketer’s distribution approach 4Lack or perceived lack of performance by the intermediary 4Termination conditions are the most important considerations in the distribution agreement and must be spelled out clearly!

Typical Export Documents Include: 4Bill of Lading 4Shipper’s Export Declaration 4Shipper’s Declaration of Dangerous Goods 4Consular Invoice 4Certificate of Origin 4Import License 4Foreign Exchange License

Guidelines for Dealing with Customs: 4Knowledge and experience in dealing with a specific country’s Customs Service 4Sufficient preparation of all required documents Support Agencies for International Shipments 4International freight forwarder 4Customs broker 4Common carrier