1. International Marketing Strategy
Chapter 10 – The Management of International Distribution and Logistics
Doole, Lowe and Kenyon
International Marketing Strategy

2. Learning Objectives
Strategically evaluate potential foreign distribution options for a given situation
Discuss the complexities of efficiently managing intermediaries in an international marketing context
Appreciate the difference in retailing infrastructures across the globe
Advise and recommend potential solutions to developing a logistics strategy in foreign markets
Understand the export documentation process

3. The challenges in managing an international distribution strategy
Selection of foreign country intermediaries (i.e. distributors)
How to build a relationship with them (i.e. build long-tern strategic relationship)
How to deal with variety of retailing structures (e.g. retail strategies in different stages of Product Life Cycle.)
How to maximize new and innovative forms of distribution (e.g. direct marketing such as Internet and Mobile marketing)
How to manage logistics of physical distribution (e.g. build well-managed online logistic system)

4. Selecting foreign market intermediaries
Channel selection
Customer characteristics
Culture
Competition
Company objectives
Character of the market
Cost
Capital required
Coverage needed
Control issues
Continuity provided
Communication effectiveness
Source: Czinkota & Ronkainen (2006)

5. Selecting foreign market intermediaries (cont.)

6. Selecting foreign market intermediaries (cont.)

7. Building relationships in foreign market channels Developing a company-owned sales force
Advantages
far greater control over sales and marketing effort
facilitates formation of closer manufacturer-customer relationships
can be used to identify and exploit new international marketing opportunities
Disadvantages
relatively larger resource commitment
higher exit costs
increased exposure to unexpected changes in political/social environment of host country

8. Trends in retailing in international markets
The differing patterns of retailing around the world
Traditional retailing (the adoption of new technology is low)
Intermediary retailing (China is encouraging mergers and partnerships between retailers to reduce costs and improve competitiveness and ensure they have the capacity to compete against global operators as Walmart and Carrefour)
Structured retailing (larger in size and have higher level of concentration and greater level of productivity per employee)
Advanced retailing
Interactive customer marketing (increase customer retention)
Mass customisation (higher volume to reduce costs)
Data mining (database marketing)
Category management (e.g. concentrate on particular products)
Effective consumer response (e.g. just-in-time delivery of suppliers)

9. Trends in retailing in international markets (cont.)

10. Trends in retailing in international markets (cont.)
The globalization of retailing
The ‘push’ factors are:
Saturation of the home market or over-competition
Economic recession or limited growth in spending
A declining or ageing population
Strict planning policies on store development
High operating costs – labour, rents, taxation
Shareholder pressure to maintain profit growth
The ‘me too’ syndrome in retailing (e.g. ‘Me too’ marketing takes place when a company starts a product which is just like its competitors.)
The push factor involves a force which acts to drive business away from a place. E.g.  Several push factors contributed to companies wanting to move their businesses from Europe to Asia.

11. Trends in retailing in international markets (cont.)
The globalization of retailing (cont.)
The ‘pull’ factors are:
Underdevelopment of some markets or weak competition
Strong economic growth or rising standards of living
High population growth or high concentration of young adults
A relaxed regulatory framework
Favourable operating costs – labour, rents, taxation
The geographical spread of trading risks
Opportunity to innovate under new marketing conditions
The pull factor is what draws firms to set up new business in new location. E.g.  Market opportunities in South Asia Countries.

12. Trends in retailing in international markets (cont.)
Internet retailing (impacted the way business transaction take place internationally, such as)
Auctions – negotiations of price between independent buyers and sellers (e.g. eBay)
Single buyer markets – large buyer markets its own supplies (e.g. online intranet system for its own suppliers – e.g. GE Trade Web))
Pure exchanges – Individual buyers and sellers are matched according to product offers and needs

13. Trends in retailing in international markets (cont.)
Internet retailing (favour the development of Internet-based distribution)
Inefficiencies in traditional distribution channels (e.g. it is difficult for international operators to penetrate Japan market.)
Market fragmentation (e.g. customers are geographically dispersed across the globe)
Minimum scale barriers (e.g. low set up costs)
Commodity-type products (e.g. the prices of well-known brands can easily price-compared across countries.)
Short life-cycle products (e.g. look for spare parts or compatible accessories foe earlier generations of product).

14. The management of the physical distribution of goods
Customer service
Order to delivery time
Consistency and reliability of delivery
Inventory availability
Order, size constraints
Ordering convenience
Delivery time and flexibility
Invoicing procedures, documentation and accuracy
Claims procedure
Condition of goods
Salesperson’s visits
Order status information
After-sales support
Can you use low-cost and high efficient ways such as Internet and mobile technologies to improve your customer service and increase customer loyalty?

15. The management of the physical distribution of goods (cont.)
The restructuring of physical distribution operations
Drivers
Changes in trading structures
Physical movement is high-cost activity
Considerations
how intermediaries can enhance service
modes of transportation used
use of export processing zones
documentation required
packaging requirements
organizing export sales contracts
In mature trading region such as US and Europe, a large number of firms have structured their distribution networks in response to changes in the trading structure in the region.
The number of distribution centers serving more than one country has increased whereas there has been a decrease in the number of warehouses dedicated to within-country movement.

16. The management of the physical distribution of goods (cont.)
The restructuring of physical distribution operations
Requirements
clearly define areas of responsibility
highly developed planning system
comprehensive information support system
expertise in distribution management
centralizing planning body
Watch:
Alibaba IPO 08 China Smart Logistics [Link]

17. The management of the physical distribution of goods (cont.)
Export processing zones (EPZs)
The concept of EPZ
duty-free manufacture or processing of products for export purposes within a customs-controlled environment
Advantages
All goods entering the EPZ are exempted from customs duties and import permits
Firms can use foreign currency to settle transactions
EPZs can be used for assembly of products and so help reduce transportation costs
EPZs give greater flexibility, and help avoid unwanted bureaucracy of customs and excise
Watch:
Export Processing Zones & the Namibian( 納米比亞) Economy in the 21st Century [Link]

18. The management of the physical distribution of goods (cont.)