1. International Marketing Chapters 14
International Marketing Channels

2. Introduction
Getting the product to the target market can be a costly process
Forging an aggressive and reliable channel of distribution may be the most critical and challenging task facing the international firms
Each market contains a distribution network with many channel choices.
In some markets the distribution structure is multi-layered, complex, inefficient, even strange
Competitive advantage will reside with the marketer best able to build the most efficient channel

3. Channel-of-Distribution Structures
The distribution process includes the physical handling and distribution of goods, the passage of ownership (title), and the buying and selling negotiations between producers and middlemen and between middlemen and customers
Each country market has a distribution structure through which goods pass from producer to use
Within this structure are a variety of middlemen whose customary functions, activities, and services reflect existing competition, market characteristics, tradition, and economic development
Channel structures range from those with little developed marketing infrastructure such as those found in many emerging markets (import oriented distribution) to the highly complex, multi-layered system found in Japan and the mass marketing distribution system of the US.

4. Japanese Distribution Structure
Distribution in Japan has long been considered the most effective non-tariff barrier to the Japanese market The Japanese distribution structure is different enough from its U.S. or European counterparts
It has four distinguishing features:
a structure dominated by many small middlemen dealing with many small retailers—high density of middlemen,
channel control by manufacturers,
a business philosophy shaped by a unique culture, and
laws that protect the foundation of the system—the small retailer

5. Distribution Systems: Japan and the US

6. A Comparison of Retail Structures

7. Channel Control in Japanese Distribution Systems
Control is maintained through the following elements:
Inventory financing with credits extending for several months.
Cumulative rebates
Merchandise returns that are allowed to the manufacturer.
Promotional support to intermediaries in the form of displays, advertising layouts, and management education programs

8. Distribution Patterns
Distribution patterns are always evolving and new patterns are developing and marketing channels are not the same throughout the world
Some general distribution patterns that are similar globally include:
Middlemen Services
Product Line Breadth
Costs and Margins
Channel Length
Nonexistent Channels
Blocked Channels
Stocking
Power and Competition

9. Retail Patterns
International retailing shows even greater diversity in its structure than does wholesaling
Some general retailing patterns include:
Retail Size Patterns
Direct Marketing
Resistance to Change
Alternative Middleman Choices

10. Retail Comparisons

11. Home-Country Middlemen
Home-country middlemen, or domestic middlemen, provide marketing services from a domestic base and find foreign markets for products for local manufacturers
Frequently used types of domestic intermediaries include:
Manufacturers’ Retail Stores
Global Retailers
Export Management Companies
Trading Companies
U.S. Export Trading Companies
Complementary Marketers
Manufacturer’s Export Agent
8. Home-Country Brokers
9. Buying Offices
10. Selling Groups
11. Webb-Pomerene Export Associations
12. Foreign Sales Corporation
13. Export Merchants
14. Export Jobbers

12. Export Management Company

13. Foreign-Country Middlemen
Some of the more important foreign-country middlemen, who find markets for foreign manufacturers include:
Manufacturer’s Representatives
Distributors
Foreign-Country Brokers
Managing Agents and Compradors
Dealers
Import Jobbers, Wholesalers, and Retailers

14. Factors Affecting Choice of Channels
The following points should be addressed prior to selecting intermediaries:
Identify specific target markets within and across countries.
Specify marketing goals in terms of volume, market share, and profit margin requirements.
Specify financial and personnel commitments to the development of international distribution.
Identify control, length of channels, terms of sale, and channel ownership

15. Six Cs of Channel Strategy
Channel strategy itself is considered to have the following six specific strategic
goals:
Cost
Capital Requirements
Control
Coverage
Character
Continuity

16. Locating Middlemen
Firms seeking overseas representation should compile a list of middlemen from
such sources as the following:
Commercially published directories
Foreign consulates
Chamber-of-commerce groups located abroad
Other manufacturers producing similar but noncompetitive goods
Middlemen associations
Business publications
Management consultants
U.S. Department of Commerce

17. Selecting Middlemen Screening based on the following criteria:
In selecting middlemen, the following steps should be used.
Screening based on the following criteria:
(a) reputation
(b) creditworthiness
(c) markets served
(d) products carried
(e) number of stores
(f) store size
2. The Agreement that details terms of the contract and the functions to be performed on behalf of the foreign manufacturer

18. Motivating Middlemen Motivational techniques may be grouped into
There is a clear correlation between the middleman’s motivation and sales
volume
Motivational techniques may be grouped into
five categories:
(1) financial rewards
(2) psychological rewards
(3) communications
(4) company support, and
(5) corporate rapport

19. The Internet
E-commerce is used to market business-to-business services, consumer services, and consumer and industrial products via the World Wide Web
The Internet is an important distribution method for multinational companies
When using the internet for distribution purposes, the following factors should be considered:
Culture
Adaptation (especially of language)
Local contact information
Payment form
Delivery
Promotion