1. International Marketing Channels
15th edition
Chapter 15
International Marketing Channels
Philip R. Cateora, Mary C. Gilly, and John L. Graham

2. Channel-of-Distribution Structures
All consumer and industrial products eventually go through a distribution process
Physical handling and distribution of goods
Passage of ownership
Buying and selling negotiations between producers and middlemen
Buying and selling negotiations between middlemen and customers
Each country market has a distribution structure
Goods pass from producer to user
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3. Import-Oriented Distribution Structure (1 of 2)
In an import-oriented or traditional distribution structure:
Importer controls a fixed supply of goods
Marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers
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4. Import-Oriented Distribution Structure (2 of 2)
Demand exceeds supply
The customer seeks the supply from a limited number of middlemen
Distribution systems are local
Few countries fit the import-oriented model
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5. Japanese Distribution Structure (1 of 2)
Four distinguishing features
High density of middlemen
Channel control
Business philosophy
Large-scale retail store law
Changes in the structure
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6. Japanese Distribution Structure (2 of 2)
A structure dominated by many small middlemen dealing with many small retailers
Channel control by manufacturers
A business philosophy shaped by a unique culture
Laws that protect the foundation of the system
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7. High Density of Middlemen
Not unusual for consumer goods to go through three or four intermediaries before reaching the consumer
Japan has a large number of independent groceries and bakers (94.7% or all retail stores)
Small stores account for 59.1% of retail food sales
U.S. emphasis is on supermarkets, discount food stores, and department stores
Small stores generate 35.7% of food sales
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8. Channel Control Inventory financing Cumulative rebates
Merchandise returns
Promotional support
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9. Business Philosophy Emphasizes loyalty, harmony, and friendship
Supports long-term dealer-supplier relationships
The cost of Japanese consumer goods are among the highest in the world
Japanese law gives the small retailer enormous advantage over the development of larger stores
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10. Large-Scale Retail Store Law and Its Successor
Daitenho – the Large-Scale Retail Store Law
Large stores must have approval from the prefecture government
All proposals first judged by the Ministry of International Trade and Industry (MITI)
If all local retailers unanimously agreed, the plan was approved
Could be a lengthy process
Applied to both domestic and foreign companies
Replaced by the Large-Scale Retail Store Location Act of June 2000
MITI out of the process
Relaxed restrictions
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11. Alternative Middleman Choices
Seller must exert influence over two sets of channels
One in the home country
One in the foreign-market country
Agent middlemen – represent the principal rather than themselves
Merchant middlemen – take title to the goods and buy and sell on their own account
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12. International Channel-of-Distribution Alternatives
Exhibit 15.3
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13. Channel Management Locating middlemen Selecting middlemen
Screening
The agreement
Motivating middlemen
Terminating middlemen
Controlling middlemen
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14. Logistics (1 of 2)
Logistics management is a total systems approach to the management of the distribution process that includes all activities involved in physically moving raw material, in-process inventory, and finished goods inventory from the point of origin to the point of use or consumption
The physical distribution system involves more than the physical movement in goods; it includes the location of plants and warehousing, transportation mode, inventory quantities, and packing
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15. Logistics (2 of 2)
Substantial savings can result from the systematic examination of logistics costs and the calculation of total physical distribution costs
The concept behind physical distribution is the achievement of the optimum (lowest) system cost, consistent with customer service objectives of the firm
One of the major benefits of the European Union’s unification is the elimination of transportation barriers among member countries
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