1. International Marketing 国际市场营销学
School of International Trade,
Shandong University of Finance and Economics
山东财经大学（筹）·国际贸易学院

2. International Distribution Channels
Chapter 11
International Distribution Channels

3. Chapter Outline 1. Nature of Distribution Channels
2. Distribution Channels Strategy
3. Distribution Channel Structures
4. Locating Selecting and Motivating Channel Members
5. Internet and Distribution Channels

4. 1. Nature of Distribution Channels
Channels of Distribution is known as "Place" in the "4 P's" model of Marketing. Distribution Channels provide the utility of place, of having products where the customer wants when the customer wants them.
Channels of Distribution is defined as an organized network (system) of agencies and institutions which, in combination, perform all the functions required to link producers with end customers to accomplish the marketing task.
Distribution has two dimensions:
Logistics- Physical movement of goods
Strategy- Who participates and what they do

5. 1. Nature of Distribution Channels
1.2 Distribution channel functions
Information
Promotion
Contact
Matching (including such things as manufacturing, grading, assembling, and packaging)
Negotiation
Physical Distribution (transporting and storing)
Financing
Risk Taking

6. 1. Nature of Distribution Channels
1.3 Intermediaries (Middlemen)
Intermediary within a channel of distribution used to transfer products from the manufacturer to the end user.
Those who actually take title to the products and resell them are merchant middlemen. Those who act as brokers but do not take title are agent middlemen.
Merchant middlemen include wholesalers and retailers. Agent middlemen include manufacturer's representatives, brokers, and sales agents.

7. Nature of Distribution Channels

8. 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

9. 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

10. Think and Answer
You’ve probably heard someone say, “The reason products cost so much is all the intermediaries.”
--Do intermediaries increase the cost of products?
--Would consumers be better off or worse off without intermediaries?

11. 2.Channel-of-Distribution Strategies
Types of intermediaries (Length of Distribution Channel)
Distribution Intensity (Width of Distribution Channel )

12. 2.Channel-of-Distribution Strategies
Types of intermediaries (Length of Distribution Channel)
Direct Distribution (short)
A channel whereby goods and services are sold directly from producer to final user without involvement of other independent middlemen.
Dell, Direct-distribution model
Eliminates wholesalers and retailers.
Complete control over inventory levels and distribution costs.
Direct monitor its customers’ needs.
“You can eliminate the middleman, but not the function.”

13. 2.Channel-of-Distribution Strategies
Types of intermediaries (Length of Distribution Channel)
Indirect Distribution (long)
A channel whereby goods and services are sold indirectly from producer through independent middlemen to final users.

14. Think and Answer
Dell Computer has used one simple supply chain system—direct sales over the Internet or by phone to both business and consumer users.
--If you were a marketing executive at Dell, what new supply chain options would you suggest?

15. 2.Channel-of-Distribution Strategies
Distribution Intensity (Width of Distribution Channel )
Intensive Distribution (广泛分销)
Stocking the product in as many outlets as possible
Used for Convenience Goods
Selective Distribution (选择性分销)
Using more than one but fewer than all of the intermediaries who are willing to carry the company's products
Used for Shopping Goods
Exclusive Distribution (独家分销)
Giving a limited number of dealers the exclusive right to distribute the company's products in their territories
Used for Specialty Goods

16. 3.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 through which goods pass from producer to user.

17. Japan VS. US Channel structure (P251)

18. German, Japan, US Retail structure (P251)

19. Think and Answer
Learning the above materials, what can you tell the distinguishing differencies that Japan’s Distribution Channel structure has between US’s?

20. 4.Choice of Channels- 6Cs Cost Capital Requirements Control Coverage
Channel strategy itself is considered to have the following six specific strategic
goals:
Cost
Capital Requirements
Control
Coverage
Character
Continuity

21. In selecting middlemen, the following criteria should be adopted.
Locating Middlemen
In selecting middlemen, the following criteria should be adopted.
(a) reputation
(b) creditworthiness
(c) markets served
(d) products carried
(e) number of stores
(f) store size

22. 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

23. 5.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

24. Chapter Summary
From the foregoing discussion, it is evident that the international marketer has a broad range of alternatives for developing an economical, efficient, high-volume international distribution system. To the uninitiated, however, the variety may be overwhelming.
Careful analysis of the functions performed suggests more similarity than difference between international and domestic distribution systems; in both cases the three primary alternatives are using agent middlemen, merchant middlemen, or government-affiliated middlemen.
In many instances, all three types of middlemen are employed on the international scene, and channel structure may vary from nation to nation or from continent to continent.

25. Chapter Summary
The neophyte company in international marketing can gain strength from the knowledge that information and advice are available relative to the structuring of international distribution systems and that many well-developed and capable middleman firms exist for the international distribution of goods.
Although international middlemen are more numerous, more reliable, and more sophisticated within the past decade, traditional channels are being challenged by the Internet, which is rapidly becoming an important alternative channel to many market segments.
Such growth and development offer an ever-wider range of possibilities for entering foreign markets.

26. Key Terms distribution process counterpurchase distribution structure
Large-Scale Retail Store Location Act
agent middlemen
merchant middlemen
compensation deal
counterpurchase
product buy-back agreement
transfer pricing
advanced pricing agreement
administered pricing
cartel