International Marketing
14th Edition P h i l i p R. C a t e o r a M a r y C. G i l l y John L. Graham
International Marketing Channels
Chapter 14
McGraw-Hill/Irwin International Marketing 14/e
Copyright 2009 by The McGraw-Hill Co panie!" Inc# $ll right! re!er%e&#
What Should You Learn?
The variety of distri ution !hannels and ho" they affe!t !ost and effi!ien!y in #arketing The $apanese distri ution stru!ture and "hat it #eans to $apanese !usto#ers and to !o#peting i#porters of goods %o" distri ution patterns affe!t the various aspe!ts of international #arketing The gro"ing i#portan!e of e&!o##er!e as a distri ution alternative The fun!tions' advantages' and disadvantages of various kinds of #iddle#en The i#portan!e of #iddle#en to a produ!t(s su!!ess and the i#portan!e of sele!ting and #aintaining #iddle#en
14-2
, Single Sti!k of -ou le#int Today + 1. /illion To#orro"
)lo al *erspe!tive +
, produ!t #ust e #ade a!!essi le to the target #arket at an afforda le pri!e )etting the produ!t to the target #arket
+ Can e a !ostly pro!ess
0orging an aggressive and relia le !hannel of distri ution
+ The #ost !riti!al and !hallenging task fa!ing the international #arketer
Co#petitive advantage
+ 0or the #arketer est a le to uild the #ost effi!ient !hannel fro# a#ong the alternatives availa le
14-3
Channel&of&-istri ution Stru!tures
,ll !onsu#er and industrial produ!ts eventually go through a distri ution pro!ess
+ *hysi!al handling and distri ution of goods + *assage of o"nership + /uying and selling negotiations et"een produ!ers and #iddle#en + /uying and selling negotiations et"een #iddle#en and !usto#ers
1a!h !ountry #arket has a distri ution stru!ture
+ )oods pass fro# produ!er to user
14-4
I#port&2riented -istri ution Stru!ture
In an i#port&oriented or traditional distri ution stru!ture3
+ I#porter !ontrols a fi4ed supply of goods + Marketing syste# develops around the philosophy of selling a li#ited supply of goods at high pri!es to a s#all nu# er of affluent !usto#ers
14-5
I#port&2riented -istri ution Stru!ture
-e#and e4!eeds supply The !usto#er seeks the supply fro# a li#ited nu# er of #iddle#en -istri ution syste#s are lo!al 0e" !ountries fit the i#port&oriented #odel
14-6
$apanese -istri ution Stru!ture
15 , stru!ture do#inated y #any s#all #iddle#en dealing "ith #any s#all retailers 65 Channel !ontrol y #anufa!turers 75 , usiness philosophy shaped y a uni8ue !ulture 45 La"s that prote!t the foundation of the syste#
14-7
Co#parison of -istri ution Channels et"een the 9nited States and $apan
Exhibit 14.1
14-8
%igh -ensity of Middle#en
:ot unusual for !onsu#er goods to go through three or four inter#ediaries efore rea!hing the !onsu#er $apan has a large nu# er of independent gro!eries and akers ;<45=> or all retail stores?
+ S#all stores a!!ount for @<51> of retail food sales
95S5 e#phasis is on super#arkets' dis!ount food stores' and depart#ent stores
+ S#all stores generate 7@5=> of food sales
14-9
Aetail Stru!ture in Three Countries
Exhibit 14.2
14-10
Channel Control
Inventory finan!ing Cu#ulative re ates Mer!handise returns *ro#otional support
14-11
/usiness *hilosophy
1#phasiBes loyalty' har#ony' and friendship Supports long&ter# dealer&supplier relationships The !ost of $apanese !onsu#er goods are a#ong the highest in the "orld $apanese la" gives the s#all retailer enor#ous advantage over the develop#ent of larger stores
14-12
Large&S!ale Aetail Store La" and Its Su!!essor
Daitenho + the Large&S!ale Aetail Store La"
+ Large stores #ust have approval fro# the prefe!ture govern#ent + ,ll proposals first Cudged y the Ministry of International Trade and Industry ;MITI? + If all lo!al retailers unani#ously agreed' the plan "as approved + Could e a lengthy pro!ess + ,pplied to oth do#esti! and foreign !o#panies
Aepla!ed y the Large&S!ale Aetail Store Lo!ation ,!t of $une 6DDD
+ MITI out of the pro!ess + Aela4ed restri!tions
14-13
Changes in the $apanese -istri ution Syste#
Stru!tural I#pedi#ents Initiative -eregulation Wal&Mart E:e"F retailers The Internet
14-14
Trends3 0ro# Traditional to Modern Channel Stru!tures
1uropean retailers #erging "ith for#er !o#petitors and other !ountries to for# 1urope&"ide enterprises 0oreign retailers attra!ted y high #argins and pri!es The Internet #ay e #ost i#portant distri ution trend Covisint )lo al:etG!hange 1&!o##er!e =&1leven !o#petes "ith 0ed14 and 9*S
14-15
)eneral -istri ution *atterns
Middle#en servi!es Line readth Costs and #argins Channel length :one4istent !hannels /lo!ked !hannels Sto!king *o"er and !o#petition
14-16
Aetail -istri ution *atterns
SiBe patterns -ire!t #arketing Aesistan!e to !hange
14-17
Aetail Stru!ture in Sele!ted Countries
Exhibit 14.3
14-18
International Channel&-istri ution ,lternatives
Exhibit 14.4
14-19
,lternative Middle#an Choi!es
Seller #ust e4ert influen!e over t"o sets of !hannels
+ 2ne in the ho#e !ountry + 2ne in the foreign&#arket !ountry
Agent middlemen + represent the prin!ipal rather than the#selves Mer hant middlemen + take title to the goods and uy and sell on their o"n a!!ount
14-20
%o#e&Country Middle#en
Manufa!turer(s retail stores )lo al retailers 14port #anage#ent !o#panies Trading !o#panies 95S5 e4port trading !o#panies Co#ple#entary #arketers Manufa!turer(s e4port agent
14-21
%o" -oes an 1MC 2perate?
Exhibit 14.5
14-22
%o#e&Country Middle#en
%o#e&!ountry rokers /uying offi!es Selling groups We &*o#erene e4port asso!iations 0oreign sales !orporation 14port #er!hants 14port Co ers
14-23
0oreign&Country Middle#en
Manufa!turer(s representatives 0oreign -istri utors 0oreign&!ountry rokers Managing agents and !o#pradors -ealers I#port Co ers' "holesalers' and retailers
14-24
)overn#ent&,ffiliated Middle#en
Marketers #ust deal "ith govern#ents in every !ountry of the "orld )overn#ent pur!hasing offi!es
+ *ro!ure produ!ts' servi!es' and !o##odities for the govern#ent(s o"n use + Work at federal' regional' and lo!al levels
1ffi!ien!y of pu li! se!tor versus the private se!tor
+ Wal&Mart did etter than 01M, after %urri!ane Hatrina
14-25
0a!tors ,ffe!ting Choi!e of Channels
Cost Capital re8uire#ents Control Coverage Chara!ter Continuity
14-26
Lo!ating' Sele!ting' and Motivating Channel Me# ers
Lo!ating #iddle#en Sele!ting #iddle#en
+ S!reening + The agree#ent
Motivating #iddle#en Ter#inating #iddle#en Controlling #iddle#en
14-27
The Internet
1&!o##er!e
+ /usiness&to& usiness ;/S/? servi!es + Consu#er servi!es + Consu#er and industrial produ!ts
1&!o##er!e is #ore developed in 95S5 than in rest of "orld /6/ ena les !o#panies to !ut !osts
+ Aedu!es pro!ure#ent !osts + ,llo"s etter supply&!hain #anage#ent + Makes possi le tighter inventory !ontrol
14-28
Con!erns for e&Iendors
Culture ,daptation Lo!al !onta!t *ay#ent -elivery *ro#otion
14-29
Su##ary
The international #arketer has a road range of alternatives for developing a distri ution syste# Three pri#ary alternatives for using agent #iddle#en
+ + + ,gent #iddle#en Mer!hant #iddle#en )overn#ent&affiliated #iddle#en
Channel stru!ture varies
+ + :ation to nation Continent to !ontinent
Infor#ation and advi!e are availa le relative to the stru!turing of international distri ution syste#s The Internet is !hallenging traditional !hannels' offering a "ider range of possi ilities for entering foreign #arkets
14-30
