International marketing channels
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International Marketing Channels. Global Perspective A Single Stick of Doublemint Today – 18 Billion Tomorrow. A product must be made accessible to the target market at an affordable price Getting the product to the target market can be a costly process

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International Marketing Channels

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International Marketing Channels

Global Perspective A Single Stick of Doublemint Today – 18 Billion Tomorrow

  • A product must be made accessible to the target market at an affordable price

  • 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 marketer

  • Competitive advantage will reside with the marketer best able to build the most efficient channel from among the alternatives available

Peking Ducks – No Free Enterprise

Guangzhou’s Farmers Market

Import-Oriented Distribution Structure

  • 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 today

In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers.

Comparison of Distribution Channels between the United States and Japan

  • Insert Exhibit 14.1

Retail Structures

Source: Euromonitor, 2003

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)

    • Then, 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

Trends: From Traditional to Modern Channel Structures

Russian Home Depot (Super Home) in St. Petersburg

Trends: From Traditional to Modern Channel Structures

  • European retailers merging with former competitors and other countries to form Europe-wide enterprises

  • Foreign retailers attracted by the high margins and prices

  • The Internet may be the most important trend affecting distribution

  • Covisint

  • GlobalNetXchange

  • E-commerce

  • 7-Eleven competes with FedEx and UPS

Distribution Patterns

Mexico vs. Malaysia

Retail Patterns

Source: Euromonitor, 2003

Alternative Middleman Choices

Home-Country Middlemen

Nike European Distribution Center, Laakdal, Belgium

Nike Sport Store, St. Petersburg, Russia

Home-Country Middlemen

Foreign-Country Middlemen

Tokyo Tsukigi Fish Market

Foreign-Country Middlemen

Factors Affecting Choice of Channels

Stockmann’s Department Store, Helsinki, Finland

Grand Bazaar (Kapali Carsi), Istanbul, Turkey

Locating, Selecting, and Motivating Channel Members

  • Locating middlemen

  • Selecting middlemen

    • Screening

    • The agreement

  • Motivating middlemen

  • Terminating middlemen

  • Controlling middlemen

The Internet

  • E-commerce is used to market:

    • Business-to-business (BSB) services

    • Consumer services

    • Consumer and industrial products

  • E-commerce is more developed in the U.S. than in the rest of the world

  • B2B enables companies to cut costs in three ways:

    • Reduces procurement costs

    • Allows better supply-chain management

    • Makes possible tighter inventory control

Concerns for e-Vendors

Fedex at Roissy Airport, Paris, France

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