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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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global perspective a single stick of doublemint today 18 billion tomorrow
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
channel of distribution structures
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.
import oriented distribution structure
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.

japanese distribution structure
Japanese Distribution Structure
  • 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
comparison of distribution channels between the united states and japan
Comparison of Distribution Channels between the United States and Japan
  • Insert Exhibit 14.1
high density of middlemen
High Density of Middlemen
  • Not unusual for consumer goods to go through three or four intermediaries before reaching the consumer
  • In Japan, small stores account for 57.7 percent of retail food sales
  • In the U.S., small stores generate 19.2 percent of food sales
  • Japan has a large number of independent groceries and bakers, unlike America with an emphasis on supermarkets, discount food stores, and department stores
business philosophy
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
large scale retail store law and its successor
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
changes in the japanese distribution system
Changes in the Japanese Distribution System
  • Structural Impediments Initiative
  • Deregulation
  • Wal-Mart
  • “New” retailers
  • The Internet
alternative middleman choices
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
foreign country middlemen
Foreign-Country Middlemen
  • Manufacturer’s representatives
  • Distributors
  • Foreign-country brokers
  • Managing agents and compradors
  • Dealers
  • Import jobbers, wholesalers, and retailers
government affiliated middlemen
Government-Affiliated Middlemen
  • Marketers must deal with governments in every country of the world
  • Products, services, and commodities for the government’s own use are always procured through government purchasing offices at federal, regional, and local levels
  • Efficiency of public sector versus the private sector
factors affecting choice of channels
Factors Affecting Choice of Channels
  • Cost
  • Capital requirements
  • Control
  • Coverage
  • Character
  • Continuity
locating selecting and motivating channel members
Locating, Selecting, and Motivating Channel Members
  • Locating middlemen
  • Selecting middlemen
    • Screening
    • The agreement
  • Motivating middlemen
  • Terminating middlemen
  • Controlling middlemen
  • The international marketer has a broad range of alternatives for developing a distribution system.
  • Three primary alternatives for using agent middlemen:
    • Agent middlemen
    • Merchant middlemen
    • Government-affiliated middlemen
  • Channel structure may vary from nation to nation or from continent to continent.
  • Information and advice are available relative to the structuring of international distribution systems.
  • Traditional channels are being challenged by the Internet, which is offering an ever-wider range of possibilities for entering foreign markets.