Transcript ch16 Hollensen - Warsaw School of Economics

Svend Hollensen
GLOBAL MARKETING
4th Edition
Lecture by Ewa Baranowska-Prokop, Ph.D.
Distribution decisions
Learning objectives (1)
Explore the determinants of channel
decisions
Discuss the key points in putting together
and managing global marketing channels
Discuss the factors influencing channel
width
Explain what is meant by integration of the
marketing channel
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Learning objectives (2)
Describe the most common export
documents
Define and explain the main modes of
transportation
Explain how the internationalisation of
retailing affects the manufacturer
Define grey markets and explain how to
deal with them
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DHL: A case study
 What are the macroeconomic drivers for the
growth of the logistic business?
 What are the most important issues in
keeping DHL’s international
competitiveness?
 How can DHL be perceived as a local
company in most countries of the world?
Requires web access
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External factors
affecting channel decisions
Customer characteristics
Nature of product
Nature of demand
Competition
Legal regulations/ local business practices
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Internal decisions
concerning channel structure
Types of intermediaries
Coverage
Length (number of levels)
Control resources
Degree of integration
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Internal decisions concerning
management and
control of channel
Screening and selecting intermediaries
Contracting
Motivating
Controlling
Termination
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Internal decisions concerning
management of channel logistics
Physical movement of goods through
channel system
Order handling
Transportation
Inventory
Storage/warehousing
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Figure 16.2a Japanese car
parts distribution channels
Sources: Cateora (1993); Onkvisit and Shaw (1993); Pirog and Lancioni (1997).
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Figure 16.2b US car
parts distribution channels
Sources: Cateora (1993); Onkvisit and Shaw (1993); Pirog and Lancioni (1997).
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Figure 16.3 A hypothetical
channel sequence in
the Japanese consumer market
Source: Pirog and Lancioni, 1997, p. 57. Adapted with kind permission from International Journal of Physical Distribution and Logistics Management, Emerald Group Publishing Ltd.
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Market coverage
Coverage can refer to geographical
areas of a country or the number of
retail outlets (as a percentage of all
retail outlets).
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Approaches to
market coverage
Intensive
Selective
Exclusive
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Figure 16.5 Factors
influencing channel width
Source: adapted from Lewison, 1996, p. 279.
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Functions performed by
intermediaries
Carrying of inventory
Demand generation
Physical distribution
After-sales service
Credit extension to customers
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Figure 16.6a Conventional
marketing channels
Manufacturer
Forward
integration
Wholesaler
Backward
integration
Retailer
Consumer
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What is this?
What form of integration means seeking
control of channel members at different
levels of the channel?
Vertical integration
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What is this?
What form of integration means seeking
control of channel members at the same
level of the channel (i.e., competitors)?
Horizontal integration
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Guidelines for anticipating
and correcting problems with
international distributors (1)
Select distributors – do not let them select you
Look for distributors capable of developing
markets
Treat the local distributors as long-term partners
Support market entry by committing money,
managers, and proven marketing ideas
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Guidelines for anticipating
and correcting problems with
international distributors (2)
Maintain control over marketing strategy
Make sure distributors provide you with
detailed market and financial performance
data
Build links among national distributors at
the earliest opportunity
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Figure 16.7 Criteria for
evaluating foreign distributors
Overall qualifications/ selection criteria
Financial
and company
strengths
Facilitating
factors
Product
factors
Commitment
Marketing
skills
Source: Adapted from Cavusgil et al. (1995).
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Selection criteria: Financial
and company strengths
Financial soundness
Ability to finance sales
and growth
Ability to raise funding
Ability to provide
promotional funds
Product and market
expertise
Ability to maintain
inventory
Quality of
management team
Reputation among
current and past
customers
Ability to formulate
and implement
marketing plans
Source: Adapted from Cavusgil et al. (1995).
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Selection criteria:
Product factors
Quality and
sophistication of
product lines
Product
complementarity
Familiarity with
product
Technical know-how
at staff level
Condition of physical
facilities
Patent security
Source: Adapted from Cavusgil et al. (1995).
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Selection criteria:
Marketing skills
Marketing
management
expertise
Ability to provide
geographic coverage
Experience with target
market
Customer service
On-time deliveries
Sales force
Market share
Participation in trade
fairs
Member in trade
associations
Source: Adapted from Cavusgil et al. (1995).
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Selection criteria:
Commitment
 Willingness to invest in
sales training
 Commitment to achieving
minimum sales targets
 Positive attitude
 Undivided attention to
product
 Willing to commit
advertising resources
 Willing to drop competing
product lines
 Volatility of product mix
 Percentage of business
with single supplier
 Willingness to keep
sufficient inventory
Source: Adapted from Cavusgil et al. (1995).
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Selection criteria:
Facilitating factors
Connections with
influential people
Working experience/
relationships with
other manufacturers
Track record with past
suppliers
Knowledge of
particular business
Government relations
Proficiency in English
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What is this?
What term is used to describe the
movement of goods and services
between suppliers and end users?
Logistics
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Figure 16.9
The export procedure
1
Exporter
Importer
4
2
Bank in
exporter’s
country
5
3
Import
warehouse
8
Manufacturing
6
Importer’s
bank
Customs
Secure transport
and documentation
7
Ship
9
Source: Albaum et al., 1994, p. 419.
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Most common
export documents
Transportation
Bill of lading
Dock receipt
Insurance certificate
Banking
Letter of credit
Commercial
Commercial invoice
Government
Export declaration
Consular invoice
Certificate of origin
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Factors affecting
transportation mode decision
Cost of different transport alternatives
Distance to the location
Nature of the product
Frequency of the shipment
Value of the shipment
Availability of transport
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Services provided
by freight forwarders
Coordination of transport services
Preparation and processing
of transport documents
Expert advice
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Factors affecting
level of inventory decisions
Order cycle
time
Customer
service levels
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Issues affecting
warehousing decisions
Where the firm’s customers are
geographically located
The pattern of existing and future
demands
The customer service level required
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Internet
distribution strategies
Present only product information on the Internet
Leave Internet business to resellers
Leave Internet business to manufacturer only
Open Internet business to everybody
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Figure 16.11 International
development positions
Source: McGoldrick and Davies, 1995, p. 7.
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What is this?
What term is used to describe the ability
of a channel member to control
marketing variables of any other
member in a channel at a different level
of distribution?
Channel power
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Figure 16.12 Channel
relationships and the
concept of trade marketing
Retailers’
objectives/
requirements
Consumer
satisfaction
Consumers’
objectives
Cooperation/conflict
Manufacturers’
channel
objectives
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What is this?
What term is used to describe the
importing and selling of products
through market distribution channels
that are not authorized by the
manufacturer?
Grey marketing
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Strategies to reduce
grey marketing
Seek legal redress
Change the marketing mix
product strategy
pricing strategy
warranty strategy
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DHL: A case study
 What are the macroeconomic drivers for the
growth of the logistic business?
 What are the most important issues in
keeping DHL’s international
competitiveness?
 How can DHL be perceived as a local
company in most countries of the world?
Requires web access
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For discussion (1)
 In attempting to optimize global marketing
channel performance, which of the following
should an international marketer emphasize:
training, motivation, or compensation? Why?
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For discussion (2)
 When would it be feasible and advisable for a
global company to centralize the coordination of
its foreign market distribution systems? When
would decentralization be more appropriate?
 Do grey marketers serve useful marketing
functions – for consumers and manufacturers?
 Why is physical distribution important to the
success of global marketing?
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For discussion (3)
 Discuss the reasons why many exporters make
extensive use of services of freight forwarders
 Discuss the implications for the international
marketer of the trend towards cross-border
retailing
 Many markets have relatively large numbers of
small retailers. How does this constrain the
international marketer?
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