Transcript 15 - rphilip

International Marketing
15th edition
Philip R. Cateora, Mary C. Gilly, and John L. Graham
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Introduction
15
• 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 is the most critical and challenging
task facing the international marketer
• Competitive advantage goes to the marketer best
able to build the most efficient channel from
among the alternatives available
Roy Philip
15-2
Overview
15
• Channel-of-distribution structures
– Import-oriented distribution structure, Japanese
distribution structure, and trends from traditional
to modern channel structures
•
•
•
•
•
•
Distribution patterns
Alternative Middlemen choices
Factors affecting choice of channels
Channel management
The internet
Logistics
Roy Philip
15-3
Global Perspective
Central Perk in Beijing
15
• All 4Ps of marketing – product, price,
promotion, and place- are important for
retailers, particularly the last
• IKEA opened its store in Beijing in 1999 and a
decade later, the Beijingers have embraced
IKEA’s European brand of minimalism
• IKEA offers affordable, modern furniture to an
emerging middle class clamoring to be the
“white collar”
• The promise of China’s middle class have girded
their investment in IKEA
Roy Philip
15-4
Channel-of-Distribution
Structures
15
• 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
– Goods pass from producer to user
Roy Philip
15-5
International Marketing
16th edition
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Import-Oriented
15
Distribution Structure (1 of 2)
• In an import-oriented or traditional distribution
structure:
– Importer controls a fixed supply of goods
– Marketing system develops around the
philosophy of selling a limited supply of goods at
high prices to a small number of affluent
customers
Roy Philip
15-7
Import-Oriented
15
Distribution Structure (2 of 2)
• 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
Roy Philip
15-8
Japanese Distribution
Structure (1 of 2)
•
Four distinguishing features
–
–
–
–
•
15
High density of middlemen
Channel control
Business philosophy
Large-scale retail store law
Changes in the structure
Roy Philip
15-9
Japanese Distribution
Structure (2 of 2)
15
1. A structure dominated by many small
middlemen dealing with many small retailers
2. Channel control by manufacturers
3. A business philosophy shaped by a unique
culture
4. Laws that protect the foundation of the system
Roy Philip
15-10
Retail Structure in Three Countries
15
Exhibit 15.1
Roy Philip
15-11
15-12
High Density of Middlemen
15
• Not unusual for consumer goods to go through
three or four intermediaries before reaching the
consumer
• Japan has a large number of independent
groceries and bakers (94.7% or all retail stores)
– Small stores account for 59.1% of retail food sales
• U.S. emphasis is on supermarkets, discount food
stores, and department stores
– Small stores generate 35.7% of food sales
Roy Philip
15-13
Channel Control
•
•
•
•
15
Inventory financing
Cumulative rebates
Merchandise returns
Promotional support
Roy Philip
15-14
Business Philosophy
15
• 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
Roy Philip
15-15
Large-Scale Retail Store Law
and Its Successor
15
• 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)
– 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
Roy Philip
15-16
Changes in the
15
Japanese Distribution System
•
•
•
•
•
Structural Impediments Initiative
Deregulation
Wal-Mart
“New” retailers
The Internet
Roy Philip
15-17
Trends: From Traditional 15
to Modern Channel Structures
• European retailers merging with former competitors
and other countries to form Europe-wide enterprises
• Foreign retailers attracted by high margins and prices
• The Internet may be most important distribution
trend
• Covisint
• GlobalNetXchange
• E-commerce
• 7-Eleven competes with FedEx and UPS
Roy Philip
15-18
Distribution Patterns
15
• Even though patterns of distribution are in a
state of change and new patterns are developing,
international marketers need a general
awareness of the traditional distribution base
• Nearly every international firm is forced by the
structure of the market to use at least some
middlemen in the distribution arrangement
• Only when the varied intricacies of actual
distribution patterns are understood can the
complexity of the distribution task be
appreciated
Roy Philip
15-19
International Marketing
16th edition
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Retail Patterns
15
• Size patterns
• Direct marketing
• Resistance to change
Roy Philip
15-21
Retail Structure in
Selected Countries
15
Exhibit 15.2
Roy Philip
15-22
15-23
Alternative Middleman
Choices
15
• 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
Roy Philip
15-24
International
Channel-of-Distribution Alternatives
15
Exhibit 15.3
Roy Philip
15-25
International Marketing
16th edition
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Home-Country Middlemen
•
•
•
•
•
•
•
15
Manufacturer’s retail stores
Global retailers
Export management companies (EMC)
Trading companies
U.S. export trading companies
Complementary marketers
Manufacturer’s export agent
Roy Philip
15-27
How Does an
EMC Operate?
15
Exhibit 15.4
Roy Philip
15-28
Home-Country Middlemen
15
• Webb-Pomerene export associations
• Foreign sales corporation
Roy Philip
15-29
Foreign-Country Middlemen
15
• Dealing directly with middlemen in the foreign
market gives international organizations the
advantage of shorter channels and deal with
middlemen in constant contact with the market
• Some of the more important foreign-country
middlemen are:
– Manufacturer’s representatives
– Foreign Distributors
Roy Philip
15-30
Government-Affiliated
Middlemen
15
• Marketers must deal with governments in every
country of the world
• Government purchasing offices
– Procure products, services, and commodities for
the government’s own use
– Work at federal, regional, and local levels
• Efficiency of public sector versus the private
sector
– Wal-Mart did better than FEMA after Hurricane
Katrina
Roy Philip
15-31
International Marketing
16th edition
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
Factors Affecting
Choice of Channels
1.
2.
3.
4.
5.
6.
15
Cost
Capital Requirements
Control
Coverage
Character
Continuity
Roy Philip
15-33
Channel Management
15
• Locating middlemen
• Selecting middlemen
– Screening
– The agreement
• Motivating middlemen
• Terminating middlemen
• Controlling middlemen
Roy Philip
15-34
The Internet (1 of 2)
15
• E-commerce
– Business-to-business (BSB) services
– Consumer services
– Consumer and industrial products
• E-commerce is more developed in U.S.
than in rest of world
• B2B enables companies to cut costs
– Reduces procurement costs
– Allows better supply-chain management
– Makes possible tighter inventory control
Roy Philip
15-35
International Marketing
16th edition
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
The Internet (2 of 2)
15
• Concern for E-vendors:
–
–
–
–
–
–
Culture
Adaptation
Local contact
Payment
Delivery
Promotion
Roy Philip
15-37
Logistics (1 of 2)
15
• Logistics management is a total systems approach
to the management of the distribution process that
includes all activities involved in physically
moving raw material, in-process inventory, and
finished goods inventory from the point of origin
to the point of use or consumption
• The physical distribution system involves more
than the physical movement in goods; it includes
the location of plants and warehousing,
transportation mode, inventory quantities, and
packing
Roy Philip
15-38
Logistics (2 of 2)
15
• Substantial savings can result from the systematic
examination of logistics costs and the calculation
of total physical distribution costs
• The concept behind physical distribution is the
achievement of the optimum (lowest) system cost,
consistent with customer service objectives of the
firm
• One of the major benefits of the European Union’s
unification is the elimination of transportation
barriers among member countries
Roy Philip
15-39
Summary
15
• 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 varies
– Nation to nation
– Continent to continent
• Information and advice are available relative to the
structuring of international distribution systems
• The Internet is challenging traditional channels, offering a
wider range of possibilities for entering foreign markets
Roy Philip
15-40