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Channel Objectives & Constraints Distribution Channels International Channel Innovation Channel Strategy for New Market Entry Physical distribution & logistics Case Example: Japan Summary

Learning Objectives
Recognize the complexity of global channels & distribution Know which characteristics influence the design of distribution channels for international markets Know how new developments reshape international distribution

Channel Objectives
Create utility of place, time & information Can be a source of competitive advantage Important because of number & nature of relationships Must analyze each market Must fit overall marketing objectives of company

International Channel Strategies

Two forms of channel strategy
direct involvement Own sales force, retail stores, etc. indirect involvement Independent agents, distributors, wholesalers

Characteristics Impacting on Channel Design and Strategy I

Customer characteristics
customer number, geographic distribution, income, shopping habits, reactions to different selling methods Need for multiple channels increases as the number of customers increased

Product characteristics
perishability, service requirements, bulk

Characteristics Impacting on Channel Design and Strategy II

Middleman characteristics
attitude towards the manufacturer selection & care of distributors & agents distributor & agent performance termination

Environmental characteristics
economic, social & political dimensions

Distribution Channels for Consumer Products

Door-to-door Manufacturer-owned store Franchise operations Combined structures

Top 4 Food Franchises Abroad

Chain: 1. McDonalds 2. KFC 3. Pizza Hut 4. Burger King
Source: Restaurant Business

Intl share 49% 52 35 21

Distribution Channels for Industrial Products

3 Options
Manufacturers sales forces Distributor Wholesaler B2B is rapidly growing

International Channel Innovation

Only in the most highly developed systems Directly related to level of economic development

Helped or hindered by local demographic/geographic factors, social mores, government action, competitive pressures & infrastructure
Accelerated by actions of aggressive individual firms

Strategy for New Market Entry

Use established channels, build own channels or abandon the market Must provide incentive to channel agents to take on a new product Either using existing channels or establishing their own direct distribution is expensive Direct distribution is most effective

Physical Distribution & Logistics

Order processing Warehousing Inventory management Transportation

Channel decisions are difficult to manage globally A global marketer must
tailor the marketing program to different types of channels or introduce new retail concepts

Retailing will see an increasing trend towards globalisation of operations