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8

Distribution
Channels and
Global Markets

PowerPoint Presentation by
Ian Anderson, Algonquin College

Chapter 8

Copyright 2010 by Nelson Education Limited.

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Looking
Looking Ahead
Ahead
After studying this chapter, you should be able to:
1. Explain the role of distribution in marketing.
2. Describe the major considerations in structuring a
distribution system.
3. Discuss global marketing.
4. Describe the initial steps of a global marketing effort.
5. Identify sources of trade and financing assistance.

Chapter 8

Copyright 2010 by Nelson Education Limited.

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The
The Role
Role of
of Distribution
Distribution Activities
Activities
in
in Marketing
Marketing
Distribution
Physically moving products and establishing intermediary
relationships to support such movement.

Physical Distribution (Logistics)


The activities of distribution involved in the physical
relocation of products.

Channel of Distribution
The system of intermediaries (business relationships)
established to guide the movement of a product.
continued
Chapter 8

Copyright 2010 by Nelson Education Limited.

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The
The Role
Role of
of Distribution
Distribution Activities
Activities
in
in Marketing
Marketing
Functions of Intermediaries
Perform the marketing function better.
Provide efficient distribution of the product.
Breaking bulk sell to customers in smaller quantities.
Assorting bringing together similar lines of goods.

Shifting risks.
Merchant middlemen - take title to the goods distributed.
Agents/brokers - distribute goods only.
continued
Chapter 8

Copyright 2010 by Nelson Education Limited.

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The
The Role
Role of
of Distribution
Distribution Activities
Activities
in
in Marketing
Marketing
Types of Distribution Channels
Direct channel
A distribution system without intermediaries

Indirect channel
A distribution system with one or more intermediaries.

Dual distribution
A distribution system with more than one channel.

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Alternative
Alternative
Channels
Channelsof
of
Distribution
Distribution

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Copyright 2010 by Nelson Education Limited.

Exhibit 8-1
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Structuring
Structuring aa Distribution
Distribution Channel
Channel
Important Factors in Building a Distribution
Channel
Costs associated with establishing a direct
channel distribution
Coverage is increased through the use of indirect
channels of distribution.
Control is enhanced using a direct distribution
channel.
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Copyright 2010 by Nelson Education Limited.

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Determining
Determining the
the Scope
Scope of
of
Physical
Physical Distribution
Distribution
Transportationwhich mode to use?
Common carriers
Transportation intermediaries available for hire to the general
public.

Contract carriers
Transportation intermediaries that
contract with individual shippers.

Private carriers
Lines of transport
owned by shippers.

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Copyright 2010 by Nelson Education Limited.

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Determining
Determining the
the Scope
Scope of
of
Physical
Physical Distribution
Distribution
Storage
Lack of storage space is a common problem.

Materials Handling
Protecting the firms output during warehousing .

Specifying Responsibility for Delivery


Terms
Paying freight costs.
Selecting the carriers.
Bearing the risk of damage .
Selecting the modes of transport.
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Copyright 2010 by Nelson Education Limited.

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Small
Small Businesses
Businesses as
as Global
Global Enterprises
Enterprises
Globalization
The expansion of international business,
promoted by converging market preferences,
falling trade barriers, and the integration
of national economies.
Size does not limit a firms international
activity, and small companies often
become global competitors to take
advantage of their unique resources.

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Copyright 2010 by Nelson Education Limited.

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Emerging
Emerging Global
Global Markets
Markets

Exhibit 8-2
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Before
Before Going
Going Global
Global
Decide if firm is up to the task of globalization.
Firms need to obtain adequate, initial exporting knowledge

Study the different cultural, political and business practices in


foreign markets.
Identify viable sales prospects abroad
Understand business protocols

Be prepared to modify products


to meet design specifications
that may vary from country to
country.
Select suitable target markets abroad
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Copyright 2010 by Nelson Education Limited.

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Questions
Questions to
to Consider
Consider Before
Before Going
Going Global
Global

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Copyright 2010 by Nelson Education Limited.

Exhibit 8-4
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Preparations
Preparations for
for Global
Global Marketing
Marketing
Researching a Foreign Market
Secondary sources of information
Department of Foreign Affairs (DFAIT)
Canadian Commercial Corporation (CCC)
Canadian International Development Agency (CIDA)
Statistics Canada
Business Development Bank
Export Development Canada
Canadian Trade Commissioner
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Export
Export Services
Services of
of the
the Department
Department of
of
Foreign
Foreign Affairs
Affairs and
and International
International Trade
Trade

Export Information Kit


Export Counselling
World Information Network for Exporters (WINS)
International Trade Data Bank
Overseas Trade Fairs
Trade Leads and Trade Missions
Internet Resources

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Assistance
Assistance for
for Global
Global Enterprises
Enterprises
Connections With International Customers
Trade Leads
Trade Missions
Trade Intermediaries
Export management companies
Export trading companies
Export agents, merchants,
or remarketers
Piggyback marketers
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Risk
Risk Levels
Levels and
and Levels
Levels of
of Involvement
Involvement

Exhibit 8-5
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Strategy
Strategy Options
Options for
for Global
Global Firms
Firms
Foreign Licensing
Allowing a company in another country to purchase the
right to manufacture and sell a companys products in
international markets
Licensee
The company buying the licensing rights

Licensor
The company selling the licensing rights

Royalties
Fees paid by the licensee to the licensor
for each unit produced under a licensing contract
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Copyright 2010 by Nelson Education Limited.

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Challenges
Challenges to
to Global
Global Business
Business
Political Risk
The potential for political forces in a country to
negatively affect the performance of businesses operating
within

Economic Risk
The probability that a government will mismanage its
economy and thereby change the business environment in
ways that hinder the performance of firms operating
there.
Exchange ratesthe value of one countrys currency
relative to that of another country.
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Sources
Sources of
of Trade
Trade and
and Financing
Financing Assistance
Assistance
Financing and Information
Factoring Houses
Export Development Canada (EDC)
FITT (Forum for International Trade Training)
Private banks
Letters of creditan agreement issued by a bank to honour a draft or
other demand for payment when specified conditions are met.
Bill of landinga document indicating that a product has been shipped
and the title to that product has been transferred

Chapter 8

Copyright 2010 by Nelson Education Limited.

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