INTERNATIONAL DISTRIBUTION CHANNEL

BY: DEBANGSHU S. ROY DIVYA SHARAD LAVEENA SACHDEVA PREETI KUKREJA TANUJ KALRA VAIBHAV VISHNOI
1 5/1/2012

 Distribution channel: system of

marketing institutions that promotes the physical flow of goods and services, along with ownership title, from producers to consumer or business user; also called a Marketing channel.
2 5/1/2012

3 5/1/2012 .

The Role of Distribution Activities in Marketing  Distribution  Physically moving products and establishing intermediary relationships to support such movement. 4 5/1/2012 .  Channel of Distribution  The system of intermediaries (business relationships) established to guide the movement of a product.  Physical Distribution (Logistics)  The activities of distribution involved in the physical relocation of products.

• Assorting – bringing together similar lines of goods. • Merchant middlemen . • Agents/brokers .take title to the goods 5 distributed. • Provide efficient distribution of the product. • Shifting risks. 5/1/2012 . • Breaking bulk – sell to customers in smaller quantities.Functions of Intermediaries • Perform the marketing function better.distribute goods only.

6 5/1/2012 .  Dual distribution  A distribution system with more than one channel.Types of Distribution Channels  Direct channel  A distribution system without intermediaries  Indirect channel  A distribution system with one or more intermediaries.

Alternative Channels of Distributio n 7 5/1/2012 .

Dell Dell Computer: A Direct Seller of Computers 8 5/1/2012 .

Global Perspective Global Perspective: “500 Million Sticks of Doublemint Today – Billions Tomorrow”  Most challenging aspect of selling the gum for 9 Doublemint is how to get the gum through China’s distribution channels:  “Mastering the distribution system is the single most important challenge of China’s economic revolution”  Finding reliable distributors is a challenge  Many are state owned and have little incentive to push one brand over another  Doublemint gum found a way to distribute their products effectively thru China 5/1/2012  Note: Doublemint has a 91% market share in .

Selection of channel The selection of distribution is affected by many of factors. It may include the buying pattern of consumer. or auto mobile. type of the product is perishable. The main affecting factors are following: Organization objectives Mode of Transport Type of product Nature and extent of market Existing channel for comparable product Buying habit of customers 10 Channel Availability 5/1/2012 . which play significant role while choosing the channel for distribution. weight and bulk and it also depends on the company's resources.

Alternative Middlemen Choices  Classification of Middlemen  Agent Middlemen  Do not take title to the goods distributed  Less risk (manufacturer assumes risk)  Merchant Middlemen  Take title of goods being distributed (manufactures have less control)  Motivated by profit. Foreign-Country Middlemen 11 5/1/2012 . Home-Country Middlemen  2. tend to be less loyal to one brand  Alternative Types of Middlemen:  1.

International Channel-of-Distribution Alternatives Home Country Foreign Country The foreign marketer or producer sells to or through Domestic producer or marketer sells to or through Foreign consumer Open distribution via domestic wholesale middlemen Exporter Importer Foreign agent or merchant wholesalers Foreign retailers Export management company or company sales force 12 5/1/2012 .

• Provide marketing services from a domestic base.Alternative Middlemen Choices— Home Country • They’re located in Firm’s own country. • Employed by marketers with less international sales volume and inexperienced with foreign markets. • Global Retailers • Export Management Companies • Manufacturers Export Agent • Home-Country Brokers • Export Merchants • Piggy Back 13 5/1/2012 .

etc. Brazil. ROEBUCK are booming domestic middlemen for international middlemen. 14 5/1/2012 . A washington DC company marketing 10 US Orthopedics manufacturer products worldwide. Companies adhering to the laid requirements gain access to Overseas markets of Argentina. EXPORT MANAGEMENT COMPANIES They work under name of manufacturers and function as a low cost. independent marketing department. For firms with relatively small international volume or which are unwilling to involve personnel in international function.HOME COUNTRY MIDDLEMEN GLOBAL RETAILERS WAL-MART. canada.

MANUFACTURER’S EXPORT AGENT •An agent firm provides selling service for manufacturers. •Operates on a straight commission basis and covers only one or two markets. HOME COUNTRY BROKERS •They perform low cost agent services. . •They specialise in one or more particular commodity and for the same maintain contact with major producers and 5/1/2012 15 purchasers. •Provides services similar to EMCs and does business in their own name. •Perform function of bringing bringing buyers and sellers together.

EXPORT MERCHANTS •Intermediaries who take title to and possession of the products they carry •Responsible for shipping and marketing the products in the target market •Carry competing brands Examples: export jobber. who carries commodity goods. PIGGYBACK MARKETING • channel innovation that has grown in popularity • One manufacturer distributes product by utilizing another company’s distribution channel • Requires that the combined product lines be complementary and appeal to the same customer 16 5/1/2012 . but does not take physical possession of the goods.

Alternative Middlemen Choices— Foreign Country • Distributors • Foreign Country Brokers • Managing Agents • Dealers • Wholesalers and Retailers 17 5/1/2012 .

• Brokers Foreign brokers are part of small brokerage firms operating in a country. servicing.• Distributor Is a merchant middlemen with close cooperation to the manufacturer Functions are.control over prices. Compensation is on the basis of cost plus a specified % of profits of the managed company. inventories. Function in good continuing relationships with customers and speedy market coverage at low costs 18 5/1/2012 . • Agent Conducts business within a foreign nation under contract arrangement with parent country.

Massey fergusson and caterpillar tractor company • Wholesalers and Retailers Engage in direct importing for their own outlets and for redistribution to smaller middlemen. Ex. Large retailers perform wholesaling to local shops and dealers.• Dealers Independent merchant middlemen with the supplier company having equity in it. 19 5/1/2012 .

Factors that affect choice of Channels  The “6 C’s” need to be considered:  1. Cost  Investment cost of developing channel. Capital requirements  How much capital is required  3. and cost of maintaining channel  2. using middlemen 20 5/1/2012 . Control  How much control is desired  Example: company’s own sales force exerts most control vs.

Factors that affect choice of Channels (Cont. Continuity  Will there be longevity issues  How to build loyalty with middlemen is much more difficult than a company’s own sales force 21 5/1/2012 . Coverage  Full market coverage. Character  Channel of the distributions system must meet the “character of the company” seeking to do business  6. or targeted coverage to densely populated areas…  5.)  The “6 C’s” need to be considered (cont):  4.

Developing the “Agreement” 22 5/1/2012 . of Commerce. etc. Selecting. Dept.Locating. reputation. productivity. commercially published directories  Selecting Middlemen  Two steps  1.  Sources to use:  U. managerial stability. Screening  2.S. Motivating and Terminating Middlemen  Factors affecting locating middlemen:  Things to look for:  Financial stability. foreign consulates.

Selecting. payment of bills and profitability. services offered. 5/1/2012 . market coverage. advertisement. communications. pricing. psychological rewards.)  Motivating Middlemen  Common methods used to motivate middlemen:  Financial rewards. company support and corporate rapport  Terminating Middlemen  Must consider things such as:  Legal protection  Control over middlemen  Controlling Middlemen  Control over the system (distribution network)  Control over the middlemen  23 Volume of sales.Locating. Motivating and Terminating Middlemen (Cont.

24 5/1/2012 .

  .

.7033.8.4-. 8/897-:943.09903.4:943 O 3/370.  ..3/.9.2.8907390/897-:943889028908302489 25479.097:3.98 0110.94180390:21474:-0239 8 4940990:2974:3.0 4-. 80.033. 438%424774 O 489.!07850..9.7098.3308 O . O 4904:-0239 .70....3.90430/.07.4342.34907 O 4:-0239 :214:3/.030 O .0945:8430 -7.7089.039.030413.3/4.94/897-:90907574/:.-0/897-:94788.!07850..0  43$9.9.850.39.8414:-0239 %4/.

.

  .

9 .:8942078 .701443 7.3/9..425.425.94341.9:70. 831.330147/897-:943 92.330..9 :3.-9  .709 893.3/-:..-0 47.5.3 87084:7.3.84/0503/84390.397400.110.3.985078..438:207 9504190574/:..:94 24-0 09.931.385479 %5041574/:.-941.3411.9478 .9.94341/897-:9438.08 %02.08 4/041%7.110.9907341.90/-2.3/09039412.:/0 90-:35.330 %0800.3.330147.$00.9478..9434-0.-0574/:..7.448390..

.

  .

3:1.90/-57419 903/94-00884.94430-7.08 O ...9..9073..3/ O 9073.39//0203 O %.0990949044/8/897-:90/ O 08878 2.0%50841//0203 O  420 4:397//0203 O  4703 4:397//0203  .43974 O 49.881...88:20878 O 07.3:1.0088.9:708.9:707.09904144/8-03/897-:90/ 2.9.0//02034.94341//0203 O 039//0203 O 43499.

.

  .

408.0 2//0203 547907 2547907 4703.347.078 54792.9.7090780894 47974: 4703 .39073.0  ..08 4204:397 47034:397 %0147032.39 408.7090747 574/:.438:207 503/897-:943.078 4703 709.425.039 47207.3..943.07 472..425.078089447974: 42089.574/:.330 41 897-:943 9073. /42089.02039 .3 8.08147.

.

  .

308 W ./02.02039425..3:1.3.078 W 5479..08.081742.7098 W 4-.9073.-.#09./42089.709078908839073.3/ 3050703.8..9..7093807.0/9147032.9:70785479039 W 420 4:39774078 W 547907.0//02034.90/372 843.80 W 2540/-2.  .943..398 W !.4:397 W !74.4:20.08 4204:397 W%0 704.

.

  .

/706:7020398..3.7093 &$ 79450/./0739490.308.3:1.32.9:707574/:.489 3/0503/039 2.82.0780.943 .70-4423/42089.0 50784330339073.943.1:3.3/1:3.98 47//0  .83943 .3.943.943.82./. 2//0203 425. .20412..792039 471728970.2//020314739073.  &%#  #%#$  #% # &.082..8.7093/05.3:1.39073...9.9:7078.943. 09. 7.4..4:2047.08894 . ! #%% !$ %047:3/073.425..4.709841 70393.70:33943.

.

  .

3:1..01472.9.08 W!0714721:3.47574/:.39..897.90843.&%&## $! #%% W3.4228843-.3./08807..9:7078 W 507.0882.3/80078940907 W%0850..4224/9.3//408-:830883907433.20   &%## #$ W%050714724.80 34304724705.3/.4..7.078.489..79..3/147908.039807.:.039172574.20 2.8078   .94341-733-733 -:078.3/5:7.439.992.0784343047942.7098 W!74./08803807.88.7948.

.

  .

425093-7.709 2...9890 .709390574/:..709 W...3/2.9308-0.099094.330 W #06:7089.7.42502039.:894207  .9-:93.77.3/ .42-30/574/:.548808843419044/8 !#% W .3 8 /897-:943.425.4224/944/8 -:9/4083499.9439.3/5488088434190574/:.79 W 302.3/8 .990.34907.3:1..2508 054794--07 4.7708..9.87433545:.330334.20.94908.9:707/897-:908574/:.77 W#085438-01478553.550.0 58.70849.983909.! #%#%$ W390720/.

.

  .

9.078.08 47034:397 W 897-:9478 W 47034:39774078 W .078  .3.30398 W 0.078 W 408.0//02034.3/#09.9073.

.

  .

.709.943:3/07.4895:8.7039.0/.9438..0.933.70 .10/4157419841 902.705. .9 .017284507.:8942078.425.9438589.4393:370.4:397 :3.392//02039..794182.W 897-:947 8.147033.4898  .44507.07.0757.08 3.8841.98-:8308893.4:397 425038.439744.94394902.0394708 807..4397.3.94384390-.480.94.207.3 W 74078 4703-74078.3 W 039 43/:.30203995.3:1.77.4.-7407.9:707 :3.943344/.3/8500/ 2.850.

.

  .

70709.078 3/0503/039207...947.3.3/14770/897-:94394 82.078.392//02039908:5507.425.078 3.3/.797.3 W 408.3//0.072//0203 .3944.3/#09.8458.078  .9254793147907434:9098.425.3 06:939  .03/70.W 0.880107:8843 .9075...0785071472408..

.

  .

.48941/0.706:7020398 O 42:.489412.08147.3 8438.8706:70/ O  43974 O 42:.425.39.0007982489.59.59...438/070/ O  489 O 3.0453.33.110...330 O  .4.250.43974.9.8 :83 2//0203  ..3/.439748/0870/ O ..9.041.330.3308 O %0  8 300/94-0.94789.0892039.

.

  .

3 8438.3.0 479..439  O  4.0 O :2.9074190.07.0  .4.:99.709.90/.7..07.3304190/897-:9438889022:89200990 .110..425.70.94789.4.7090/.988:08 O 494-:/4.9.907 O ..2470/11.3  800394/4-:83088 O  4393:9 O 9070-0430..4.438/070/ .08147.8 O  .9.3308 439 O %0  8 300/94-0. .425.094/0380545:.7.041.07.992//020382:.

.

  .

93..0 14703.9...4.93 49.943 09.-9 574/:.0894:80 O & $ 059 4142207.3.89.934..3.93//0203 O .9 705:9.110.932//0203 O %389444147 O 3.89.07.9478.438:.70033 O  0.5:-80//70... O $4:7.908 .-9 2.94708 O $00.93//0203 O %489058 O  $.93 $00.045390 7002039  .3/ %0723.42207.

.

  .

.3/ %0723.203941-8 .7/8 .93//0203 O :89.70.93 49.709..55479 O %0723.08411070/ 57.07.079088902 /897-:94330947 O 439744.902//0203 O 3.-9 ..44.072//0203 O 439743//0203 O 439744.8 O 0.422:3.3.57490.4.93.079802039 5.3 .943 O 439744.0 807..93//0203 439 O 49.7/8 58...38:55479.93//0203 O 422432094/8:80/94249.3/57419.07902//0203 O  '4:20418.4..9438 ..70.425.907.08 2.438/079388:.47547..93 $00.3/ ./.

.

  .

 .

.

  .

Sign up to vote on this title
UsefulNot useful