Slide 1Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20Slide 21Slide 22Slide 23Slide 24Slide 25Slide 26Slide 27Slide 28Slide 29Slide 30International Marketing ChannelsChapter 14McGraw-Hill/Irwin © 2005 The McGraw-Hill Companies, Inc. All rights reserved.PowerPoint presentation prepared by:Professor Rajiv MehtaAssociate Professor of MarketingNew Jersey Institute of TechnologyNewark, N.J.Chapter Learning Objectives1. The variety of distribution channels and how they affect cost and efficiency in marketing1. The variety of distribution channels and how they affect cost and efficiency in marketing2. The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods2. The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods3. How distribution patterns affect the various aspects of international marketing3. How distribution patterns affect the various aspects of international marketingChapter Learning Objectives4. The growing importance of e-commerce as a distribution alternative4. The growing importance of e-commerce as a distribution alternative5. The functions, advantages, and disadvantages of various kinds of middlemen5. The functions, advantages, and disadvantages of various kinds of middlemen6. The importance of middlemen to a product’s success and the importance of selecting and maintaining middlemen6. The importance of middlemen to a product’s success and the importance of selecting and maintaining middlemenIntroduction•Getting the product to the target market can be a costly process •Forging an aggressive and reliable channel of distribution may be the most critical and challenging task facing the international firms•Each market contains a distribution network with many channel choices whose structures are •In some markets the distribution structure is multi-layered, complex, inefficient, even strange•Competitive advantage will reside with the marketer best able to build the most efficient channelChannel-of-Distribution Structures•The distribution process includes the physical handling and distribution of goods, the passage of ownership (title), and the buying and selling negotiations between producers and middlemen and between middlemen and customers•Each country market has a distribution structure through which goods pass from producer to use•Within this structure are a variety of middlemen whose customary functions, activities, and services reflect existing competition, market characteristics, tradition, and economic development •Channel structures range from those with little developed marketing infrastructure such as those found in many emerging markets to the highly complex, multi-layered system found in JapanJapanese Distribution Structure1. a structure dominated by many small middlemen dealing with many small retailers—high density of middlemen, 2. channel control by manufacturers, 3. a business philosophy shaped by a unique culture, and 4. laws that protect the foundation of the system—the small retailer•Distribution in Japan has long been considered the most effective non-tariff barrier to the Japanese market The Japanese distribution structure is different enough from its U.S. or European counterparts•Distribution in Japan has long been considered the most effective non-tariff barrier to the Japanese market The Japanese distribution structure is different enough from its U.S. or European counterpartsIt has four distinguishing features:It has four distinguishing features:Channel Control in Japanese Distribution Systems1. Inventory financing with credits extending for several months.2. Cumulative rebates 3. Merchandise returns that are allowed to the manufacturer.4. Promotional support to intermediaries in the form of displays, advertising layouts, and management education programsControl is maintained through the following elements:Control is maintained through the following elements:Distribution Patterns1. Middlemen Services 2. Product Line Breadth 3. Costs and Margins 4. Channel Length5. Nonexistent Channels 6. Blocked Channels 7. Stocking8. Power and Competition•Distribution patterns are always evolving and new patterns are developing and marketing channels are not the same throughout the world•Distribution patterns are always evolving and new patterns are developing and marketing channels are not the same throughout the worldSome general distribution patterns that are similar globally include:Some general distribution patterns that are similar globally include:Retail Patterns1. Retail Size Patterns 2. Direct Marketing3. Resistance to Change4. Alternative Middleman Choices•International retailing shows even greater diversity in its structure than does wholesaling•International retailing shows even greater diversity in its structure than does wholesalingSome general retailing patterns include:Some general retailing patterns include:Home-Country Middlemen1. Manufacturers’ Retail Stores 2. Global Retailers 3. Export Management Companies 4. Trading Companies 5. U.S. Export Trading Companies 6. Complementary Marketers 7. Manufacturer’s Export Agent•Home-country middlemen, or domestic middlemen, provide marketing services from a domestic base and find foreign markets for products for local manufacturers•Home-country middlemen, or domestic middlemen, provide marketing services from a domestic base and find foreign markets for products for local manufacturersFrequently used types of domestic intermediaries include:Frequently used types of domestic intermediaries include:8. Home-Country Brokers 9. Buying Offices 10. Selling Groups11. Webb-Pomerene Export Associations 12. Foreign Sales Corporation 13. Export Merchants 14. Export JobbersForeign-Country Middlemen1. Manufacturer’s Representatives 2. Distributors3. Foreign-Country Brokers 4. Managing Agents and Compradors 5. Dealers 6. Import Jobbers, Wholesalers, and Retailers•Some of the more important foreign-country middlemen, who find markets for foreign manufacturers include:•Some of the more important foreign-country middlemen, who find markets for foreign manufacturers include:Factors Affecting Choice of Channels1. Identify specific target markets within and across countries.2. Specify marketing goals in terms of volume, market share, and profit margin requirements.3.