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Channel-of-Distribution Structures
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 through which goods pass from producer to user.
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In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers.
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Channel Control
1. 2. 3. 4. Inventory financing Cumulative rebates Merchandise returns Promotional support
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Business Philosophy
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
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Distribution Patterns
General patterns
Middlemen services Line breadth Costs and margins Channel length Nonexistent channels Blocked channels Stocking Power and competition
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Agent middlemen represent the principal rather than themselves Merchant middlemen take title to the goods and buy and sell on their own account
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Home-Country Middlemen
Manufacturers retail stores Global retailers Export management companies Trading companies U.S. export trading companies Complementary marketers Manufacturers export agent Home-country brokers Buying offices
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Foreign-Country Middlemen
Manufacturers representatives Distributors Foreign-country brokers Managing agents and compradors Dealers Import jobbers, wholesalers, and retailers
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Government-Affiliated Middlemen
Marketers must deal with governments in every country of the world Products, services, and commodities for the governments own use are always procured through government purchasing offices at federal, regional, and local levels Efficiency of public sector versus the private sector
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The Internet
E-commerce is used to market:
- Business-to-business (BSB) services - Consumer services - Consumer and industrial products
E-commerce is more developed in the U.S. than in the rest of the world B2B enables companies to cut costs in three ways:
- Reduces procurement costs - Allows better supply-chain management - Makes possible tighter inventory control
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Summary
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 may vary from nation to nation or from continent to continent. Information and advice are available relative to the structuring of international distribution systems. Traditional channels are being challenged by the Internet, which is offering an ever-wider range of possibilities for entering foreign markets.
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