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International Channels of
Distribution
How do you get the
product/service to foreignconsumers?
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Distribution Plan
1. Determine which selling approach is
best.
a. Consult Country Commercial Guides(CCGs) "Marketing U.S. Products and
Services in (country) chapter
b. Industry Subsector Analyses (ISAs)
2. Find distributors.3. Find end foreign buyers (trade leads).
http://www.state.gov/www/about_state/business/com_guides/index.htmlhttp://www.usatrade.gov/website/Website.nsf/WebBySubj/MarketResearch_AboutMarketResearchhttp://www.usatrade.gov/website/Website.nsf/WebBySubj/MarketResearch_AboutMarketResearchhttp://www.state.gov/www/about_state/business/com_guides/index.html7/29/2019 Ch 14 Channels
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For example, How would you distribute shoes in Italy?
Shoes Distribution Varies Across Countries
Producer Producer Producer Producer
Agents
Wholesaler
Retailer
ConsumerConsumer Consumer Consumer
RetailerRetailer
Wholesaler
A B C D
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Germany
Organized Independents
(buying groups)
35%
Major Shoe chains 29%
Mail 7%
Department Stores 6%
Hypermarkets 6%
Discount Stores 6%Independent Shoe Stores 4%
Other retailers 7%
100%
For Example German Vs. French Shoe Distribution
DistributionLondon: Euromonitor, 1988, pp. 162, 171
France
Independent Shoe
stores
56%
Direct Sales 14%
Clothing stores 2%
Department stores 2%
Variety stores 1%
Other retailers 25%
100%
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Who are Your Customers/ What Brands Styles Do They Buy?
Where Do They Shop?
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Would They Shop in Specialty Stores?
Distributing Shoes in Italy j99
Bruno Magli
Gucci Childrens
Shoes E400
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Outdoors? Shoe Stores? Specialty Stores?
Distributing Shoes in Italyj99
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Should You Set Up Your Own Store Chain?
Distributing Shoes in Italyj99
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Potential Italian Shoe Distributors
ITALYBOLOGNAFIEREPiazza Constituzione, 6 - 40128 BOLOGNATel: 39 051 282111 - fax: 39 051 282333E-mail:[email protected]
CENTRO SERVIZI E.F.D.Contact: Dott.ssa Chiara PadovaniVia B. Franceschini, 5 - 50142 FIRENZETel: 39 055 7398932 - Fax: 39 055 7398935E-mail:[email protected]
FIERA MILANOLargo Domodossola, 1 20145 MILANOTel: 39 2 49971 - Fax: 39 2 49977244730 Fifth Avenue, Suite 600 New York, NY 10019 (USA)Tel: 1 212-459-0044 - Fax: 1 [email protected]
LINEAPELLE - ANTEPRIMA - PREVIEWVia Brisa, 3 - 20123 MILANOTel: 39 02 8807711 - Fax: 39 02 860032E-mail:[email protected]
AREAPELLESegreteria: Via Brisa,3 20123 MILANOTel: 39 02 801020 - Fax: 39 02 72000120E-mail:[email protected]
FIRENZE EXPO SpaFirenzeTel: 00 39 55 49721 - Fax: 00 39 55 490573
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://www.lineapelle-fair.it/mailto:[email protected]://www.trendselection.com/mailto:[email protected]:[email protected]:[email protected]://www.bolognafiere.it/mailto:[email protected]7/29/2019 Ch 14 Channels
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What is a Channel of Distribution?
Process including the physical handling
and distribution of goods, the passage of
ownership (title) and the buying and selling
negotiations between producers andmiddlemen and between middlemen and
customers.
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What Is An International Marketing Channel?
Middlemen in the process betweenManufacturer& Final InternationalConsumerwho may or may not
Physically handle & distribute the goodsAssume title to goods
Negotiate buying and selling
Middlemen used when the can performfunctions more efficiently thanmanufacturers can
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Marketing Channels for Consumer
Goods and Services
Producer Producer Producer Producer
Agents
Wholesaler
Retailer
ConsumerConsumer Consumer Consumer
RetailerRetailer
Wholesaler
A B C D
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Marketing Channels for Industrial
Goods and Services
Producer Producer Producer Producer
Agent
Wholesaler
Industrial BuyerIndustrial Buyer Industrial Buyer Industrial Buyer
Wholesaler
Agent
A B C D
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Channel Decisions When Entering New Country
Whether to Use Established Channels or BuildOwn Channels?
Whether to Use Home-country (located in
producing firms country) orHost-country(located in foreign country) middlemen?
Which intermediaries?
How many intermediaries?
Exclusive one or a select few Selective more than a few, less than all
Intensive as many outlets as possible
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Examples of Home-Country Middlemen(1) Global Retailers
Global Retailers
http://edweb.tusd.k12.az.us/sped/images/reallifephotos/Wal%20Mart.jpghttp://edweb.tusd.k12.az.us/sped/images/reallifephotos/Wal%20Mart.jpg7/29/2019 Ch 14 Channels
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Examples of Home-Country Middlemen(2) Export Management Company
Export Management
Companies
Independent firm which acts
as the exclusive export
sales department for non-competing firms;
Typically represent smallercompanies in specialized
industries
Ranges in size from 1 to 100
employees and handles
10% of exportedmanufactured goods
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Example of Export Management Company
You sell to AMEX; We take it abroad & absorb all risks
Amex Export Functions:
We purchase products from our business partners for resale in international markets.
We pay for products purchased on terms similar to our business partners' standarddomestic terms.
We've developed over the past twenty years a unique system and strong know-howto select, appoint, and manage international distributors to market these productsoverseas.
We attend trade shows, implement advertising programs, and translate material.
We are responsible for invoicing, collection and bear the responsibility for payment.
We handle shipping details, customs forms, export licensing, and all relevant exportdocumentation.
We constantly research and appraise market conditions overseas, and provide usefulfeedback to ourbusiness partners to incorporate in their marketing, and product
development plans. We travel, meet face-to-face with our customers and see first-hand their needs and
marketing efforts.
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EMC Limitations
Relatively small with limited financial
resources; may be unable to stock product
or offer financing to foreign customers
Focus efforts on products that bring in
most profits
Most do not cover Canada
Manufacturers may lose control over who
buys, selling price, promotion, etc.
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Examples of Home-Country Middlemen
(3) Export Trading Company
Export Trading Companies
Largercompanies that specialize in providingintermediary services, risk reduction, financial
assistance, etc.
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Export Trading Companies
Export Trading CompaniesA typical ETC is more market-orientated and transactions driventhan a typical EMC. An ETC most often acts as an independentdistributor creating transactions by linking domestic producers andforeign buyers.
As opposed to representing a given manufacturer in a foreign
market, the ETC determines what U.S. products are desired in agiven market and then work with U.S. producers to satisfy demand.ETCs can perform a sourcing function searching for U.S. supplies tofill specific foreign requests for U.S. products.
A special kind of ETC is a group organized and operated byproducers. These ETCs can be organized along multiple or single-
industry lines and can also represent producers of competingproducts.
Most ETCs take title to the goods involved, but some will work on acommission basis.
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Examples of Home-Country Middlemen(4) Agents/Brokers
Home country agents/brokers
Do not take title;
Shorter term relationship;
Specialize in certain products
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Examples of Host (Foreign) Country
Middlemen
(1)Merchant middlemen (take title &
possession)
Distributors/Wholesalers
Dealers / Retailers (Ongoing relationship to
sell to customers)
(2)Agents & brokers (do not take title &
seldom take possession)
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Home-country or Host-country Middlemen?
Use Home-country or Host-country
middlemen
Select Home-country middlemen if you do
not wish to enter or do not have capability toenter foreign market
Select Host-country middlemen if you seek
greater control over marketing mix; have apresence in the foreign country
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Marketing Channels DifferAround The World in
Services they perform
Breadth of lines they carry
Costs and trade margins
Length of channel - long vs. short
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Selecting Marketing Channels
Marketing channel decisions are among
the most complex & challenging facing the
firm
Each channel creates different level of
sales & costs
Firm usually committed to decision for long
time
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How Do you Select Channel?
Cost Transporting & storing goods
Capital Requirements
Control
Coverage
CharacterDoes it fit the character of the company and the market?
Continuity Can you foster loyalty among members?
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Locating Middlemen
U.S. Department of Commerce;
Directories;
Foreign Chambers of commerce; Middlemen associations;
Internet services, e.g.
www.tradecompass.com Carriers e.g. shipping companies
http://www.tradecompass.com/http://www.tradecompass.com/7/29/2019 Ch 14 Channels
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Two basic sources of "buy" leads:
The ones you or your reps develop first-hand
Second hand leads -- the ones you hear or read
about Good trade lead sources include
U.S. Governments Trade Opportunity Program found on theNTDB,
FAS Agricultural Trade Leads,
Commercial News USA trade leads, Global Technology Network.
World Trade Center(WTC) network, and many states havetheir own overseas trade offices.
http://www.stat-usa.gov/top.nsf/ByDate?OpenViewhttp://www.fas.usda.gov/scripts/agexport/tradeleadquery.asphttp://www.importnewsusa.com/tradeleads/index.asphttp://www.usgtn.net/http://www.wtcanet.org/http://www.wtcanet.org/http://www.usgtn.net/http://www.importnewsusa.com/tradeleads/index.asphttp://www.fas.usda.gov/scripts/agexport/tradeleadquery.asphttp://www.stat-usa.gov/top.nsf/ByDate?OpenView7/29/2019 Ch 14 Channels
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Locating Information About Channels of
Distribution in Foreign Country
Commercial Guide - Marketing U.S.
Products and Services section
Articles on distribution country product
ABI-Inform
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For Example, How are Cars Sold in China?
Buick Succeed in China By Laying Stress on Quality,Robert Simison,Wall Street Journal, Oct. 26, 1999
Most cars are sold not by conventional
dealers but by independent distributors
and traders. Typical is the Asia Games
Village parking lot in Beijing, which hasbecome a sort of flea market for dozens of
small-time traders of new and used
vehicles.
For Example When Opening Retail Outlet Where
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For Example, When Opening Retail Outlet, Where
Do You Locate, How Many?1st Starbucks Herald Plan ToGive Parisians Caf Alternative,Jonathan Shenfield, The Commercial Appeal,Memphis, TN, Jan. 17, 2004The first shop (Starbucks) near the Paris
Opera, is situated to draw both tourists
and localsThe chain began to establish
itself across Europe nearly six years ago,starting with Britain, Switzerland and
AustriaAnother outlet opens Monday in
the La Defense business district, thesecond of about 10 planned for Paris.