In International Distribution
n The firm sells to its customers:
n directly through its own sales force.
n indirectly through independent intermediaries.
n indirectly through an outside distribution system with regional or global coverage.
Channel Configurations
Channel Design Considerations
Ø Company objectives
n Determined by company objectives for market share and profitability.
Ø Customer characteristics
n What do they need, why, when, and how?
Ø Distribution culture
n The structural linkages and functional characteristics of existing channels.
Ø Competition
n What channels does the competition use?
Channel Design Considerations
Ø Character
n The nature of the product impacts the design of the channel.
Ø Capital
n Describes the financial requirements for setting up a channel system.
Ø Cost
n is the expenditure incurred in maintaining a channel once it is established.
Channel Design Considerations
Ø Coverage
n The number of areas in which a product is represented and the quality of that representation.
n Types of coverage
n Intensive
n Selective
n Exclusive
Channel Design Considerations
Ø Control
n The use of intermediaries, product type, and the marketer’s use of power will determine the amount of market control.
Ø Continuity
n Responsibility of the marketer and is expressed through market commitment.
Ø Communication
n Provides the exchange of information that is essential to the functioning of the channel.
n Social, cultural, technological, time and geographical distances may cause problems.
Intermediaries
n Types of intermediary relationship
n Distributorship
n Agency
n Type of exporting function
n Indirect exporting
n Direct exporting
n Integrated distribution
Intermediaries
n Screening Intermediaries
n Performance
n Professionalism
Channel Management
n Coordinating two independent entities with shared goals.
n The relationship needs to be managed for the long term.
n Factors complicating channel management
n Ownership
n Geographic, cultural, and economic distance
n Different rules of law
Gray Markets
(Parallel Importation)
Arguments for:
n The right to “free trade.”
n Consumers benefit from lower prices.
n Discount distributors have found a profitable market niche.
Arguments against:
n Gray marketers take unfair advantage of trademark owner’s marketing and promotion.
n Parallel imports deceive consumers by not meeting product standards or expectations of after-sale service.
The Solution to the Gray Market Problem?
n A contractual relationship that ties businesses together.