International Distribution and Logistics

Swatchs channel design Todays system of exchange Rationalising local channels Wholesaling Nikes Do it yourself Retailing Creating new channels Kodaks own airfreight hub Global logistics

Global Channel Design

Chosen intermediaries must meet criteria work closely with distributors build sustain brand avoid discounting shops in shops approach e.g department stores

Todays system of exchange

Promotion Contact Negotiation

Producers

Transporting and storing Financing Packaging Money Goods

Users

Rationalising Local Channels

Changing distributors - where a poor job is being done e.g. Nike took on distributors Dual distribution - multiple channels may emerge e.g Lucky Goldstar entry from Korea into in USA television market (OEM deal with Sears, later under own brand name Gold star later LG)

Wholesaling
Vertical integration
power and competition 80/20 rule e.g. Malaysia a dozen European import houses handle half of the trade, whilst hundreds of smaller companies handle the remainder

Efficiency
trend towards integration by technology e.g. Wal-Mart

Types of wholesaler
fit all bills e.g. full-service wholesalers

Nikes Do it yourself
1970s independent distributors successful brand at home 1980s established own subsidiaries overseas Now controls most subsidiaries even bought some distributors

Retailing
Middlemen who sell directly to the consumer Retailing and lifestyles
many in developed world retailers are globalising

Problems for marketer?

Gillette blades through drugstores in USA, tobacco shops in Italy, department stores in Germany, street in Moscow, counters in Thailand, travelling vans in India

 Retailing is dynamic Innovative over recent years

self-service discounting vending machines mail-order houses fast-food globally diffused

Creating New Channels

Global retailing
success for Carrefour in Brazil and Argentina Marks and Spencer had problems in Canada and pulled-out

Global Logistics
Focus on channels within a country
the transportation and storage activities necessary to transfer the physical product from manufacturing plants and and warehouses in different countries to the various local market countries Johansson (1999)

Supply chain management

e.g. Nissan trucks sold in France come from their Tennessee plant in US,

Competition and technology

 Air Express e.g. FedEX, and Airborne Ocean carriers

Global carrier alliances e.g. Sea-Land Service of Seattle and Maersk of Denmark have a global partnership.

Overland transportation
roll-on-roll-off (RORO) containers are moved from ships directly onto rail (USA)

Warehousing and inventory management

e.g. SKF swedish roller-bearing cos new distribution centre in Belgium reduced distribution points from 24 to 5 .

centralized

Parallel Distribution Gray Trade is parallel distribution of genuine goods by intermediaries other than authorised channel members. Reasons
Wide price discrepancies Limited availability Inexpensive logistics Floating exchange rates

 Effects of gray trade

Erode brand equity Strains relationship with authorized channel members Leads to legal labilities Complicate global marketing strategies

 Channel action against Gray trade Supply interference : relationship building with distributers, asking them help to to stop gray trade. Careful dispose of surplus inventory, careful volume discount to suppliers. Dealer interference : search & destroy Demand interference: educating customers. Rolex, Mercedes, IBM Strategic Attack : price cutting & supporting authorized dealers in offering innovative credit plans, improved services, & other customer oriented initiatives. Caterpiller customized warranty to customers

Global channel design

Availability of channel Channel tie-up Co-ordination & control