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Chapter 12: Channels and Distribution Strategies

Learning Objectives:
• Understand the channel structure and the linkages between the
buyer and the seller
• The Channel Design (11 C’s)
• Selection of Intermediaries
• Channel Management
• International Shipment
- Documentation
- Support Agencies for international shipment
• Importance of Distribution Channels
• Channels configurations
- Consumer goods
- Industrial goods
- Services
• In international distribution, The firm sells to it’s customers
- Through its own sales force
- Through independent intermediaries
- Through an outside distribution system with regional/global
coverage
• Channels structure should be designed to manage
- Physical flow of goods and services
- Transactional flows
- Information flows
• Channels Design
- Customer Characteristics
- Distribution culture
- Competition
- Company objectives (for market share and profitability)
- Character (nature of product, positioning of the product)
- Capital (financial requirement)
- Cost (cost incurred in maintaining the channel)
- Coverage (intensive, selective, exclusive distributions)
- Control (product/service presentations, quality, image)
- Continuity
- Communication
• The concept of channel captain and power
- Reward
- Coercive
- Legitimate
- Referent
- Expert
• Type of “Distance” that cause communication problem

- Social Distance
- Culture Distance
- Technological Distance
- Time Distance
- Geographical Distance
• Selection of Intermediaries
Agent
Foreign (Direct)
- Brokers
- Manufacturer’s Representative
- Factors
- Managing Agents
- Purchasing Agents
Domestic (Indirect)
- Brokers
- Export Agent
- EMCs
- Webb-Performance Association
- Commission Agents
Distribution
Foreign (Direct)
- Distribution/Dealers
- Import Jobbers
- Wholesalers/retailer
Domestic (Indirect)
- Domestic wholesalers
- EMCs
- ETCs
- Complementary marketers
Types of Distributors
- Indirect Exporting
- Direct Exporting
- Integrated Distribution
• Sources for finding Intermediaries
- Govt. Agency
- Private Sources
• Criteria for Screening Intermediaries
- Performance
- Professionalism
• Distributors agreement includes
- Contract duration
- Geographic boundaries
- Compensation
- Products and conditions of sale
- Communication between parties
• Channel management
- Coordination
- Long term relationship
• Factor in channel management
- Ownership
- Geographic, culture and economic distance
- Difference in rules of law
• Gray Market (Parallel Imports)
- Why Gray markets occur
- How to handle Gray markets
• Typical reasons for termination of channel relationship
- Change in international marketer’s distribution strategy
- Lack of performance by the intermediary
- Make the terminators conditions explicit in the agreement
Documents Required for International Shipments
• Documents required by U.S Government
- Shipper export declaration
- Export license
• Commercial Documents
- Commercial Invoice
- Packing list
- Inland bill of lading
- Dock receipt
- Bill of lading
- Insurance Certificate
- Shipper’s declaration of dangerous goods
• Import Documents
- Import license
- Foreign exchange license
- Certificate of Origin
- Consular Invoice
- Customs Invoice
• Support Agencies for International Shipments

- Freight forwarder
- Customs broker
- Common carrier