Global Marketing Management Chapter 13 Global Marketing Channel and Physical Distribution Decisions

Warren J. Keegan

Overview
aChannel Objectives & Constraints aDistribution Channels aInternational Channel Innovation aChannel Strategy for New Market Entry aPhysical distribution & logistics aCase Example: Japan

aSummary

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Learning Objectives
aRecognize the complexity of global channels & distribution aKnow which characteristics influence the design of distribution channels for international markets aKnow how new developments reshape international distribution

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Channel Objectives
aCreate utility of place, time & information aCan be a source of competitive advantage aImportant because of number & nature of relationships aMust analyze each market aMust fit overall marketing objectives of company
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International Channel Strategies

aTwo forms of channel strategy `direct involvement Own sales force, retail stores, etc. `indirect involvement Independent agents, distributors, wholesalers

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Characteristics Impacting on Channel Design and Strategy I

aCustomer characteristics `customer number, geographic distribution, income, shopping habits, reactions to different selling methods `Need for multiple channels increases as the number of customers increased aProduct characteristics `perishability, service requirements, bulk
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Characteristics Impacting on Channel Design and Strategy II

aMiddleman characteristics `attitude towards the manufacturer selection & care of distributors & agents distributor & agent performance termination aEnvironmental characteristics `economic, social & political dimensions
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Distribution Channels for Consumer Products

aDoor-to-door aManufacturer-owned store aFranchise operations aCombined structures

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Top 5 Food Franchises Abroad

Chain: 1. McDonalds 2. KFC 3. Pizza Hut 4. Burger King 5. Tim Hortons
Source: Restaurant Business

Intl share 49% 52 35 21 97

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Products
a3 Options `Manufacturers sales forces `Distributor `Wholesaler `B2B is rapidly growing

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International Channel Innovation

Only in the most highly developed systems
Directly related to level of economic development Helped or hindered by local demographic/geographic factors, social mores, government action, competitive pressures & infrastructure

Accelerated by actions of aggressive individual firms

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Strategy for New Market Entry

aUse established channels, build own channels or abandon the market aMust provide incentive to channel agents to take on a new product aEither using existing channels or establishing their own direct distribution is expensive aDirect distribution is most effective

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Physical Distribution & Logistics

aOrder processing aWarehousing aInventory management aTransportation

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Summary
aChannel decisions are difficult to manage globally aA global marketer must
`tailor the marketing program to different types of channels `or introduce new retail concepts

aRetailing will see an increasing trend towards globalisation of operations

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