ch 14 channels

7/29/2019 Ch 14 Channels

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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.html


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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


8/31

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]


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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


Agents

Wholesaler

Retailer

ConsumerConsumer Consumer Consumer

RetailerRetailer

Wholesaler

A B C D


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Marketing Channels for Industrial

Goods and Services


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.jpg


16/31

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


25/31

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/


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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?OpenView


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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


30/31

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


31/31

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.

ch 14 channels

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