global marketing 12

7/29/2019 Global Marketing 12

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Global Marketing

Channels and

Distribution

(Global Edition)Chapter 12

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Chapter topics:

Channel objectives Channel design & strategy

Distribution channels consumer& industrial

Global retailing

Channel conflict

Vertical marketing systems Physical distribution, supply

chains, and logistics

2011 Pearson Education, Inc.

12-2 Transportation modes

Marketing channels exist to create utility forcustomers

Place utility: availability of a product or service in alocation that is convenient to a potential customer

Time utility: availability of a product or servicewhen desired by a customer

Form utility: availability of the product processed,prepared, in proper condition and/or ready to use

Information utility: availability of answers toquestions and general communication about useful


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pro uc ea ures an ene s

Organizational Objectives forChannel Management

Economic objectives cost minimization

stabilization of costs and/or profits over time

channel control

independence organizational stability


12-4 organizational image


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Factors which im act the selection of amarketing channel include:

Market factors

Product factors

Competitive factors


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Channels

Channels

Market Business users Consumersfactors

Geographically concentrated Geographically diverse

Extensive technical knowledge Little technical knowledge and

Large orders Small orders

Productfactors

Perishable Durable


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Complex Standardized

Expensive Inexpensive

Channels

Channels

Organizational Manufacturer has adequate Manufacturer lacks adequate

factors resources to perform channelfunctions

resources to perform channelfunctions

Limited product line Broad product line

Channel control important Channel control notimportant

Competitivefactors

Manufacturing feelsdissatisfied with marketing

Manufacturer feels satisfiedwith marketing


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in promoting products

in promoting products

Distribution Channels:Terminology and Structure

Distribution is the physical flow of goods

roug c anne s Channels are made u of a coordinated

group of individuals or firms that perform

service


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Distribution Channels:Terminology and Structure

Distributor wholesale intermediarythat typically carries product lines orbrands on a selective basis

Agent an intermediary who negotiates

parties but does not take title to thegoods being purchased or sold


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he Internet and other related media aredramatically altering distribution

Interactive TV may become a viable directmarketing channel in the future

eBay pioneered P2P-auction sites for B2C auctions

when homes are wired


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-

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Mature form in the US

Growin o ularit in China

AIG insurance, Mary Kay,u erware Avon Amwa

Amway sales tripled in China,- ,

biggest market

- -door in Japan with 100,000


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anu acturer-owne stores

Walt Disney opening 600 new stores

Nike, Levi Strauss, Apple

Independent retailers a - ar

Flagship retail stores for Apple,, - ,Nokia, Nike: to build brand loyalty,


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,marketing intelligence

Piggyback Marketing Channel innovation that has grown in

popularity

One manufacturer distributes product byutilizing another companys distributionc anne

Requires that the combined product linese comp emen ary an appea o e samecustomer


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Direct involvement the company establishes

s own sa es orce or opera es s own re astores

Indirect involvement the company utilizesindependent agents, distributors, and/orwholesalers

Channel strate must fit the com an s

competitive position and marketing objectiveswithin each national market


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Retailing inDeveloping Countries

Consumers purchase food,

at Mom & Pop stores,,

single use packages

these stores

at least 40 P&G productswith dis la s romo


12-17materialsMexican storefront

Working withChannel Intermediaries

1. Select distributors dont let them select you

2. Look for distributors ca able of develo in marketsrather than those with a few good customer contacts

3. Treat local distributors as long-term partners, notemporary mar e -en ry ve c es

4. Support market entry by committing money, managers,

5. From the start, maintain control over marketing strategy

6. Make sure distributors rovide ou with detailed marketand financial performance data

7. Build links among national distributors at the earliest


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oppor un y

Department stores

Supermarkets

Discount stores and

Hypermarkets

upercenters Category killers

Dome of the famous de artment store


12-19 Outlet stores

Galeries Lafayette in Paris



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Environmental Factors Saturation in the home country market Recession or other economic factors Strict regulation on store development High operating costs

Critical Question What advantages do we have relative to

the local competition?


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Organic growth

Company uses its own resources to open a store on a

Franchise Appropriate strategy when barriers to entry are low, yet the

market is culturally distant in terms of consumer behavior orretailing structures

A market entry strategy that entails purchasing a companywith multi le existin outlets in a forei n countr

Joint Venture

This strategy is advisable when culturally distant, difficult-to-


12-22enter markets are targeted

Global Retailing MarketEntry Strategy Framework


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Horizontal Conflict

Most often, horizontal conflict causes sparks

e ween eren ypes o mar e ngintermediaries that handle similar products Sometimes results from disagreements among

channel members at the same level

Channel members at different levels find many

reasons for disputes

Example: when retailers develop private brands tocompete with producers brands or when


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websites


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Ado tion ofsuperordinate goals

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Diplomacy

Mediation


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Conflict, Cooperation &Competition

rey mar e ng para e mpor ng : sa e o au or ze ,branded products through unauthorized channels

Why do manufacturers tolerate grey marketing?1. violations are difficult to detect or document. potent a or one c anne to ree-r e on anot er

member is low.

4. parallel importer is a loyal high-performing dealer

Why do manufacturers welcome grey markets?1. increase coverage in emerging markets


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. pressure au or ze c anne s o compe e ar er3. avail the product to price-sensitive consumers

Conventional Channels vs.VMS


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Corporate VMS combines successive stagesof roduction and distribution under sin le

ownership Administered VMS coordinates successive

s ages o pro uc on an s r u on rougthe size and power of the parties; channel

Contractual VMS consists of independentfirms at different levels of roduction and

distribution who join through contracts toobtain economies or sales impact (franchise,


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,


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.


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Supply Chain

that perform supportactivities by generatingraw materials, convertingthem into components or

,making them available to

customers og st cs

The management process that integrates the


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flow of goods through the supply chain

PD, Supply Chains, andLogistics Management

Order Processing includes order entr in which the order is actuall

entered into a companys information system;order handling, which involves locating,

,and order delivery

Warehouses are used to store goods until they aresold

Distribution centers are designed to efficientlyreceive goods from suppliers and then fill orders for


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n v ua s ores or cus omers

PD, Supply Chains, andLogistics Management

Inventory Management

manufacturing components or finished goods norincurs the expense and risk of carrying excessivestock of these items

Transportation

the method or mode a company should utilize whenmoving products through domestic and global

channels; the most common modes of transportationare rail, water, truck, air, pipeline and internet


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Important since firms need to maintain enough

inventory to meet customer demand without incurringunneeded costs for carrying excess inventory

Just-in-time (JIT) production

Vendor-managed inventory (VMI)

Determining

order

quantity


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mode to determine which one, or combination of


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,situation

Federal government deregulation of

transportat on n ustry e to newbreed of transportation companies which aremu t mo a , prov ng cra e to grave serv ceor total transportation

-- piggyback

-- s y ac-- birdyback


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Make or buy alternatives:

private carrier - owned & operated by

contract - independent organization that

contractual arrangement common - o erates trans ortation facilities

on scheduled basis between predeterminedpoints


global marketing 12

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