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Chapter 10

Managing Global Channel RelationsManaging Global Channel Relations

Imanuel Hutagalung

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Channel Design

Customer Characteristics

Culture

Competition

The term channel design refers to the length and the widthof the channel employed.

Channel design is determined by 11 Cs: customer characteristics,culture, competition, company objectives, character, capital, cost,coverage, control, continuity, communication.

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Customer Characteristics

Need to answer questions such as what

customer need-as well as why, when,and how they buy-are used todetermine ways in which the productsshould be made available to generate a

competitive advantage.

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Culture

In planning a distribution system, the marketer must analyze

existing channel systems, or distribution culture.

CHANNEL MEMBER

MANUFACTURER INTERMEDIARY RETAIL

ProductionAdvertising

Natl Sales PromoDealer aidsEducation of dealersFinancing

Order TakingInventory maintenance

Space control at the retail levelDispatching of sales supportpersonnelArea MarketingFinancing

SellingOrganizing consumer

In-store promo

Examples of Function Performance in the Channel Systems for the Japanese Cosmetic Industry

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Competition

Channels used by competitors may be the only product-

distribution system that is accepted by both the trade and

consumersThe alternative is to use a distribution approach totally

different and hope to develop a competitive

advantage.(5A)

The new approach will have to be carefully analyzed andtested against the cultural, political and legal environment

in which it is to be introduced.

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Selection of Intermediaries

INTERMEDIARIES

DISTRIBUTOR

AGENTS

A distributor: will purchase the product, moreindependent than agents. Distributorsprovide a complete marketing service to intlmarketer.(5B)

Agents: have less freedom of

movement because they operateon a commission basis anddo not physically handle thegoods.(5B)

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Screening for Intermediaries

Performance(5C)(choose 2)

Financial standing of the candidate

Sales are excellent indicatorDistributors existing product lines

Market Coverage and how well the markets are served

Professionalism(5C)(choose 2)

Reputation

Distributors business strategy

Overall attitude in terms of cooperation and commitment to themarketer by developing a local marketing plan.

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Gray Markets

Also known asparallel importation: authentic and legitimatelymanufactured trademark items that are produced and purchased abroad

but imported or diverted to the U.S by bypassing designatedchannels(5D)

Gray-market products vary from inexpensive consumer goods (candy)to expensive capital goods (equipment)

Problems:

Price segmentation

Exchange rate fluctuation

Example: Japanese marketers often find it cheaper to go to LosAngeles to buy export versions of Japanese-made products.