International Marketing: Chapter 15 Key Concepts • Japanese Distribution System & Four Characteristics – High density of middlemen – High level of channel control – Unique business philosophy – Large-scale retail store law • Six factors affecting channel choices – Cost – Capital – Control – Coverage – Character – Continuity • Home-country middlemen • Foreign country middlemen • Government-affiliated middlemen • Challenges of Channel Development • Internet-the most important international distribution trend
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International Marketing: Chapter 15 Key Concepts Japanese Distribution System & Four Characteristics –High density of middlemen –High level of channel.
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International Marketing:Chapter 15 Key Concepts
• Japanese Distribution System & Four Characteristics– High density of middlemen– High level of channel control– Unique business philosophy– Large-scale retail store law
• Home-country middlemen• Foreign country middlemen• Government-affiliated middlemen• Challenges of Channel Development• Internet-the most important international distribution trend
Channels of Distribution
• Each country market has a unique distribution structure
• Distribution process includes:–Physical handling and distribution of goods–Passage of ownership–Buying and selling negotiations • between producers and middlemen• between middlemen and customers
15-2
Channels of Distribution in Developing Countries
• Traditional, import-oriented channels– Importer-wholesaler performs most marketing functions– Limited supply of products is sold at high prices to affluent
customers– Demand exceeds supply– Mass distribution not necessary
• Implications for foreign marketers:– Local distribution systems– Distribution system not integrated nationally– Nonexistent or underdeveloped marketing infrastructure
15-3
Primary Characteristics ofJapanese Distribution Systems
High density of middlemenHigh level of channel controlUnique business philosophyLarge-scale retail store law
Retail Patterns of DistributionGreater Diversity Than Wholesaling
• Size patterns– Great diversity in size– No adequate way to reach small retailers– Large retailers growing in developing countries
• Direct marketing– By mail, telephone, catalogs, or door-to-door– Works well in affluent markets with underdeveloped
channels– Amway & Avon expanding dramatically
• Resistance to change– Many laws exist to protect the entrenched
Alternative Middleman Choices
• Seller must exert influence over two sets of channels– home country– foreign market country
• Agent middlemen – represent the principal rather than themselves– work on commission
• Merchant middlemen– take title to the goods and buy and sell on their own
– Procure products & services for the government’s own use
– Work at federal, regional, and local levels
15-9
Factors Affecting Choice of Channels
• International marketers need a clear understanding of market characteristics and must have established operating policies before beginning the selection of channel middlemen
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Factors Affecting Channel Choices
• Cost
• Capital
• Control
• Coverage
• Character
• Continuity
Challenges of Channel Development
• Locating Middlemen
• Selecting Middlemen
• Motivating Middlemen
• Terminating Middlemen
• Controlling Middlemen
Internet:The Most Important Global Distribution Trend