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Round tableDistribution challenges and workable solutionsUnder a Creative Commons license Open access AbstractAn effective distribution channel can be a source of strategic advantage for companies. However, little research exists about the distribution channel structure in India, which is largely traditional and quite unique. The first part of this round table article provides an overview of distribution channels, particularly their constituents and structure, with a special focus on distribution channels in India. The second part of the article reports on a panel discussion with eminent academic and industry experts on the challenges that companies in India face in designing, constructing, and managing distribution channels on the ground. KeywordsDistribution channels Channel management Indian retail FDI in Indian retail Cited by (0)Copyright © 2013 Indian Institute of Management Bangalore. Production and hosting by Elsevier Ltd. Presentation on theme: "International Marketing Channels"— Presentation transcript: 1 International Marketing Channels
2 Learning Objectives LO1 The variety of distribution channels and how they affect cost and efficiency in marketing LO2 The Japanese distribution structure and what it means to Japanese customers and to competing importers of goods LO3 How distribution patterns affect the various aspects of international marketing LO4 The functions,
advantages, and disadvantages of various kinds of middlemen LO5 The importance of selecting and maintaining middlemen LO6 The growing importance of e-commerce as a distribution alternative LO7 The interdependence of physical distribution activities 3 Channel-of-Distribution
Structures 4
International Distribution Systems
5 Import-Oriented Distribution Structures 6 Import-Oriented Distribution Structures 7 Japanese Distribution Structure 8 15-8 9
Japanese Distribution Structure 10 Channel Control in Japanese
Distribution Systems
11 Trends: From Traditional to Modern Channel Structures 12 Distribution Patterns
13 Retail Patterns Retailing shows even greater diversity in its structure than does wholesaling Size Patterns Large dominant
retailers can be sold to directly, but there is no adequate way to reach small retailers who, in the aggregate, handle a great volume of sales Underdeveloped countries present similar problems The rate of change appears to be directly related to the stage and speed of economic development In Italy and Morocco, retailing is composed largely of specialty houses that carry narrow lines, whereas in Finland, most retailers carry a more general line of
merchandise. 14 Retail Patterns Direct Selling Resistance to Change
15 15-15 16 Alternative Middlemen Choices
17 Exhibit 15.3 shows some of the possible channel-of-distribution alternatives 18 Home-Country Middlemen 19
Frequently Used Types of Domestic Intermediaries 20 Foreign Country Middlemen 21 Foreign-Country Middlemen 22 Government-Affiliated Middlemen
23 Factors Affecting Channel Choice 24 Six C’s of Channel Strategy 25 Channel Management Many companies have been stopped in their efforts to develop international markets by their inability to construct a satisfactory system of channels. Construction of the middleman network includes seeking out potential middlemen, selecting
those who fit the company’s requirements, and establishing working relationships with them The closer the company wants to get to the consumer in its channel contact, the larger the sales force required 26 Channel Management Locating
Middlemen Selecting Middlemen 27 Selecting Middlemen Screening based on the following
criteria: 28 The Internet
E-commerce is used to market business-to-business services, consumer services, and consumer and industrial products via the World Wide Web The Internet is an important distribution method for multinational companies When using the internet for distribution purposes, the following factors should be considered: Culture Adaptation (especially of language) Local contact information Payment form
Delivery Promotion 29 Logistics Logistics management is a total systems approach to the management of the distribution process that includes all activities involved in physically moving raw material, in-process inventory, and finished goods inventory from the point of origin to the point of use or
consumption. A physical distribution system involves more than the physical movement of goods. It includes the location of plants and warehousing (storage), transportation mode, inventory quantities, and packing. The concept of physical distribution takes into account the interdependence of the costs of each activity; a decision involving one activity affects the cost and efficiency of one or all others. The difficult part is not making the sale but getting
the correct quantity of the product to customers in the required time frame at a cost that leaves enough margins for a profit. At some point in the growth and expansion of an international firm, costs other than transportation are such that an optimal cost solution to the physical movement of goods cannot be achieved without thinking of the physical distribution process as an integrated system. What is often the approach of choice in markets?Sometimes called direct marketing, selling directly to the consumer through mail, by telephone, or door-to-door is often the approach of choice in markets with insufficient or underdeveloped distribution systems. The approach, of course, also works well in the most affluent markets.
In which of the following modes of distribution in the foreign market will a company have to make maximum financial investment?In which of the following modes of distribution in the foreign market will a company have to make maximum financial investment? Direct sales force. Trading companies provide the best means for intensive coverage of the market.
Which mode of distribution affords the manufacturer the most control over the international distribution channels but often at a cost that is not practical?Capital required to maintain effective distribution. Which of the following modes of distribution affords the most control over the distribution channels but often at a cost that is not practical? Direct sales force.
Which of the following is a factor that affects the choice of distribution channels?Factors Influencing Choice of Distribution Channel – 5 Important Factors: Product, Company, Competitive, Market and Environment Related Factors. Deciding or selecting channels of distribution is a strategic decision for any manufacturing or trading concern.
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