Global Marketing 12
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Transcript of Global Marketing 12
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Global Marketing
Channels and
Distribution
(Global Edition)Chapter 12
1
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
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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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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
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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
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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-
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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
2011 Pearson Education, Inc.