International Channels of Distribution How do you get the product/service to foreign consumers?
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Transcript of International Channels of Distribution How do you get the product/service to foreign consumers?
International Channels of Distribution
How do you get the product/service to foreign
consumers?
Distribution Plan
1. Determine which selling approach is best.
a. Consult Country Commercial Guides (CCGs) "Marketing U.S. Products and Services in (country) chapter
b. Industry Subsector Analyses (ISAs)
2. Find distributors.
3. Find end foreign buyers (trade leads).
For example, How would you distribute shoes in Italy?Shoes Distribution Varies Across Countries
ProducerProducer ProducerProducer ProducerProducer ProducerProducer
AgentsAgents
WholesalerWholesaler
RetailerRetailer
ConsumerConsumerConsumerConsumer ConsumerConsumer ConsumerConsumer
RetailerRetailerRetailerRetailer
WholesalerWholesaler
A B C D
Germany
Organized Independents (buying groups)
35%
Major Shoe chains 29%
Mail 7%
Department Stores 6%
Hypermarkets 6%
Discount Stores 6%
Independent Shoe Stores 4%
Other retailers 7%
100%
For Example German Vs. French Shoe Distribution Distribution – London: Euromonitor, 1988, pp. 162, 171
France
Independent Shoe stores
56%
Direct Sales 14%
Clothing stores 2%
Department stores 2%
Variety stores 1%
Other retailers 25%
100%
Who are Your Customers/ What Brands Styles Do They Buy?Where Do They Shop?
Would They Shop in Specialty Stores?Distributing Shoes in Italy j99
Bruno MagliGucci Children’s Shoes E400
Outdoors? Shoe Stores? Specialty Stores?
Distributing Shoes in Italy j99
Should You Set Up Your Own Store Chain?
Distributing Shoes in Italy j99
Potential Italian Shoe Distributors
• ITALY BOLOGNAFIEREPiazza Constituzione, 6 - 40128 BOLOGNATel: 39 051 282111 - fax: 39 051 282333E-mail:[email protected]
• CENTRO SERVIZI E.F.D.Contact: Dott.ssa Chiara PadovaniVia B. Franceschini, 5 - 50142 FIRENZETel: 39 055 7398932 - Fax: 39 055 7398935E-mail:[email protected]
• FIERA MILANOLargo Domodossola, 1 20145 MILANOTel: 39 2 49971 - Fax: 39 2 49977244730 Fifth Avenue, Suite 600 New York, NY 10019 (USA)Tel: 1 212-459-0044 - Fax: 1 [email protected]
• LINEAPELLE - ANTEPRIMA - PREVIEWVia Brisa, 3 - 20123 MILANOTel: 39 02 8807711 - Fax: 39 02 860032E-mail:[email protected]
• AREAPELLESegreteria: Via Brisa,3 20123 MILANOTel: 39 02 801020 - Fax: 39 02 72000120E-mail:[email protected]
• FIRENZE EXPO SpaFirenzeTel: 00 39 55 49721 - Fax: 00 39 55 490573
What is a Channel of Distribution?
• “Process including the physical handling and distribution of goods, the passage of ownership (title) and the buying and selling negotiations between producers and middlemen and between middlemen and customers.”
What Is An International Marketing Channel?
• Middlemen in the process between Manufacturer & Final International Consumer who may or may not– Physically handle & distribute the goods– Assume title to goods– Negotiate buying and selling
• Middlemen used when the can perform functions more efficiently than manufacturers can
Marketing Channels for Consumer Goods and Services
ProducerProducer ProducerProducer ProducerProducer ProducerProducer
AgentsAgents
WholesalerWholesaler
RetailerRetailer
ConsumerConsumerConsumerConsumer ConsumerConsumer ConsumerConsumer
RetailerRetailerRetailerRetailer
WholesalerWholesaler
A B C D
Marketing Channels for Industrial Goods and Services
ProducerProducer ProducerProducer ProducerProducer ProducerProducer
AgentAgent
WholesalerWholesaler
Industrial BuyerIndustrial BuyerIndustrial BuyerIndustrial Buyer Industrial BuyerIndustrial Buyer Industrial BuyerIndustrial Buyer
WholesalerWholesaler
AgentAgent
A B C D
Channel Decisions When Entering New Country
• Whether to Use Established Channels or Build Own Channels?
• Whether to Use Home-country (located in producing firm’s country) or Host-country (located in foreign country) middlemen?
• Which intermediaries?• How many intermediaries?
– Exclusive – one or a select few– Selective – more than a few, less than all– Intensive – as many outlets as possible
Examples of Home-Country Middlemen(1) Global Retailers
• Global Retailers
Examples of Home-Country Middlemen(2) Export Management Company
• Export Management Companies –– Independent firm which acts
as the exclusive export sales department for non-competing firms;
– Typically represent smaller companies in specialized industries
– Ranges in size from 1 to 100 employees and handles
10% of exported manufactured goods
Example of Export Management Company
• You sell to AMEX; We take it abroad & absorb all risks• Amex Export Functions: • We purchase products from our business partners for resale in international markets. • We pay for products purchased on terms similar to our business partners' standard
domestic terms. • We've developed over the past twenty years a unique system and strong know-how
to select, appoint, and manage international distributors to market these products overseas.
• We attend trade shows, implement advertising programs, and translate material. • We are responsible for invoicing, collection and bear the responsibility for payment. • We handle shipping details, customs forms, export licensing, and all relevant export
documentation. • We constantly research and appraise market conditions overseas, and provide useful
feedback to our business partners to incorporate in their marketing, and product development plans.
• We travel, meet face-to-face with our customers and see first-hand their needs and marketing efforts.
EMC Limitations
• Relatively small with limited financial resources; may be unable to stock product or offer financing to foreign customers
• Focus efforts on products that bring in most profits
• Most do not cover Canada
• Manufacturers may lose control over who buys, selling price, promotion, etc.
Examples of Home-Country Middlemen(3) Export Trading Company
• Export Trading Companies – – Larger companies that specialize in providing
intermediary services, risk reduction, financial assistance, etc.
Export Trading Companies• Export Trading Companies
A typical ETC is more market-orientated and transactions driven than a typical EMC. An ETC most often acts as an independent distributor creating transactions by linking domestic producers and foreign buyers.
• As opposed to representing a given manufacturer in a foreign market, the ETC determines what U.S. products are desired in a given market and then work with U.S. producers to satisfy demand. ETCs can perform a sourcing function searching for U.S. supplies to fill specific foreign requests for U.S. products.
• A special kind of ETC is a group organized and operated by producers. These ETCs can be organized along multiple or single-industry lines and can also represent producers of competing products.
• Most ETCs take title to the goods involved, but some will work on a commission basis.
Examples of Home-Country Middlemen(4) Agents/Brokers
• Home country agents/brokers – Do not take title; – Shorter term relationship; – Specialize in certain products
Examples of Host (Foreign) Country Middlemen
• (1)Merchant middlemen (take title & possession)– Distributors/Wholesalers– Dealers / Retailers (Ongoing relationship to
sell to customers)
• (2)Agents & brokers (do not take title & seldom take possession)
Home-country or Host-country Middlemen?
• Use Home-country or Host-country middlemen– Select Home-country middlemen if you do not
wish to enter or do not have capability to enter foreign market
– Select Host-country middlemen if you seek greater control over marketing mix; have a presence in the foreign country
Marketing Channels Differ Around The World in
• Services they perform
• Breadth of lines they carry
• Costs and trade margins
• Length of channel - long vs. short
Selecting Marketing Channels
• Marketing channel decisions are among the most complex & challenging facing the firm
• Each channel creates different level of sales & costs
• Firm usually committed to decision for long time
How Do you Select Channel?
• Cost – Transporting & storing goods• Capital Requirements• Control• Coverage• Character – Does it fit the character of the company and the market?
• Continuity – Can you foster loyalty among members?
Locating Middlemen
• U.S. Department of Commerce;
• Directories;
• Foreign Chambers of commerce;
• Middlemen associations;
• Internet services, e.g. www.tradecompass.com
• Carriers e.g. shipping companies
• Two basic sources of "buy" leads:• The ones you or your reps develop first-hand • Second hand leads -- the ones you hear or read
about – Good trade lead sources include
• U.S. Government’s Trade Opportunity Program found on the NTDB,
• FAS Agricultural Trade Leads, • Commercial News USA trade leads, • Global Technology Network. • World Trade Center (WTC) network, and many states have
their own overseas trade offices.
Locating Information About Channels of Distribution in Foreign Country
• Commercial Guide - “Marketing U.S. Products and Services” section
• Articles on “distribution” “country” “product” – ABI-Inform
For Example, How are Cars Sold in China? “Buick Succeed in China By Laying Stress on Quality,” Robert Simison,
Wall Street Journal, Oct. 26, 1999
• “Most cars are sold not by conventional dealers but by independent distributors and traders. Typical is the Asia Games Village parking lot in Beijing, which has become a sort of flea market for dozens of small-time traders of new and used vehicles.”
For Example, When Opening Retail Outlet, Where
Do You Locate, How Many? “1st Starbucks Herald Plan To
Give Parisians Café Alternative,” Jonathan Shenfield, The Commercial Appeal,
Memphis, TN, Jan. 17, 2004
“The first shop (Starbucks) near the Paris Opera, is situated to draw both tourists and locals…The chain began to establish itself across Europe nearly six years ago, starting with Britain, Switzerland and Austria…Another outlet opens Monday in the La Defense business district, the second of about 10 planned for Paris.”
