3-1
Chapter Fifteen
Global Distribution
MKT568
Global Marketing Management
Dr. Fred Miller
Sample Essay Question
DeutscheDrives is German producer of computer storage devices
and media. The firm wishes to build upon its success in
European markets by expanding to Asia, Africa, North and South
America.
1. Identify and describe the three general international marketing
strategies. (6 points)
2. For each element of the marketing mix (product, price, promotion
and distribution), identify and describe one benefit of a global
strategy and one constraint to implementing such a strategy. (12
points)
3. Which of the three general marketing strategies do you
recommend to DeutscheDrives? Explain why. (2 points)
Benefits of Standardized Distribution
Cost reduction
shipping and merchandising costs
channel management costs
Control of marketing strategy
Consistency of positioning
Logistic efficiency
Constraints on Standardization
Wholesaling and Retailing Structures
wholesaling; types, business practices, integration
retailing practices; integration, lifestyles, global
retailing, retailing channel captains, PoP IT
Adjusting Channel Relationships
changing distributors, dual distribution
shortening channels, integration
creating new channels
Data Archaeology:
Profiling Web Customers
14-2
Size and Number of Wholesalers
in Selected Countries
# of enterprises
Employees
Revenue
(thousands)
(thousands)
(bill ECU)
Belgium
48
202
85
4.2
1,771
Denmark
36
166
60
4.6
1,676
Greece
28
115
—
4.1
France
132
1,049
312
7.9
2,356
Ireland
4
40
12
11.5
3,429
193
1,084
—
5.6
Luxembourg
2
11
5
5.7
2,632
Netherlands
72
360
135
5.0
1,878
Portugal
31
200
—
6.4
United Kingdom
143
921
310
6.5
2,172
United States
470
4,578
1,260
9.8
2,684
Japan
436
4,332
2,651
9.9
6,075
Italy
Exhibit 14.1
Emp/Ent
Rev/Ent
(mill ECU)
Source: Retailing in the European Single Market, 1993. These figures are adapted from Table EUR1a:
“Importance of Commerce in the EC—absolute values (1987-91)”
14-7
Exhibit 14.4
Size and Number of Retail Outlets
in Selected Countries
# of enterprises
Employees
Revenue/
Ret to Whol Ratio
Emp/Ent
Rev/Ent
(thousands)
(thousands)
(bill ECU)
Belgium
128
275
35/41%
2.1
274
Denmark
48
200
24/40%
4.2
499
Greece
175
338
20
1.9
114
France
462
2,090
260/83%
4.5
563
Ireland
29
131
11/92%
4.5
375
Italy
930
2,401
230
2.6
247
Luxembourg
4
18
3/60%
5.2
857
Netherlands
95
638
45/33%
6.7
474
Portugal
173
366
20
2.1
115
United Kingdom
348
3,030
280/90%
8.7
804
United States
1,504
19,085
1,350/107%
12.7
898
Japan
1,620
6,851
682/26%
4.2
421
(mill ECU)
Source: Retailing in the European Single Market, 1993. These figures are adapted from Table EUR1a:
“Importance of Commerce in the EC—absolute values (1987-91)”
14-3
Japanese Import Distribution Alternatives - Distribution
Route of Italian Spaghetti
Producer
Import
agent
Conventional Route
Processing
and
packing
plant
Primary
wholesaler
Small
wholesaler
Intermediary
wholesaler
Retail price: 170yen/300g package
Retailer
Restructured Route
Producer
Savings: 25%
Exhibit 14.2
Importing
company
A/C
Processing
and
packing
plant
Depots
Distribution
Wholesalers
Distribution
centers
Retailer
Retail price: 128yen/300g package
Source: Allied Import Company, as reproduced in Michael R. Czinkota, and Jon Woronoff, Unlocking Japan’s
Markets. Chicago, IL: Probus, 1991, p. 104. Used with permission.
14-4
International comparison of Wholesale
Trade Practices
Practice
Returned
Goods
• Returning unsold
goods is common
Rebate system
• Diverse complicated
structure (volume,
fixed date, evaluation,
promotion)
• Long term in pay
unit (yearly, halfyear, etc.)
• Rebates are not
necessarily open
• MSRP’s exist
• Written materials and
certain drugs and
cosmetics are allowed
to maintain resale
prices
Quotations
Exhibit
14.3
Japan
United States
Britain
• Doesn't exist
except for
imperfect or
damaged goods
• No rebates but
discounts and
allowances exist
• Open rule
• Pay unit depends
• Doesn't exist
except for
imperfect or
damaged goods
• Quantitative and
date fixed rebates
exist
• Open rule
• Pay unit depends
• Manufacturer's
suggested retail
prices exist
• Doesn't exist in
principle
• Books and drugs
are allowed to
maintain resale
prices
Source: Distribution Economics Institute, Survey on International Comparison on the Distribution Industry, May 1990.
Global Logistics and Channels
Global Distribution
issues of transportation between countries
technology and competition
Modes of Transportation
air express; business and consumer markets
ocean carriers; containerization
overland; rail, truck, roll-on-roll-off
inventory management; distribution centers
Global Logistics and Channels
Parallel Distribution
definition and effects
supply, dealer, demand interference and strategic
attack
Global Channels
availability, tie-up, coordination and control
14-8
Seiko’s Authorized and Unauthorized
Channels of Distribution
Europe
Hong Kong
Japan
North America
Importer
Importer
Distributors
Distributors
Distributors
Distributors
Retailers
Retailers
Retailers
Retailers
Importer
Solid arrows denote the flow of Seiko watches through authorized channels of distribution.
Broken arrows denote the flow of Seiko watches through unauthorized channels of distribution.
Exhibit 14.5
Source: Jack Kaikati, “Parallel Importation: A growing Conflict in International Channels of Distribution,”
Symposium on Export-Import Interrelationships, Georgetown University, November 14-15, 1985.
KFC in Japan Video
This video has content relevant for several topics in the
course. Describe the challenges KFC has confronted in
TWO of the following areas. Has the firm responded to
these challenges effectively? Explain.
Japanese management styles and practices
Corporate strategies for international markets
multidomestic, global, global with localization
Product and branding strategies
Market entry strategies
Promotion strategies
Distribution and locational strategies
3-1
Chapter Fifteen
Global Distribution
MKT568
Global Marketing Management
Dr. Fred Miller
Cola Wars Video
In which countries, with what strategy and with
what success has Mecca Cola chosen to
challenge Coca Cola?
In which countries, with what strategy and with
what success has Qibla Cola chosen to
challenge Coca Cola?
How has Coca Cola responded to these
challenges?
Bond’s Vodka Article
The promotional technique discussed in this article is product
placement. Describe this technique and explain its value,
especially for an alcoholic beverage product.
Why did Brown Forman spend as much as it did to insure
that James Bond would drink Finlandia in his most recent
movie? How does this effort mesh with the firm’s marketing
strategy?
In your opinion, how valuable is product placement for
global marketing strategies? Explain.