Slides of 1/04/2016 international
distribution
The market creation strategy
• Indirect via importers , distributors or piggy Back
• Direct creating is own organisation
• Directly to the big Chains
• Collaboration agreements ;franchising , joint
venture
Importers / distributors
• The difference with the trading companies is
that they are located in the local markets
where the company want to enter.
• Importers/distributors are buying the
products and reselling them in a specific
country/area/channel/customers
Indirect via importers/distributors
• How to choose them
• How to manage them in order to control the
market.
• The KPI’s
• The contracts
• The route to market
• examples
ADVANTAGE IN USING DISTRIBUTORS
• Gives a knowledge of a new market at a
reasonable cost which allows to evaluate his
potential without big investments
• Portfolio leverage
• Reduce the financial risk
• Can be used also for some channels ( mama’s
DISADVANTAGE IN USING
DISTRIBUTORS
• Generally not very product focus
• No direct contact with the market
• Difficulty in the control of the marketing-mix
(prices, stocks in the point of sales, visibility…)
• Hard to contain geographically
How to choose the distributors
• Can they take the full range of sales and
distribution tasks
• What is their geographic coverage,the reach
• Are they active or passive distributors
• Are they financially stable
How to choose the distributors
• Are they strong in their capabilities
• Are they willing to learn and to change
• Are they willing to come an extension of
the organisation
Distributor profitability
Contracts with Distributors
• Territory /channels
• Duration
• KPI’S ( Turnover. Numerical and weighted
distribution by brand or by sku’s …and some
specific to the category e.g freshness for
chocolate category
International agreement of
cooperation
International agreement of
cooperation
• Franchising
• Piggy back
• Joint Venture
Piggy back
• The company will use the distribution network of a
local manufacturer .Ferrero case In Korea or Brembo in
Brasil
• The products have to be complementary
• The advantage is that the introduction will be faster
,use the competency , the relationship and the
negotiation part of the counterpart and less
investments
Piggy back (cont’n)
• For the local company he will share the costs
of his sales organisation and some others (
logistic’s ,administration ,general costs…)
• The negative point for the external company
,is that the priority will be given to his own
products .
Franchising
• Definition?
• Positive points?
• Negative points
Franchising
• The franchisor will give to the franchisee the
usage of his brand and of his commercial formula
together with is organisation
• The franchisee will pay ,generally , royalties on
the turnover .
« direct franchising »
• The franchisor will create a subsidary in the
market in which is interested.
• The role of the subsidary will be to manage
the local network of franchisee included a
strict control on the application of the
agreements
• Generaly used for the markets that are
considered strategic for the franchisor
« Indirect franchising »
• With the area development agreement the
« area developer » will have the right to create
a number of his shops. I will pay a developper
fee.
• With the master franchising the franchisor will
give to a third party the right to develop and
manage ,in a certain territory ,a network of
franchisee.
Positive points of the franchising
• The franchising will give to the franchisor the
possibility to expand his activity on new markets
with the same approach and impact to the
consumer leveraging on the investments and
entrepreneuriel mind set of his franchisee.
• Economy of scale of production and the
organisation costs
• Good feed back from the different markets via his
franchisee
Joint Venture
• Two or more companies decide to create a
new company in order to develop a market.
Generally on of the partner is a local one.(
Case on la Nuova Simonelli )
• The strategy and the rules have to be very
clear
Direct creating is own organisation
• When and how
• Pro and cons
Creating is own organisation
• Is own organisation has to be created when
the company considers that the market or the
area has enough potential and when the
products or services have been tested with
relevant marketing-mix
• To be close with the market is an advantage (
control of the brand..) but also a cost (Rana
case)
Positive points of the own organisation
• Better contact with the differents markets and
better understanding of the different cultures.
• Better understanting of the local trade and
easier negotiation
Mixed situation
• Distributors has service
providers
- Which services to give
out and which one’s to
keep
- How to manage this
situation
- examples
• franchasing
- How and when
- The organisation