Global Marketing
Management
A European Perspective
GLOBAL LOGISTICS AND
CHANNEL DECISIONS
Warren J. Keegan
Bodo B. Schlegelmilch
Overview
The Nature of Global Logistics and Channel
Decisions
In-Bound and Out-Bound Logistics
International Channel Strategies
Characteristics Impacting on Channel Design and
Strategy
Global Trends in Channel Design and Strategy
Summary
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
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Learning Objectives
Recognise the complexity of global logistics
Know the key decisions within in-bound logistics and
the factors impinging on these decisions
Learn about out-bound logistics and know which tasks
need to be taken care of in this respect
Know which characteristics influence the design of
distribution channels for international markets
Know how new developments reshape international
distribution
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Global Marketing Management: A European Perspective
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The Nature of Global Logistics and
Channel Decisions I
International distribution encompasses two areas
of responsibility:
Channel management
identifying, selecting and supporting distribution partners
distribution partners bridge the gap between manufacturer and
customer
Global logistics
ensuring adequate supply
the right products are made available to customers when and
where they want them
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Global Marketing Management: A European Perspective
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The Nature of Global Logistics and
Channel Decisions II
The value chain
In fo rm atio n &
R esearch
T arget M ark etin g
Selectio n
Pu rch asin g
Inbo und
L o g istics
R & D
Pro d u ct Po licy &
Strategy
Pricin g Po licy &
Strategy
A ssem b ly &
M an u factu rin g
D istributio n P o licy
& Stra teg y
O utbo und
L o g istics
C o m m u n icatio n
Po licy & Strategy
M ark etin g
In stallatio n & T estin g
Serv ice
M argin
-
M essages, ap p eals
M ed ia Strategy & Plan
A d v ertisin g Plan
Pro m o tio n Plan
Perso n al Sellin g
D irect M ark etin g Plan
D irect M ail
T elem ark etin g
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Global Marketing Management: A European Perspective
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The Nature of Global Logistics and
Channel Decisions III
The value chain provides a useful framework for
integrating various organisational activities related
to global distribution
Today, distribution activities are becoming
increasingly intertwined, i.e.
sourcing material and parts for production
taking care of product shipment
selecting suitable distribution partners
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Global Marketing Management: A European Perspective
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In-Bound Logistics I
In-bound logistics describes the process of moving
products and materials from suppliers to the
factory
Six factors must be taken into account
factor costs and conditions
transport costs
country infrastructure
political risk
market access
currency issues
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Global Marketing Management: A European Perspective
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In-Bound Logistics II
Factor costs and conditions
land
labour, including the cost of workers
manufacturing and production
professional and technical
management
capital cost
The cost of these factors depends on
availability
relative abundance
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Global Marketing Management: A European Perspective
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In-Bound Logistics III
World factor costs that affect manufacturing
industrialised countries
factor costs are tending to equalise
industrialising countries (Singapore, other Pacific
Rim countries)
offer significant factor costs savings
offer an increasingly developed infrastructure and
political stability
Russia and other countries
lower factor costs (especially wages) are offset by limited
infrastructure development and greater political
uncertainty
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
Chapter 13 / 9
In-Bound Logistics IV
Transport Costs
Country Infrastructure
Political Risk
Market Access
Foreign Exchange
Keegan/Schlegelmilch
Global Marketing Management: A European Perspective
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Out-Bound Logistics
Moving products from
customers
It involves aspects of
the
factory
to
transportation,
inventory control,
order processing and
warehousing
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Global Marketing Management: A European Perspective
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International Channel Strategies
The purpose of marketing channels is to
create utility for customers
place
time
form
information
Two forms of channel strategy
direct involvement
indirect involvement
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Global Marketing Management: A European Perspective
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Characteristics Impacting on
Channel Design and Strategy I
Customer characteristics
customer number, geographic distribution, income,
shopping habits, reactions to different selling methods
Product characteristics
perishability, service requirements or unit price
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Global Marketing Management: A European Perspective
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Characteristics Impacting on
Channel Design and Strategy II
Middleman characteristics
attitude towards the manufacturer
selection and care of distributors and agents
distributor and agent performance
termination
Environmental characteristics
economic, social and political dimensions
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Global Marketing Management: A European Perspective
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Global Trends in Channel Design
and Strategy I
Global Retailing
today
future
Direct Marketing
distribution system, where sales to customers are
carried out via telephone, mail or door-to-door
one-on-one approach is effective for products which
need demonstration or complex explanation
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Global Marketing Management: A European Perspective
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Global Trends in Channel Design
and Strategy II
E-Commerce and International Distribution
Strategies
Design of appropriate distribution systems
E-Tailing
describes the increasing trend of retail operations
globalising via the Internet
presenting and selling a product range over the
Internet gains increasing importance
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Global Marketing Management: A European Perspective
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Global Trends in Channel Design
and Strategy III
Alternative Channel Responses
C
h
an
n
el D
ecision
E
lectron
ic
C
om
m
erce
M
anufacturer
D
irect
P
h
ysical
D
istrib
u
tion
E
xisting
R
etailerO
nline
T
raditional
R
etailer
C
y
berm
ediary
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Global Marketing Management: A European Perspective
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Summary
Channel decisions are difficult to manage globally
A global marketer must
tailor the marketing program to different types of
channels
or introduce new retail concepts
Retailing will see an increasing trend towards
globalisation of operations
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Global Marketing Management: A European Perspective
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