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“Wearestrivingtoachievenoticeableimprovements
forourcustomersanddistributionsystems.(…)The
varioussalesformatsinallmajormarketswillbe
adaptedtonewcustomerrequirements.(…)Every
dayisachancetoimproveourserviceandmakeit
moreaccessible.”
MichaelDiekmann,ChairmanoftheBoardof
Management,AllianzGroup
McGraw-Hill/Irwin
Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
 InternationalDistributionDecisions
 FactorsInfluencingDistributionDecisions
Internal
External
 ManagingandControllingInternational
DistributionChannels
Directandindirectchannels
Conventionalversusverticalsystems
Multichannelstrategies
Typesofchannelintermediaries
InternationalRetailing
Selectionofchannelpartners
 ChannelManagementandControl
 PhysicalDistribution
 Summary
12-2

Internal
• Internationalmarketstrategy‐ entrymodeanddegreeofcontrol
• Distributionstrategy
 Intensive– distributioninallpossibleoutlets
 Selective‐ fewer,selectiveintermediaries
 Exclusive– limitednumberofintermediaries
• Productcomplexity
• Sizeanddevelopmentofthefirm’smarketingorganization

External
•
•
•
•
•
Characteristicsofdistributionsystem
Localregulations
StageofPLC
Consumershoppinghabitsandmarketsize
Competitiveclimate
12-3
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
Insert12‐1
12-4
 Thedistributionchannelstructureisstrongly
influencedbythecountry’seconomicdevelopment
whichcreatestheneedformoreefficientchannels
 Distributionconsiderationsinclude:
• Directversusindirect
• Conventionalversusverticalmarketingsystems(VMS)
• Differenttypesofintermediaries
12-5
 Direct
• Manufacturersellsdirectlytocustomer
 Indirect
• Oneormoreintermediaries(agent,wholesaler,
retailer,etc.)areinvolved
 Lengthofadistributionchannel
• Determinedbynumberandtypesof
intermediaries
 Depthofadistributionchannel
• Definedbynumberofintermediariesofthesame
typology
12-6
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Figure12‐1
12-7
Limitednumberofcustomers
Internal,qualifiedstaff
CommoninB2B
Requisiteforcomplexproducts
Traditionallyonlyfor
• Doortodoorsales
• Mailorders
• Telephoneselling
Today:Internetselling
12-8
Relationbetweenmanufacturerand
customerfilteredbyintermediaries:
• Agents
• Wholesalers
• Retailer
Intermediariesperformdifferent
functions:
• Reducenumberofexchanges
• Overcomeculturalbarriers
• Simplifythesellingprocess
12-9
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ConventionalChannel:
• Intermediariesindependent;actasifthey
runaseparatebusiness
VMS:
• Intermediariesarelinkedinaunique
integratedsystemwhichfavors
cooperationandsynergies
12-10
Beneficialwhen
• Complex productsbothinthesaleandafter
salephases
• Noreliabledistributionpartner
• Channelpartnersoperatewithveryhigh
markups,makingfinalpriceuncompetitive
• Retailingformatavailableintheforeign
countryisnotsuitableforitsgoods
 OwnedStores
 Franchising
12-11
Figure12‐2
12-12
4
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A vertical marketing system that combines successive stages of
Corporate VMS
production and distribution under single ownership (examples
are DOS – directly owned stores).
A vertical marketing system in which independent firms at
different levels of production and distribution join together
Contractual VMS
through contracts to obtain more economies or sales impact than
they could achieve alone (examples are wholesaler-sponsored
voluntary chains, retailer cooperatives or franchise)
A vertical marketing system that coordinates successive stages
Administrative
of production and distribution, not through common ownership
VMS
or contractual ties, but through the size and power of one of the
parties.
12-13
 Dependingonthecharacteristicsofthe
foreignmarket,companiesusuallydefine
multiplechannels(directandindirect,with
differenttypesofintermediaries)and
choosethemoresuitablechannel
organization(conventionalorvertical)
 L’Orealisaprimeexampleofthis.
12-14
12-15
5
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 Threetypesofintermediaries:
1. Agents
Operateinthenameofthecompanybutdonot
taketitletogoods
2.
3.
Wholesalers
Taketitletogoodsandselltocustomers
forresaleorbusinessuse
 Fullservice
 Limitedservice
4.
Retailers
Arefinallinkbetweenproviderconsumer
12-16
12-17
 Intermediariesthatselldirectlytofinal
customer
 Activities
• Ordering
• Storing
• Creatingassortments
• Presentinggoodsinthemostattractiveway
• Packaging
• Financing
• Providingaftersalesservices
 Differencesinretailformatmayarisefrom
locallegislation
12-18
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 Theprerequisitetomanagethe
developmentofaninternationalnetwork
isthecreationofabrandvalue
recognizedbyforeignconsumers
 Valuecreationmodelsaredifferentfor
differentretailers
 Akeydecision:standardizationvs.
adaptation
Theneedtoadapttonationalculturesisstrongly
perceivedbyglobalretailerswhoarefarfrom
standardizingnotonlytheirretailingformatbut
alsotheirlocaloffer
12-19
Partnerselectionisalong
processandeachphasemustbe
carefullyevaluated
Attributesforevaluation:
Companystrengths
Financialresources
Marketingskills
Salesskills
Commitment
12-20
 Relationshipmanagementiscriticalinforeign
markets
 Maximumdistributorcommitmentmustbe
obtained
• Guaranteeexclusivity
• Provideinformationtechnology
 Successfulmanagementpracticesarebased
uponfourdimensions
Performancemanagement
Coveragemanagement
Capabilitymanagement
Motivationalprograms
12-21
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• Performancemanagement
 Identifiesactivitiesthatarefinalizedto
improveoperatingperformancesthroughthe
definitionofroles,responsibilitiesand
measurablegoals
• Coveragemanagement
 Focusesonchannelstructureefficiencyandits
coordinationwiththetargetmarket.
12-22
Capability‐ buildingprogramsand
motivationalprograms
• Includeallthoseactivitiesthatsupportthe
operationsofthechannelmembersand
increasepartners’motivationthatstrengthen
therelationship
12-23
Objective:managethemovementof
finishedproductsfromthecompany
toitscustomers
Efficiencyandqualityachieved
througheffectivelogistics
Logisticsactivitiesinclude:
Handling
Transport
Inventory
Labeling
Storage
12-24
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 Whenacompanyplanstobuilditsglobalmarket
position,themostsuitabledistributionchannels
mustbeidentified
 Severalinternalandexternalfactorsimpactthe
decision,including
•
•
•
•
•
•
•
•
•
Firmstrategy
Sizeanddevelopmentofmarketingandsalesfunctions
Financialstrength
Productcomplexity
Distributioncharacteristics
Localregulations
Lifecyclephase
Consumerhabits
Competitiveclimate
12-25
 Distributionstructuresarestrongly
influencedbythecountry’seconomic
development
 Successfulchannelmanagementstrategies
takeintoaccountthebenefitsand
disadvantagesofdirectvs.indirectchannels
andconventionalvs.VMSsystems
 Selectingchannelpartnersrequiresan
understandingofdifferentagentand
wholesalertypologies
 Therearewidedifferencesinretailing
formatsbetweencountries
12-26
 Whenevaluatingdistributorpartnersitis
importanttodefinecontractualand
relationshipdevelopment
 Successfulchannelmanagementpractices
arebasedon
• Performancemanagement
• Coveragemanagement
• Capability‐buildingprograms
• Motivationalprograms
 Decisionsrelatedtophysicaldistribution
arealsoabigissue.
12-27
9