Welcome to class of
International Distribution
by
Dr. Satyendra Singh
University of Winnipeg
Canada
International Distribution
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Factors Affecting Choice of Channels
Locating and Managing Channel Members
Internet
Intermediary Choices
– Home
– Foreign
– Government
Factors Affecting Choice of Channel…
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Objectives
– Volume, market share, profit, control, length of channel, terms of sales
– The 5 C’s of distribution
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Character of your Company and the market
– Perishable items, complexity of sales requires, SAS, value of the product
– Own sales force vs. distributor’s, aggressive managers (NY, fast cities)
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Coverage
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Distribution intensity, 100%! Has impact on market share/penetration/$
Several channels may be needed (full service vs. no service)
2-3 cities may be enough (Paris 30% of France population vs. NY only 5%)
More distributors are needed in US than France to achieve the same market share
Continuity
– Serious issue if family-owned channel. Coca-cola lured Pepsi’s distributor in Brazil
– May not carry the line with less margin
Factors Affecting Choice of Channel
• Control
– Own/short channel  more control on price, volume, promotion
– Enthusiastic  invest time to promote your product
• Cost
– Developmental and maintenance costs
– Transporting and sorting, breaking bulk, provide credit, local advertising,
sales representation, negotiations
– If possible, set up your own channel  own sales force
– However other costs remain same– consignments, loan, floor plans, etc.
Locating and Managing Channel Members
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Locating
– Tradeshow, governments (DFAIT), third party recommendations, websites
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Selecting
– Trustworthy, references, finances, size of firm, experience, resources
– Go to foreign market and see the channel members
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Motivating
– Financial, psychological rewards (trip to head office, recognition), communications
(newsletter, new product info.), corporate rapport
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Controlling
– Measurable performance indicators sales volume, market share, inventory
turnover, accounts per area…
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Terminating
– Easy in US, not in international markets may claim up to 10% of sales as
compensation x no of years served
Internet
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Culture
– Polite words, color,
– 70% user Sweden vs. 1% in China vs. 40% France
– Need broad-band, China allows only access to approved websites
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Adaptation
– Global or local
– 50,000 pages! Translation in +50 languages!
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Local Contact
– Customer enquiries, product return, payment where credit card is not possible,
delivery of the purchased product
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Promotion
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Website is a store; we need to bring customers there
Search engine registration, banners display, press release, local news group, …
Different e-mail marketing strategy in EU– more privacy by law
Vacation packages are more popular in the UK than US
Germany may be interested in different destinations than Canadians
Intermediary Choices
Intermediary Choices…
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Home-Country Intermediaries
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Global retailer
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Export Management Companies
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Ikea, Wal-Mart, Costco, Toys “R” Us…
Usually works on commission (but may buy merchandize)
Good for small companies – does not want to have own people
Minimum investment, no commitment
But no deep distribution
ATM Export Management, MARAC Enterprizes
Trading Companies
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Not very popular in US/Canada
Generally in developed countries
Accumulate, transport and distribute in many countries
Strategies www.strategis.gc.ca
Ontario association of trading houses www.oath.on.ca
Intermediary Choices…
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Home-Country Intermediaries
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Home-Country Brokers
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Buying Offices
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Bring buyer and seller together
Low-cost agent service, Does not have continuing relationship
www.aacb.com
Does not provide selling services
Grey marketing!
Does not provide continuing source of representation
Selling Group
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Works under government sanctions
Canadian wheat board
Intermediary Choices…
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Foreign-Country Intermediaries
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Producers’ retail stores
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Distributors
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Tim Horton, Nygard International…
May be exclusive rights
High degree of dependence
Long-term continuous basis
Control over price, promotional efforts, inventories, servicing
Foreign Country broker
Dealers
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Very powerful within a geographic areas
Retailers – consumers
Dealers– industrial and capital items
Intermediary Choices
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Government-Affiliated Intermediaries
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Government purchasing offices
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Selling to governments is complex and competitive
Good understanding of governments
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Keep an eye on government spending
Be on the government buyer’s list
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National, Regional and Local levels
Military supplies
Office supplies
Construction
Can be very lucrative