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Global Marketing Management

Chapter 13 Global Marketing


Channel and Physical Distribution
Decisions

Warren J. Keegan
Overview
❚ Channel Objectives & Constraints
❚ Distribution Channels
❚ International Channel Innovation
❚ Channel Strategy for New Market Entry
❚ Physical distribution & logistics
❚ Case Example: Japan
❚ Summary

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Learning Objectives
❚ Recognize the complexity of global channels &
distribution
❚ Know which characteristics influence the design of
distribution channels for international markets
❚ Know how new developments reshape international
distribution

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Channel Objectives

❚ Create utility of place, time & information


❚ Can be a source of competitive advantage
❚ Important because of number & nature of
relationships
❚ Must analyze each market
❚ Must fit overall marketing objectives of
company
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International Channel Strategies

❚ Two forms of channel strategy


❙ direct involvement
Own sales force, retail stores, etc.
❙ indirect involvement
Independent agents, distributors, wholesalers

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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
❙ Need for multiple channels increases as the
number of customers increased
❚ Product characteristics
❙ perishability, service requirements, bulk

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Characteristics Impacting on
Channel Design and Strategy II

❚ Middleman characteristics
❙ attitude towards the manufacturer
❘ selection & care of distributors & agents
❘ distributor & agent performance
❘ termination
❚ Environmental characteristics
❙ economic, social & political dimensions

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Distribution Channels for Consumer
Products

❚ Door-to-door
❚ Manufacturer-owned store
❚ Franchise operations
❚ Combined structures

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Top 5 Food Franchises Abroad

Chain: Intl share


2. McDonald’s 49%
3. KFC 52
4. Pizza Hut 35
5. Burger King 21
6. Tim Hortons 97
Source: Restaurant Business

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Distribution Channels for Industrial
Products

❚ 3 Options
❙ Manufacturer’s sales forces
❙ Distributor
❙ Wholesaler

❙ B2B is rapidly growing

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International Channel Innovation

Only in the most highly developed systems

Directly related to level of economic development

Helped or hindered by local demographic/geographic


factors, social mores, government action, competitive
pressures & infrastructure

Accelerated by actions of aggressive individual firms

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Strategy for New Market Entry

❚ Use established channels, build own channels or


abandon the market
❚ Must provide incentive to channel agents to take
on a new product
❚ Either using existing channels or establishing their
own direct distribution is expensive
❚ Direct distribution is most effective

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Physical Distribution & Logistics

❚ Order processing
❚ Warehousing
❚ Inventory management
❚ Transportation

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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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