International Distribution

  • Created by: diabianca
  • Created on: 02-05-14 04:47
Distribution channel
essential link; producers to consumers
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general distribution systems used by companies include (2):
direct/indirect sales (own sales force; e-commerce)/(intermediaries/distributors)
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Design Channel structures to manage (3):
• Physical movement of goods and services. • Transactional title flows. • Information communications flows
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Channel design
Refers to the length and width of the channel
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Determined by the number of levels or different types of intermediaries
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Determined by the number of institutions of each type in the channel.
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External & internal determinants of channel structure & relationships (E: 3; I: 8)
E: Customer characteristics, Culture, Competition I:Company objectives, Character, Capital, Cost, Coverage, Control, Continuity, Communication
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Customer characteristics
focus on customer needs, psychographics, demographics
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focus on distribution culture/existing channel structures, intermediaries' functions performed
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Single distributor advantages (4)
• Eliminates confusion; Improved communication • Volume of business with a single distributor will attract better qualified distributors • Better coordination of sales & promotion; logistics flows more economical • Distributor morale
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2 decisions involved in choosing the type of intermediaries to serve a market:
– Determining intermediary relationship type (D/A?) – Determining the type of exporting (indirect/direct/integrated distribution?)
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Selection criteria for intermediaries (3):
• capable of developing markets, • regard as long term partners, • has the necessary contacts, • Actively search for and select intermediaries, do not let them select you • Provide updated information you need • Maintain as much control • Try to
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Screening intermediaries (3)
– Assess potential candidates against an exporter’s criteria. – Before signing a contract with A/D, satisfy certain key criteria. – Quantify criteria while qualitative requires careful interpretation and confidence in the information sources
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Criteria in Screening intermediaries (2)
• Performance (financial standing, sales figures, products, facilities, market coverage) • Professionalism (reputation, relationship expectations, attitude: cooperation & commitment)
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4 Reasons to terminate the relationship include:
– changes in distribution approach (e.g. setting up a sales office) – lack of performance by the intermediary – violating terms of the agreement (e.g. selling to an unauthorised party) – breaking the law (e.g. fraud).
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Manage channels (3)
coordinate w/ shared goals, • Manage relationships for the long term. • Establish distributor advisory councils to help address measures
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Factors which complicate channel management are: (3)
– Ownership. – Geographic, cultural, and economic distance. – Different rules of law
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Gray markets (parallel importation)(2-what it is)
– authentic and legitimately manufactured trademark items that are produced and purchased abroad but imported or diverted to the market by bypassing designated channels. – Fuelled by price segmentation and exchange rate fluctuation.
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what gray markets do-4
– Under cut local marketing plans, erode long-term brand images, eat up costly promotion funds, and sour manufacturer–intermediary relations.
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arguments for gray markets (2)
Arguments for it: free trade, consumers benefit coz’ of low prices
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arguments against gray markets (4)
Hurts the legitimate owners of trademarks, reduces incentives for product development, takes unfair advantage of trademark owners’ marketing and promotions, may not meet product standards or after-sale service
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Solutions to the gray market problem: (3)
– A one-price policy. – Producing different versions of products for different markets. – Conducting educational and promotional campaigns
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Channel relationship can be terminated due to (3):
– Changes in the international marketer’s distribution approach &/ product lines – Dishonoring of the contract by either of the parties. – Market expansion
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E-commerce (3)
• Communication; interactive; convenient • brings together buyers, sellers, distributors, and transaction payment processors in one single marketplace • issues related to security, privacy, and access to global networks
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Other cards in this set

Card 2


general distribution systems used by companies include (2):


direct/indirect sales (own sales force; e-commerce)/(intermediaries/distributors)

Card 3


Design Channel structures to manage (3):


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Card 4


Channel design


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Card 5




Preview of the front of card 5
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