PP 13 Channels

Global Marketing Management

Warren J. Keegan

Chapter 13 Global Marketing Channel and Physical Distribution Decisions

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Overview

Channel Objectives & ConstraintsDistribution Channels International Channel InnovationChannel Strategy for New Market EntryPhysical distribution & logistics Case Example: JapanSummary

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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 advantageImportant because of number & nature of

relationshipsMust analyze each marketMust 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 & agentsdistributor & agent performancetermination

Environmental characteristics economic, social & political dimensions

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Distribution Channels for Consumer Products

Door-to-doorManufacturer-owned storeFranchise operationsCombined structures

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Top 5 Food Franchises Abroad

Chain: Intl share

1. McDonald’s 49%

2. KFC 52

3. Pizza Hut 35

4. Burger King 21

5. Tim Hortons 97Source: 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 processingWarehousing Inventory managementTransportation

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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