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Chapter 12

Global Marketing

Channels and Physical

Distribution

Introduction

It’s a way of bringing dreams closer

to people, dreams which before

they only saw in films.

—Tadeusz Donocki, undersecretary of state, Poland’s Economics Ministry on the arrival of hypermarkets that provide customers with more products and lower prices than they have ever had.

Distribution Channels: Terminology

and Structure

Distribution is the physical flow of

goods through channels

Channels are made up of a coordinated

group of individuals or firms that

perform functions that add utility to a

product or service

Distribution Channels: Terminology

and Structure

Distributor—wholesale intermediary

that typically carries product lines or

brands on a selective basis

Agent—an intermediary who negotiates

transactions between two or more

parties but does not take title to the

goods being purchased or sold

Peer-to-Peer Selling

The Internet and other related media

are dramatically altering distribution

Ebay pioneered P2P and now helps

Disney and IBM set up websites for

fixed price selling as well as B2C

auctions

Interactive TV may become a viable

direct marketing channel in the future

Door-to-Door Selling

Mature form in the United States Growing popularity in China—AIG Insurance, Mary Kay, Tupperware, Avon, Amway One-half cars are sold door-to-door in Japan

Consumer Products

Piggyback marketing

Channel innovation that has grown in popularity One manufacturer distributes product by utilizing another company’s distribution channel Requires that the combined product lines be complementary and appeal to the same customer

Industrial Products

Working with Channel Intermediaries

Select distributors—don’t let them

select you

Look for distributors capable of

developing markets, rather than those

with a few good customer contacts

Treat local distributors as long-term

partners, not temporary market-entry

vehicles

Working with Channel Intermediaries

Support market entry by committing money, managers, and proven marketing ideas From the start, maintain control over marketing strategy Make sure distributors provide you with detailed market and financial performance data Build links among national distributors at the earliest opportunity

Top 10 Global Retailers 2005 Sales; Millions

• 1. Wal-Mart USA $285,
• 2. Carrefour France 90,
• 3. Home Depot USA 73,
• 4. Metro AG Germany 70,
• 5. Royal Ahold Netherlands 64,
• 6. Tesco UK 62,
• 7. Kroger USA 56,
• 8. Sears USA 55,
• 9. Rewe Handelgruppe GER 50,
• 10. Costco USA 48,

Global Retailing

Environmental factors

Saturation in the home-country market Recession or other economic factors Strict regulation on store development High operating costs

Critical question

What advantages do we have relative to the local competition?

Global Retailing Strategies

Organic growth

Company uses its own resources to open a store on a Greenfield site or acquire one or more existing retail facilities

Franchise

Appropriate strategy when barriers to entry are low yet the market is culturally distant in terms of consumer behavior or retailing structures

Global Retailing Strategies

Chain acquisition

A market entry strategy that entails purchasing a company with multiple existing outlets in a foreign country

Joint venture

This strategy is advisable when culturally distant, difficult-to-enter markets are targeted