8-1 Chapter 8 Copyright © 2010 by Nelson Education Limited. Distribution Channels and Global Markets 8 PowerPoint Presentation by Ian Anderson, Algonquin

8-1Chapter 8 Copyright © 2010 by Nelson Education Limited.

Distribution Distribution Channels and Channels and Global MarketsGlobal Markets

Distribution Distribution Channels and Channels and Global MarketsGlobal Markets

88

PowerPoint Presentation by PowerPoint Presentation by

Ian Anderson, Algonquin CollegeIan Anderson, Algonquin College


Looking AheadLooking Ahead

After studying this chapter, you should be able to:

1. Explain the role of distribution in marketing.

2. Describe the major considerations in structuring a distribution system.

3. Discuss global marketing.

4. Describe the initial steps of a global marketing effort.

5. Identify sources of trade and financing assistance.


The Role of Distribution Activitiesin Marketing


• Distribution Physically moving products and establishing intermediary

relationships to support such movement.

• Physical Distribution (Logistics) The activities of distribution involved in the physical

relocation of products.

• Channel of Distribution The system of intermediaries (business relationships)

established to guide the movement of a product.

…continued




• Functions of IntermediariesPerform the marketing function better.Provide efficient distribution of the product.

Breaking bulk – sell to customers in smaller quantities. Assorting – bringing together similar lines of goods.

Shifting risks. Merchant middlemen - take title to the goods distributed. Agents/brokers - distribute goods only.

…continued




• Types of Distribution ChannelsDirect channel

• A distribution system without intermediaries

Indirect channel• A distribution system with one or more intermediaries.

Dual distribution• A distribution system with more than one channel.


Exhibit 8-1

Alternative Channels of Distribution

Alternative Channels of Distribution


Structuring a Distribution Channel Structuring a Distribution Channel

• Important Factors in Building a Distribution ChannelCosts associated with establishing a direct

channel distributionCoverage is increased through the use of indirect

channels of distribution.Control is enhanced using a direct distribution

channel.


Determining the Scope ofPhysical Distribution


• Transportation—which mode to use?Common carriers

• Transportation intermediaries available for hire to the general public.

Contract carriers• Transportation intermediaries that

contract with individual shippers.

Private carriers• Lines of transport

owned by shippers.




• Storage Lack of storage space is a common problem.

• Materials HandlingProtecting the firm’s output during warehousing .

• Specifying Responsibility for Delivery TermsPaying freight costs.Selecting the carriers.Bearing the risk of damage .Selecting the modes of transport.


Small Businesses as Global EnterprisesSmall Businesses as Global Enterprises

• GlobalizationThe expansion of international business,

promoted by converging market preferences, falling trade barriers, and the integration of national economies.• Size does not limit a firm’s international

activity, and small companies often become global competitors to take advantage of their unique resources.


Emerging Global MarketsEmerging Global Markets

Exhibit 8-2


Before Going Global Before Going Global

• Decide if firm is up to the task of globalization.– Firms need to obtain adequate, initial exporting knowledge

• Study the different cultural, political and business practices in foreign markets.

– Identify viable sales prospects abroad

– Understand business protocols

• Be prepared to modify products to meet design specifications that may vary from country to country.

– Select suitable target markets abroad


Questions to Consider Before Going GlobalQuestions to Consider Before Going Global

Exhibit 8-4


Preparations for Global MarketingPreparations for Global Marketing

• Researching a Foreign MarketSecondary sources of information

Department of Foreign Affairs (DFAIT) Canadian Commercial Corporation (CCC) Canadian International Development Agency (CIDA) Statistics Canada Business Development Bank Export Development Canada Canadian Trade Commissioner


Export Services of the Department of Foreign Affairs and International Trade

Export Services of the Department of Foreign Affairs and International Trade

• Export Information Kit• Export Counselling• World Information Network for Exporters (WINS)• International Trade Data Bank• Overseas Trade Fairs• Trade Leads and Trade Missions• Internet Resources


Assistance for Global EnterprisesAssistance for Global Enterprises

• Connections With International CustomersTrade LeadsTrade MissionsTrade Intermediaries

• Export management companies• Export trading companies• Export agents, merchants,

or remarketers• Piggyback marketers


Risk Levels and Levels of InvolvementRisk Levels and Levels of Involvement

Exhibit 8-5


Strategy Options for Global FirmsStrategy Options for Global Firms

• Foreign LicensingAllowing a company in another country to purchase the

right to manufacture and sell a company’s products in international markets

Licensee• The company buying the licensing rights

Licensor• The company selling the licensing rights

Royalties• Fees paid by the licensee to the licensor

for each unit produced under a licensing contract


Challenges to Global BusinessChallenges to Global Business

• Political RiskThe potential for political forces in a country to

negatively affect the performance of businesses operating within

• Economic RiskThe probability that a government will mismanage its

economy and thereby change the business environment in ways that hinder the performance of firms operating there.• Exchange rates—the value of one country’s currency

relative to that of another country.


Sources of Trade and Financing AssistanceSources of Trade and Financing Assistance

• Financing and InformationFactoring HousesExport Development Canada (EDC)FITT (Forum for International Trade Training)Private banks

• Letters of credit—an agreement issued by a bank to honour a draft or other demand for payment when specified conditions are met.

• Bill of landing—a document indicating that a product has been shipped and the title to that product has been transferred

Documents

8-1 Chapter 8 Copyright © 2010 by Nelson Education Limited. Distribution Channels and Global Markets 8 PowerPoint Presentation by Ian Anderson, Algonquin