Chapter 10- International Distribution and Logistic

8/6/2019 Chapter 10- International Distribution and Logistic

1/17

InternationalDistribution andLogistics

Dhamitha PathiranaMCIM(UK),AMSLIM, AMAMI, Certified Professional

Marketer (Asia Pacific)


2/17

Distribution channels are the means by whichgoods are distributed from the manufacturer tothe end user.The management of foreign channels of distribution is a key area in a firms efforts to gaincompetitive advantageThe key objective in building a effectivedistribution strategy is to have a planned andprofessionally managed vertically integratedmarketing system that incorporates both theneeds of the manufacturer and the distributor


3/17

The services offered by intermediariesmay include

1. The purchase of goods

2. The assembly of an attractive assortmentof goods

3. Holding stock or inventory

4. Promoting the sale of goods to the endcustomer 5. The physical movement of goods


4/17

Selecting Foreign countrymarket intermediaries

A distribution decision is a long term decisionOnce established it can be difficult to extract a companyfrom existing agreementsChannels chosen have to be appropriate for today and

flexible enough to adapt to long term market developmentAlso a careful analysis of future developments in thedistribution channel is very importantThe barriers to entry erected by local competitors andeven government regulations has to be taken intoaccountsE.g. Japan no one can open a store larger than 5382square feet without the permission from the communitystore owners


5/17

Indirect Channels is using out side agentsdistributors in other countries to distributethe products

Direct Channels is using the companyssalesforce , company owned distributionchannels or other intermediaries to sell theproductDirect channels are seen to be beneficialwhen a firms marketing strategy requires ahigh level of service before or after sales


6/17

A company owned sales force may beone of three types

1. Travelling export sales rep2. Domestic based export department of

division3. Foreign based sales branch or subsidiary


7/17

Channel Selection11C model

1. Customer characteristics2. Culture3. Competition4. Company objectives5. Character of the market6. Cost7. Capital required8. Coverage needed9. Control issues10. Continuity provided11. Communication effectiveness

Having evaluated the criteria above the firm shouldselect intermediaries who can help the firm achieve its

objectives


8/17

B uilding relationships inforeign market channels

The combination of diverse languages,dissimilar cultural heritages and remotegeographic locations can create strongbarriers to building and maintainingeffective channel relationshipsMotivating international marketing

intermediaries and Controllingintermediaries in International markets arevery important


9/17

Motivating internationalmarketing intermediariesInternational marketing intermediaries will pickand choose the products they will promote totheir customers.Therefore they need to be motivated to promote

the firms productsThere are three basis elements which areinvolved in motivating the intermediaries

1. Finding out the needs and problems of theintermediaries

2. Offering support that is consistent with their needs and problems

3. Building continuing relationships


10/17

When finding the needs and problems of different intermediaries Rosenbloomidentified the following needs and

problems which are commonly seen1. The adequacy of the profit marginsavailable

2. The guarantee of exclusive territories3. The adequacy and availability of

advertising assistance4. The offer of needed financial assistance


11/17

Controlling intermediaries ininternational markets

To enable easy control companies should go intomutually agreed upon drafted contractsPerformance objectives should be agreed for measurementPerformance objectives may include salesturnover per year, number of accounts, marketshare, growth rate, introduction of new productsetc.Evaluation of performance and control againstagreed plans has to be interpreted against thechanging environment


12/17

Managing physicaldistribution of goods

The physical movement of goods is a high costactivityThe customer is interested in a number of thingswhen it comes to delivery

Deliveries to meet the agreed time schedulesZero defect deliverySuppliers willingness to meet emergency needsSuppliers willingness to replace damaged goods

quicklySuppliers willingness to engage in JIT suppliesContd in page number 91 in the text book


13/17

For this companies will need to;Clearly define areas of responsibility acrossforeign country markets

Have a highly developed planning systemHave an up to date and comprehensiveinformation support systemDevelop expertise in distribution managementHave a centralized planning body to coordinateactivities and exercise overall control


14/17

T ransportation

OceanInland waterwaysAir

RoadRail

The decision on which method to use will dependupon the terms of the export contract, Thecommodity specifications, Freight and overalltransit time


15/17

Ex port Processing Zones

All goods entering the EPZ are exemptedfrom customs duties and import permitsEPZs can be used for assembly of productsEPZs give a company much more flexibilityand helps avoid unwanted bureaucracy of

customs and excise


16/17

Documentation

Errors made in documents can result inlaws being brokenErrors can result in goods being held atcustoms or in portElectronic Data interchange is expandingand now providing a fast integrated system

which is reducing documentationpreparation time and errors


17/17

Packaging

To prevent LossTo prevent Damage

Documents

Chapter 10- International Distribution and Logistic