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Distribution Channels and Global Markets

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1 Distribution Channels and Global Markets
8 Distribution Channels and Global Markets PowerPoint Presentation by Ian Anderson, Algonquin College

2 Looking 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.

3 The Role of Distribution Activities in Marketing
LO 1 The Role of Distribution Activities in 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

4 The Role of Distribution Activities in Marketing
LO 1 The Role of Distribution Activities in Marketing Functions of Intermediaries Perform 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

5 The Role of Distribution Activities in Marketing
LO 1 The Role of Distribution Activities in Marketing Types of Distribution Channels Direct 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.

6 Alternative Channels of Distribution
LO 1 Alternative Channels of Distribution Exhibit 8-1

7 Structuring a Distribution Channel
LO 2 Structuring a Distribution Channel Important Factors in Building a Distribution Channel Costs associated with establishing a direct channel distribution Coverage is increased through the use of indirect channels of distribution. Control is enhanced using a direct distribution channel.

8 Determining the Scope of Physical Distribution
LO 2 Determining the Scope of Physical 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.

9 Determining the Scope of Physical Distribution
LO 2 Determining the Scope of Physical Distribution Storage Lack of storage space is a common problem. Materials Handling Protecting the firm’s output during warehousing . Specifying Responsibility for Delivery Terms Paying freight costs. Selecting the carriers. Bearing the risk of damage . Selecting the modes of transport.

10 Small Businesses as Global Enterprises
Globalization The 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.

11 Emerging Global Markets
Exhibit 8-2

12 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

13 Questions to Consider Before Going Global
Exhibit 8-4

14 Preparations for Global Marketing
Researching a Foreign Market Secondary 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

15 LO 4 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

16 Assistance for Global Enterprises
Connections With International Customers Trade Leads Trade Missions Trade Intermediaries Export management companies Export trading companies Export agents, merchants, or remarketers Piggyback marketers

17 Risk Levels and Levels of Involvement
LO 4 Risk Levels and Levels of Involvement Exhibit 8-5

18 Strategy Options for Global Firms
Foreign Licensing Allowing 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

19 Challenges to Global Business
Political Risk The potential for political forces in a country to negatively affect the performance of businesses operating within Economic Risk The 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.

20 Sources of Trade and Financing Assistance
LO 5 Sources of Trade and Financing Assistance Financing and Information Factoring Houses Export 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

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