Presentation on theme: "Distribution Channels and Global Markets"— Presentation transcript:
1 Distribution Channels and Global Markets 8Distribution Channels and Global MarketsPowerPoint Presentation byIan 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 1The Role of Distribution Activities in MarketingDistributionPhysically 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 DistributionThe system of intermediaries (business relationships) established to guide the movement of a product.…continued
4 The Role of Distribution Activities in Marketing LO 1The Role of Distribution Activities in MarketingFunctions 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
5 The Role of Distribution Activities in Marketing LO 1The Role of Distribution Activities in MarketingTypes of Distribution ChannelsDirect channelA distribution system without intermediariesIndirect channelA distribution system with one or more intermediaries.Dual distributionA distribution system with more than one channel.
6 Alternative Channels of Distribution LO 1Alternative Channels of DistributionExhibit 8-1
7 Structuring a Distribution Channel LO 2Structuring a Distribution ChannelImportant 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.
8 Determining the Scope of Physical Distribution LO 2Determining the Scope of Physical DistributionTransportation—which mode to use?Common carriersTransportation intermediaries available for hire to the general public.Contract carriersTransportation intermediaries that contract with individual shippers.Private carriersLines of transport owned by shippers.
9 Determining the Scope of Physical Distribution LO 2Determining the Scope of Physical DistributionStorageLack 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.
10 Small 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.
12 Before Going Global Decide if firm is up to the task of globalization. Firms need to obtain adequate, initial exporting knowledgeStudy the different cultural, political and business practices in foreign markets.Identify viable sales prospects abroadUnderstand business protocolsBe 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 MarketSecondary sources of informationDepartment of Foreign Affairs (DFAIT)Canadian Commercial Corporation (CCC)Canadian International Development Agency (CIDA)Statistics CanadaBusiness Development BankExport Development CanadaCanadian Trade Commissioner
15 LO 4Export Services of the Department of Foreign Affairs and International TradeExport Information KitExport CounsellingWorld Information Network for Exporters (WINS)International Trade Data BankOverseas Trade FairsTrade Leads and Trade MissionsInternet Resources
16 Assistance for Global Enterprises Connections With International CustomersTrade LeadsTrade MissionsTrade IntermediariesExport management companiesExport trading companiesExport agents, merchants, or remarketersPiggyback marketers
17 Risk Levels and Levels of Involvement LO 4Risk Levels and Levels of InvolvementExhibit 8-5
18 Strategy 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 marketsLicenseeThe company buying the licensing rightsLicensorThe company selling the licensing rightsRoyaltiesFees paid by the licensee to the licensor for each unit produced under a licensing contract
19 Challenges to Global Business Political RiskThe potential for political forces in a country to negatively affect the performance of businesses operating withinEconomic 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.
20 Sources of Trade and Financing Assistance LO 5Sources of Trade and Financing AssistanceFinancing and InformationFactoring HousesExport Development Canada (EDC)FITT (Forum for International Trade Training)Private banksLetters 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