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Chapter 18 International Channel Perspectives. The International Perspective 18 Objective 1: W hat drives the need to focus on international markets?

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Presentation on theme: "Chapter 18 International Channel Perspectives. The International Perspective 18 Objective 1: W hat drives the need to focus on international markets?"— Presentation transcript:

1 Chapter 18 International Channel Perspectives

2 The International Perspective 18 Objective 1: W hat drives the need to focus on international markets? Slow growth in domestic markets Fierce foreign competition

3 18 The Complex Environment Objective 2: From an International Perspective Environment of international channel management Environment of international channel management Motivating international channel members Behavioral processes in international channels Behavioral processes in international channels Designing international channels Designing international channels

4 18 Key Environmental Factors Objective 3: Economic Factors Competitive Environment Sociocultural Environment Technological Environment Legal/Political Environment

5 18 Economic Factors Economic conditions that appear in the domestic environment can also occur in foreign environments, but the changes can be more dramatic. I nflation R ecession D eflation F luctuating currency rates

6 18 Competitive Environment Because competitive structure in foreign countries can be quite different from that in the United States, channel structure needs to be able to adapt to a wide variety of circumstances. D ifferent languages D ifferent cultures D ifferent currencies M any less-developed countries do not have free & open competition

7 18 Because sociocultural elements can influence all elements of the marketing mix, the channel variable is sensitive because of the often necessary person-to-person or organization-to-organization involvement. V arying behavior norms V arying attitudes V arying perceptions V arying cultural values Sociocultural Environment

8 18 Varying levels of technological advancement around the world require U.S. channel strategy either to force foreign suppliers to meet technological demands or to raise the bar of their own levels of technology. I n some developed countries, technology often matches or surpasses that of the United States. S ome less-developed countries have relatively primitive communications & transportation technology Technological Environment

9 18 Firms seeking to establish channels in foreign markets need to investigate the legal environment of each country because of the wide array of complex & burdensome issues. P olitical pressures T ariffs I mport restrictions G overnment regulations Legal/Political Environment P olicies Q uotas

10 18 Behavioral Processes Objective 4: In order to avoid negative conflict, use power effectively, & establish good communications, the channel manager must understand the behavioral aspects of channel systems. Japan & Bose speakers

11 18 Designing International Channels Objective 5: Phase 1Recognize that a channel design decision must be made. Phase 2The design will need to reflect whether the firms distribution objectives specify reaching overseas markets. Phase 3The firm must examine carefully the kinds of tasks that need to be performed to successfully meet the firms distribution objectives. Phase 4Develop a set of channel structure alternatives for the specific international environment.

12 18 Alternative Channel Structures Objective 6: Indirect Exporting

13 18 Casual Exporting The firm is just beginning to sell its products overseas. Unsolicited orders from foreign countries may also account for significant parts of this type of exporting.

14 18 Trading Companies They are large and have access to many world markets. They can provide a U.S. firm with rapid entry into foreign countries. Because the trading companies are so large, U.S. firms have little influence over how their products are sold. But:

15 18 Domestically based wholesalers or manufacturers representatives who specialize in overseas sales They offer an attractive alternative to the firm that seeks a higher level of involvement in international marketing than that provided by casual exporting or trading companies. Export Management Companies

16 18 The carrier is the firm already involved in exporting. The rider is the firm that uses the international expertise and capabilities of the carrier to enter foreign markets. This method can offer the rider an opportunity to gain entry into foreign markets with little capital outlay, while the carrier can obtain a desirable product to sell. Cooperative or Piggyback Arrangements

17 Alternative Channel Structures 18 Direct Exporting

18 18 The manufacturers ability to exercise control over how its products are marketed by distributors is a crucial issue in domestic and in international marketing. Modern technology has made it much easier and more efficient for U.S. manufacturers to communicate with foreign distributors. Foreign Distributors But:

19 18 They are independent, but they do not take title to, and usually do not take physical possession of, the products they represent. Foreign Agents They can arrange for the performance of most of the international marketing tasks.

20 18 When the manufacturer establishes its own foreign sales branch overseas and it can perform most or all of the international marketing tasks Requires substantial commitment and investment in international marketing Overseas Marketing Subsidiary But: Because the subsidiary is owned by the manufacturer, the degree of control possible is greater.

21 18 Motivating Channel Members Objective 7: Three facets of motivation management: 1. Finding out the needs & problems of channel members 2. Offering support to the channel members that is consistent with their needs & problems 3. Providing leadership through the effective use of power

22 18 Objective 8: Leading Foreign Marketing Channels Effective leadership occurs under the following circumstances 1.Roles & routines of foreign distributors were not rigidly set by overseas manufacturer, but were adapted by distributor to changing circumstances in market 2.Marketing strategy decisions were made jointly by manufacturer & distributors 3.High degree of personal contact between manufacturer & foreign distributors maintained through personal visits, phone calls, & letters

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