1. Chapter 13 Global Marketing Channels and Physical Distribution

2. Global Marketing Channels
Channel of Distribution
An organized network of agencies and institutions which, in combination, perform all the activities required to link producers with users to accomplish the marketing task
Distribution
The physical flow of goods through channels
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

3. Channel Objectives and Constraints
Major Categories of Channel Utility
Place – product available in location convenient to a customer
Time – product available when desired by a customer
Form – product available in form ready to be used by a customer
Information – availability to answer questions about product benefits
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

4. Channel Objectives and Constraints
Customer Characteristics
Geographic distribution, income, shopping habits, reaction to selling methods vary by country
Product Characteristics
Degree of standardization, perishability, service requirements also vary by country
Middleman Characteristics
Often engage in cherry picking
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

5. Selection and Care of Distributors and Agents
A wholesale intermediary that typically carries product lines or brands on a selective basis
Agent
An intermediary who negotiates transactions between parties but does not take title to the goods being purchased or sold
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

6. Distribution Channels
Piggyback Marketing
One manufacturer obtains distribution of products through another’s distribution channels
Avon and Mattel
Industrial Products
Four elements of industrial marketing channel
The Internet, the manufacturer’s sales force, distributor or agents, and wholesalers
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

7. Global Retailing Department Stores Specialty Retailers Supermarkets
Have several departments under one roof (Macy’s)
Specialty Retailers
Have a great deal of merchandise depth (Gap)
Supermarkets
Retail establishments that offer food and nonfood items
Convenience Store
Merchandise mix is limited to high turnover products
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

8. Global Retailing Discount Stores Hypermarkets
Emphasis is on low prices
Full-line discounters (Wal-Mart)
Offer a wide range of nonfood and nonperishable items
Hypermarkets
Combines the discounter, supermarket, and warehouse club approach under one roof
Average 200,000 to 300,000 sq. ft.
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

9. Global Retailing Supercenters Category Killers
Offer a wide range of aggressively priced grocery items plus general merchandise
Space size is half that of hypermarkets (Wal-Mart)
Category Killers
Stores specialize in a particular product category and offer a vast selection at low prices
Home Depot and Toys R Us
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

10. Global Retailing Market Entry Strategy Framework
Culturally Close
Organic
Chain Acquisition
Easy to Enter
Difficult to Enter
Franchise
Joint Venture
Culturally Distant
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

11. Global Retailing Market Entry Strategy Framework
Organic Growth
When a company uses its own resources to start a store from scratch or to acquire existing retail facilities
Virgin Megastore in Paris
Franchising
The appropriate entry strategy when barriers to entry are low yet the market is culturally distant in terms of consumer behavior or retailing structures
Benetton stores
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

12. Global Retailing Market Entry Strategy Framework
Acquisition
Entails purchasing multiple existing outlets in a foreign country
Marks & Spencer acquiring Brooks Brothers
Joint Ventures
Advisable when culturally distant, difficult-to-enter markets are targeted
China
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

13. Physical Distribution and Logistics Management
Important Distribution Activities
Order Processing
Includes order entry, order handling, and order delivery
Warehousing
Distribution centers are designed to efficiently receive goods from suppliers and fill orders for individual stores
Inventory Management
Ensures that a company neither runs out of manufacturing components or finished goods nor have excess inventory
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

14. Physical Distribution and Logistics Management
Important Distribution Activities
Transportation Modes
Rail – the most heavily used mode in the U.S. accounting for nearly 40% of all cargo moved
Trucks – an excellent mode for both long-haul, transcontinental transport and local delivery of goods
Air – the most expensive but also the quickest and most reliable mode of transportation
Water – inland water and ocean transportation
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156

15. Physical Distribution and Logistics Management
Channel Strategy
Involves an analysis of each shipping mode to determine which mode(s) will be effective and efficient in a situation
Logistics Management
The integration of activities necessary to ensure the efficient flow of raw materials, in-process inventory, and finished goods from producers to customers
2002 – Chapter 13
Andrew P. Yap - FIU – MAR 4156