1. Welcome to class of International Distribution by Dr
Welcome to class of International Distribution by Dr. Satyendra Singh Professor, Marketing and International Business University of Winnipeg Canada

2. International Distribution
Distribution Structure
Traditional, Modern, Retail Giants
Distribution Patterns
General, Retail
Factors Affecting Choice of Channel
Character, Coverage, Continuity, Control, Cost
Locating and Managing Channel Members
Locating, Selecting, Motivating, Controlling, and Terminating

3. Distribution Structure…
Difference Between Domestic and Foreign Structure
Super-efficient system in the USA vs. highly complex in Japan
Traditional Distribution Structure
Import-oriented structure
High price, small no of affluent customers
Sellers market  demand exceed supply
Absence of cars and telephones
Local monopoly of small stores
Buy daily in developing country vs bi-weekly in Canada
Intermediaries do not perform specific activities
Import-wholesalers perform marketing function
Advertising, marketing research, warehousing, financing, storage

6. International Intermediaries

7. In Africa

8. In Africa

9. Distribution Structure…
Modern Channel Structure
Discount, self-service, mass merchandizing, return policy…
Change in direct marketing
Door-to-door selling, hypermarkets, shopping malls, catalogue, Internet
Wal-Mart, Carrefour (France), Praktikar (Germany), Ikea (Sweden)
Higher margin in EU than US
Internet-based system for ordering and delivering (low cost, efficient)
Brick-mortar eg. Dell, Brick-click eg Amazon, DHL, UPS
Convenience store as a pickup points for web-orders

10. Distribution Structure
Retail Giants Structure
Wal-Mart, McDonald’s, Home Depot take risk in foreign markets
Europeans: quick to enter foreign market, emphasis on being first, retail strategy, local needs and taste
Americans: exploit domestic market first, emphasis on efficiency, standardization and value to customers
International retailers have advantages over local retailers
World-class business processes
Technology
Financing
Organizational capabilities
Greater buying power
Superior service…

11. Retail Structure in Selected Countries

12. Distribution Pattern…
General Pattern
Foreign channels are not the same as domestic channels
Intermediary services are different
Storage and wait for customers to come and see them, India, Egypt
Line breadth
Dealing-only narrow lines
Requires government license
Cost and margin
Shorter channel for industrial or expensive goods
Inverse relationship b/w length of channel and size of purchases
Non-existent channels – selling on the roads!
Blocked channels – competitors or relationships
Power and competition – large whole sellers finance downstream

13. Distribution Pattern Retail Pattern
Product lines: narrow (Italy, Morocco) vs. broad (Japan)
Size pattern
No of person served per retailer– higher in developed countries
May be difficult to reach so many small retailers across a country
Depends of economic development – single cigarette
Direct marketing – mail, tel, door-to-door
Usually best for developed economy, but Eastern European gaining popularity; e.g., Amway
Local retailers need to compete
Product selection
Greater convenience
Customer service
Liberal store hours
Retailers cannot close/open stores at their wish

14. Factors Affecting Choice of Channel…
Objectives
Volume, market share, profit, control, length of channel, terms of sales
The 5 C’s of distribution
Character of your Company and the market
Perishable items, complexity of sales requires, SAS, value of the product
Own sales force vs. distributor’s, aggressive managers (NY, fast cities)
Coverage
Distribution intensity, 100%! Has impact on market share/penetration/$
Several channels may be needed (full service vs. no service)
2-3 cities may be enough (Paris 30% of France population vs. NY only 5%)
More distributors needed in US than France to achieve the same market share
Continuity
Serious issue if family-owned channel. Coca-cola lured Pepsi’s distributor in Brazil
May not carry the line with less margin

15. Factors Affecting Choice of Channel
Control
Own/short channel  more control on price, volume, promotion
Enthusiastic  invest time to promote your product
Cost
Developmental and maintenance costs
Transporting and sorting, breaking bulk, provide credit, local advertising, sales representation, negotiations
If possible, set up your own channel  own sales force
However other costs remain same– consignments, loan, floor plans, etc.

16. Locating and Managing Channel Members
Tradeshow, governments (DFAIT), third party recommendations, websites
Selecting
Trustworthy, references, finances, size of firm, experience, resources
Go to foreign market and see the channel members
Motivating
Financial, psychological rewards (trip to head office, recognition), communications (newsletter, new product info.), corporate rapport
Controlling
Measurable performance indicators sales volume, market share, inventory turnover, accounts per area…
Terminating
Easy in US, not in international markets may claim up to 10% of sales as compensation x no of years served

17. Internet Culture Polite words, color,
70% user Sweden vs. 1% in China vs. 40% France
Need broad-band, China allows only access to approved websites
Adaptation
Global or local
50,000 pages! Translation in +50 languages!
Local Contact
Customer enquiries, product return, payment where credit card is not possible, delivery of the purchased product
Promotion
Website is a store; we need to bring customers there
Search engine registration, banners display, press release, local news group, …
Different marketing strategy in EU– more privacy by law
Vacation packages are more popular in the UK than US
Germany may be interested in different destinations than Canadians