1. Global Perspective A Single Stick of Doublemint Today – 18 Billion Tomorrow
A product must be made accessible to the target market at an affordable price
Getting the product to the target market can be a costly process
Forging an aggressive and reliable channel of distribution may be the most critical and challenging task facing the international marketer
Competitive advantage will reside with the marketer best able to build the most efficient channel from among the alternatives available

2. Channel-of-Distribution Structures
All consumer and industrial products eventually go through a distribution process.
Physical handling and distribution of goods
Passage of ownership
Buying and selling negotiations between producers and middlemen
Buying and selling negotiations between middlemen and customers
Each country market has a distribution structure through which goods pass from producer to user.

3. Import-Oriented Distribution Structure
Demand exceeds supply
The customer seeks the supply from a limited number of middlemen
Distribution systems are local
Few countries fit the import-oriented model today
In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers.

4. Japanese Distribution Structure
A structure dominated by many small middlemen dealing with many small retailers
Channel control by manufacturers
A business philosophy shaped by a unique culture
Laws that protect the foundation of the system

5. Comparison of Distribution Channels between the United States and Japan
Insert Exhibit 14.1

6. High Density of Middlemen
Not unusual for consumer goods to go through three or four intermediaries before reaching the consumer
In Japan, small stores account for 57.7 percent of retail food sales
In the U.S., small stores generate 19.2 percent of food sales
Japan has a large number of independent groceries and bakers, unlike America with an emphasis on supermarkets, discount food stores, and department stores

7. Business Philosophy Emphasizes loyalty, harmony, and friendship
Supports long-term dealer-supplier relationships
The cost of Japanese consumer goods are among the highest in the world
Japanese law gives the small retailer enormous advantage over the development of larger stores

8. Large-Scale Retail Store Law and Its Successor
Daitenho – the Large-Scale Retail Store Law
Large stores must have approval from the prefecture government
All proposals first judged by the Ministry of International Trade and Industry (MITI)
Then, if all local retailers unanimously agreed, the plan was approved
Could be a lengthy process
Applied to both domestic and foreign companies
Replaced by the Large-Scale Retail Store Location Act of June 2000
MITI out of the process
Relaxed restrictions

9. Changes in the Japanese Distribution System
Structural Impediments Initiative
Deregulation
Wal-Mart
“New” retailers
The Internet

10. Alternative Middleman Choices
Seller must exert influence over two sets of channels:
One in the home country
One in the foreign-market country
Agent middlemen – represent the principal rather than themselves
Merchant middlemen – take title to the goods and buy and sell on their own account

11. Foreign-Country Middlemen
Manufacturer’s representatives
Distributors
Foreign-country brokers
Managing agents and compradors
Dealers
Import jobbers, wholesalers, and retailers

12. Government-Affiliated Middlemen
Marketers must deal with governments in every country of the world
Products, services, and commodities for the government’s own use are always procured through government purchasing offices at federal, regional, and local levels
Efficiency of public sector versus the private sector

13. Factors Affecting Choice of Channels
Cost
Capital requirements
Control
Coverage
Character
Continuity

14. Locating, Selecting, and Motivating Channel Members
Locating middlemen
Selecting middlemen
Screening
The agreement
Motivating middlemen
Terminating middlemen
Controlling middlemen

15. Summary
The international marketer has a broad range of alternatives for developing a distribution system.
Three primary alternatives for using agent middlemen:
Agent middlemen
Merchant middlemen
Government-affiliated middlemen
Channel structure may vary from nation to nation or from continent to continent.
Information and advice are available relative to the structuring of international distribution systems.
Traditional channels are being challenged by the Internet, which is offering an ever-wider range of possibilities for entering foreign markets.