1. Distribution Channels and Global Markets8
Distribution Channels and Global Markets
PowerPoint Presentation by
Ian 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 1
The Role of Distribution Activities in Marketing
Distribution
Physically 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 Distribution
The system of intermediaries (business relationships) established to guide the movement of a product.
…continued

4. The Role of Distribution Activities in Marketing
LO 1
The Role of Distribution Activities in Marketing
Functions of Intermediaries
Perform 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 1
The Role of Distribution Activities in Marketing
Types of Distribution Channels
Direct channel
A distribution system without intermediaries
Indirect channel
A distribution system with one or more intermediaries.
Dual distribution
A distribution system with more than one channel.

6. Alternative Channels of Distribution
LO 1
Alternative Channels of Distribution
Exhibit 8-1

7. Structuring a Distribution Channel
LO 2
Structuring a Distribution Channel
Important Factors in Building a Distribution Channel
Costs associated with establishing a direct channel distribution
Coverage 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 2
Determining the Scope of Physical Distribution
Transportation—which mode to use?
Common carriers
Transportation intermediaries available for hire to the general public.
Contract carriers
Transportation intermediaries that contract with individual shippers.
Private carriers
Lines of transport owned by shippers.

9. Determining the Scope of Physical Distribution
LO 2
Determining the Scope of Physical Distribution
Storage
Lack of storage space is a common problem.
Materials Handling
Protecting the firm’s output during warehousing .
Specifying Responsibility for Delivery Terms
Paying freight costs.
Selecting the carriers.
Bearing the risk of damage .
Selecting the modes of transport.

10. Small Businesses as Global Enterprises
Globalization
The 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.

11. Emerging Global Markets
Exhibit 8-2

12. Before Going Global Decide if firm is up to the task of globalization.
Firms need to obtain adequate, initial exporting knowledge
Study the different cultural, political and business practices in foreign markets.
Identify viable sales prospects abroad
Understand business protocols
Be 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 Market
Secondary sources of information
Department of Foreign Affairs (DFAIT)
Canadian Commercial Corporation (CCC)
Canadian International Development Agency (CIDA)
Statistics Canada
Business Development Bank
Export Development Canada
Canadian Trade Commissioner

15. LO 4
Export Services of the Department of Foreign Affairs and International Trade
Export Information Kit
Export Counselling
World Information Network for Exporters (WINS)
International Trade Data Bank
Overseas Trade Fairs
Trade Leads and Trade Missions
Internet Resources

16. Assistance for Global Enterprises
Connections With International Customers
Trade Leads
Trade Missions
Trade Intermediaries
Export management companies
Export trading companies
Export agents, merchants, or remarketers
Piggyback marketers

17. Risk Levels and Levels of Involvement
LO 4
Risk Levels and Levels of Involvement
Exhibit 8-5

18. Strategy Options for Global Firms
Foreign Licensing
Allowing a company in another country to purchase the right to manufacture and sell a company’s products in international markets
Licensee
The company buying the licensing rights
Licensor
The company selling the licensing rights
Royalties
Fees paid by the licensee to the licensor for each unit produced under a licensing contract

19. Challenges to Global Business
Political Risk
The potential for political forces in a country to negatively affect the performance of businesses operating within
Economic Risk
The 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 5
Sources of Trade and Financing Assistance
Financing and Information
Factoring Houses
Export Development Canada (EDC)
FITT (Forum for International Trade Training)
Private banks
Letters 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