1. INTERNATIONAL MARKETING Distribution

2. Marketing Mix (4 Ps)  Product  Promotion  Pricing  Place (Distribution) – the most important for international business entry Group 7 - Distribution

3. Marketing Mix (4 Ps)  Place (Distribution) – the most important for international business entry: Incoterms determine where title to goods changes. One of the main differences in establishing a domestic or an international distribution system consists of the complexity of the variables involved in the choice of “international activities”, when each foreign market has a different distribution system. Group 7 - Distribution

4. In International Distribution  The firm sells to its customers:  directly through its own sales force  indirectly through independent intermediaries  indirectly through an outside distribution system with regional or global coverage Group 7 - Distribution

5. Channel Structure  How to structure the distribution channels is the most important long-term marketing mix decision a firm may make.  Channel structures are designed to manage multidirectional (horizontal and vertical) connections in  physical movement of goods and services  transactional title flows  information communications flows Group 7 - Distribution

6. Typical Channel Configurations ManufacturerManufacturerOriginator Consumer Industrial User Consumer / Industrial User Agent Agent Agent Agent Agent Agent Agent Wholesaler Wholesaler Retailer Retailer Retailer Retailer Industrial Distributor Consumer Products Industrial Products Services Group 7 - Distribution

7. International Channel-of-Distribution Alternatives Home Country Domestic producer or marketer sells to or through Open distribution via domestic wholesale middlemen Export management company or company sales force ExporterImporter Foreign agent or merchant wholesalers Foreign retailers Foreign consumer The foreign marketer or producer sells to or through Foreign Country Group 7 - Distribution

8. Risk Levels and Levels of Involvement Group 7 - Distribution

9. Channel length  Refers to number of intermediaries between the producer and the consumer  Determined by degree to which the retail system is fragmented  Long distribution channel  Short distribution channel Group 7 - Distribution

10.  Long distribution channel  Fragmented retail system promotes growth of wholesalers and retailers  Firms go through intermediaries such as wholesalers to cut selling costs  Short distribution channel  Concentrated retail system  Firms deal directly with retailers Channel length Group 7 - Distribution

11. Channel exclusivity  Degree to which it is difficult for outsiders to access distribution channels  Varies between countries  Japan - exclusive systems because personal relations, often decades old play important role in stocking products  Difficult for new firm to get shelf space as compared to an old firm Group 7 - Distribution

12. The American structure is characterized by a large variety of retailers, by a diminishing number of wholesalers, a lot of discount stores and large retailers that control the network. The Japanese structure is characterized by many small wholesalers dealing with a large number of retailers, and manufacturers control networks. Small retailers benefit from strong protection through The Large Scale Retail Store Law. Different distribution structures at international level Group 7 - Distribution

13. Channel Design Considerations  Customer characteristics  What do they need, why, when, and how?  Distribution culture  The structural linkages and functional characteristics of existing channels  Competition  What channels does the competition use?  Company objectives  Determined by company objectives for market share and profitability. Group 7 - Distribution

14. Channel Design Considerations  Character  The nature of the product impacts the design of the channel. The channel must match the positioning of the product in the market.  “Capital” ... describes the financial requirements for setting up a channel system.  “Cost”  … is the expenditure incurred in maintaining a channel once it is established. Group 7 - Distribution

15. Channel Design Considerations  Coverage  the number of areas in which a product is represented and the quality of that representation.  Types of coverage  Intensive  Selective  Exclusive Group 7 - Distribution

16. Control  The use of intermediaries will result in some loss of market control.  Control correlates with the type of product or service being marketed.  The marketer’s ability to exercise power determines the extent of control.  Careful communication with foreign intermediaries is needed to make them aware of the marketer’s control intentions. Group 7 - Distribution

17. Continuity  Channel decisions are the most long-term of the marketing mix decisions.  Care must be taken in choosing the right type of channel.  Establishing continuity is the marketer’s responsibility  Continuity is expressed through visible market commitment. Group 7 - Distribution

18. Communication ...provides the exchange of information that is essential to the functioning of the channel.  Types of “distances” that cause communication problems:  Social distance  Cultural distance  Technological distance  Time distance  Geographical distance Group 7 - Distribution

19. Channel Objectives  Place utility - availability of a product or service in a location that is convenient to a potential customer  Time utility - availability of a product or service when desired by a customer  Form utility - availability of the product processed, prepared, in proper condition and/or ready to use  information utility - availability of answers to questions and general communication about useful product features and benefits Group 7 - Distribution

20. Intermediaries  Types of intermediary relationship  Distributor  Agency  Type of exporting function  Indirect exporting  Direct exporting  Integrated distribution Group 7 - Distribution

21. Intermediaries  Sources for Finding Intermediaries  Distributor inquires  Governmental agencies  Commerce Department’s Trade Opportunities Program  U.S. Exporters Yellow Pages  Private sources  Trade directories  Screening Intermediaries  Performance  Professionalism Group 7 - Distribution

22. Selection of Intermediaries Agents  Foreign (Direct)  Brokers  Manufacturer’s Reps  Factors  Managing agents  Purchasing Agents  Domestic (Indirect)  Brokers  Export Agents  EMCs  Commission agents Distributors  Foreign (Direct)  Distributors/dealers  Import jobbers  Wholesalers/retailers  Domestic (Indirect)  Domestic wholesalers  EMCs  ETCs  Complementary marketers Group 7 - Distribution

23. Channel Management  Coordinating two independent entities with shared goals  The relationship needs to be managed for the long term  Factors complicating channel management  Ownership  Geographic, cultural, and economic distance  Different rules of law Group 7 - Distribution

24. Channel Adjustment and Termination  Typical reasons for channel adjustment  Growth and changes in the international marketer’s distribution approach may eliminate a channel.  Conflict of interest and a lack interest or performance by the intermediary may require a channel modification.  Termination conditions are the most important considerations in the distribution agreement and must be spelled out clearly. Group 7 - Distribution

25. E-Commerce  Any worldwide web strategy must be tied closely to the company’s overall growth strategy in international markets.  Advantages Being able to conduct business 24 x 7 x 365. Expansion in market size. Better customer service. Reduction in costs. Marketing efforts gets boosted. Group 7 - Distribution

26. Challenges to International Distribution  Distribution challenges in developing countries  Parallel imports (gray markets)  Distribution systems that are not authorized by the manufacturer: products purchased in a low-price market are diverted to other markets  Hurt company image -Charge similar prices worldwide -Create product for low-markets not as attractive to up-market -Complicate repair/servicing process for gray market goods -Inform consumers -Litigate Group 7 - Distribution

27. COMPANY OVERVIEW In 1984, Michael Dell founded the company In 1985, company produced the first computer on its own In 1993, Dell joined the ranks of the top five PC makers worldwide In 1996, Dell began selling computer via web It develops, manufactures, sells, and support personal computers and computer related products Dell is the World's largest PC maker having Build To Order model A Fortune 200 company in just 14 years Group 7 - Distribution

28. DELL Brand-Names for Its product ranges  OptiPlex: Office desktop computer systems  Dimension: Consumer Desktop computer systems  Latitude: Commercially-focused laptops  Inspiron: Consumer laptops  Precision: Workstation systems and high-performance laptops  PowerEdge: Larger corporate servers  PowerVault: Direct-attach and some network-attached storage (NAS)  Dell EMC: Storage area networks  XPS: Enthusiast/high-performance systems  Axim: PDAs utilizing Microsoft's Windows Mobile  Dell On Call: Extended support services  Dell monitors LCD/plasma TVs and projectors: HDTV and monitor use Group 7 - Distribution

29. Dell’s Global Presence The Americas EMEA Asia Pacific China Sales Offices in 43 countries Sales presence in 170 countries 7 Manufacturing Sites Xiamen China Penang Malaysia Limerick Ireland Austin Texas Nashville Tennessee Eldorado do Sul Brazil Group 7 - Distribution

30. DELL’s WAY  Traditional PC’s Industry Value Chain (Utilized by Compaq, IBM, HP and Most Other)  Build-to-Order/Direct Sales Value Chain (Employed by: Dell) Manufacturing of PC’s Component By Suppliers Assembly of PC by PC Makers Manufacturing of PC’s Component By Suppliers Purchase By PC Users Service and support activities Provided to PC Users Sales and Marketing Activities of Reseller to self Inventories of PC’s on hand Service and Support activities Provided to PC Users Purchase By PC users Customized Assembly of PC’s By PC Makers Group 7 - Distribution

31.  Most efficient method of distribution  Minimized inventory  Rapid response to customer changes  Customers receive exactly what they want: not standard solution  New technology delivered immediately  Strong relationship with customers and suppliers. Benefits of Dell Direct Model Group 7 - Distribution

32.  In 1996, DELL launched its web site at www.dell.com and transaction buyers used this site on the Internet increasingly to contact DELL. Shortly thereafter, buyers could actually design a computer on-line, check pricing, place an order, and track an order’s progress.  Almost immediately DELL began selling 1 million dollars per week through the Web. Incredibly, by December of 1998, transactions on www.dell.com total about 10 million dollars per day. www.DELL.com Group 7 - Distribution

33. Dell’s website Group 7 - Distribution

34. Source: IDC PC Tracker, 1995 - 2005 (Full Year) * In 1995 Pre-Merger, Compaq ranked #1, HP #7 Dell Takes No.1 Position in 2004 Dell No. 1 Group 7 - Distribution

35. DELL - India Story Dell Started its full fledged operations in India using the Dell direct Model in 2007. But Indian customers had to wait up to a month for delivery while the computers were manufactured in Dell's factory in Penang, Malaysia. Dell sold just 79,244 laptops and desktops in India. In that same year, HP sold 1 million to Indian consumers. Group 7 - Distribution

36. Dell New Distribution Model On the distribution front, Dell divided the Indian market between 35 master sales affiliates. It sidestepped the established national, regional, and retail distribution model to instead follow a model typically used for insurance agents. The first step was to set up a factory in India. "Manufacturing locally cut delivery time by almost 50% and improved profitability," says M.R. Sundaresan, general manager of operations for Dell India. It also reduced waiting time to less than eight days. Group 7 - Distribution

37. Dell New Distribution Model Simultaneously, Dell opened 38 exclusive stores across India. Also joined hands with retailers such as the Tata group's Croma and Future Group's eZone for a shop-in-a-shop counter for its products. “With the launch of Dell exclusive stores, we offer our customers the touch & feel for Dell branded products within a unique shopping experience,” Mr. Mahesh Bhalla, Director – Consumer Sales, Dell India. Dell backed this hybrid retail model by extending onsite service (technicians coming to individuals' homes) in 650 cities to retail and small business customers as well. Group 7 - Distribution

39. Results The new distribution model worked for Dell, giving it access to even rural areas, where customers would not be able to easily order online, and where setting up retail outlets was not viable. Now India is emerging as the fastest-growing market for Dell. In the third quarter of 2010, India reported year-on-year growth of 55% -- the highest for any Dell market. Group 7 - Distribution

40. Thank You Group 7 - Distribution