International Marketing: Chapter 14 Key Concepts

1. Six factors affecting channel choices Cost Capital Control Coverage Character Continuity Challenges of Channel Development Japanese Distribution System & Four Characteristics High density of middlemen High level of channel control Unique business philosophy Large-scale retail store law International Marketing:Chapter 14 Key Concepts

2. Cost Capital Control Coverage Character Continuity Factors Affecting Channel Choices

3. Channel Cost & Capital • Initial capital and/or investment costs • Channel development costs • Ongoing maintenance costs • Sales force costs • Promotion costs • Inventory costs • Physical distribution costs

4. Ability to “control” channel Price Volume Promotion Company/Product/Brand Image Type of Outlets Shorter channels = more control Longer channels = less control Channel Control Manufacturer Consumer Manufacturer Export Agent Wholesaler Retailer Consumer

5. Market coverage impacts: Volume of sales Market share Market penetration Company/Product/Brand Image Adequate market coverage is difficult Unequal population density Topography Paucity of specialized middlemen Market Coverage in the Channel

6. Channel Character • Character of the company and markets • Perishability or bulk of the product • Complexity of selling the product • Level of sales service required • Value of the product • Channel patterns change constantly!

7. Channel Continuity • Channel membership is dynamic • Many middlemen are small institutions • Most middlemen have little loyalty to foreign vendors • Distribution & dealers probably most loyal • Loss of middlemen means loss of distribution

8. Locating Middlemen Selecting Middlemen Motivating Middlemen Terminating Middlemen Controlling Middlemen Challenges of Channel Development

9. Primary Characteristics of Japanese Distribution Systems • High density of middlemen • High level of channel control • Unique business philosophy • Large-scale retail store law