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Maximizing Distribution Channels for International Markets

Explore direct and indirect selling channels, types of intermediaries, channel development strategies, and channel decisions for expanding business reach abroad. Understand determinants of channel types, channel adaptation, and the complexities of distribution in different markets. Discover key considerations like legal requirements, product characteristics, and managing relationships with intermediaries. Learn about representation agreements, gray markets, and effective strategies to combat unauthorized distribution.

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Maximizing Distribution Channels for International Markets

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  1. Chapter 12 Channels of Distribution

  2. Chapter Outline • Direct and Indirect Selling Channels • Types of Intermediaries: Direct Channel • Types of Intermediaries: Indirect Channel • Channel Development • Channel Adaptation • Channel Decisions

  3. Chapter Outline • Determinants of Channel Types - Legal Requirements - Product Image - Product Characteristics - Middlemen's Loyalty and Conflict - Local Customs - Power and Coercion - Control

  4. Chapter Outline • Distribution in Japan • Selection of Channel Members • Representation Agreement and Termination • Black Market • Gray Market • Distribution of Services

  5. Direct & Indirect Selling Channels • INDIRECT SELLING CHANNELS - selling through home-country intermediaries - simple and inexpensive - lack of marketing control

  6. Direct & Indirect Selling Channels • DIRECT SELLING CHANNELS - direct contact with overseas intermediaries or consumers - requiring more time and cost - better control

  7. Agent vs. Merchant • Taking possession vs. taking title (ownership) • Compensation: profit/loss vs. fee/commission • Employee vs. independent contractor

  8. Agent • may or may not take possession • never taking title • compensation: commission • more difficult to terminate relationships

  9. Merchant • may or may not take possession • always taking title • compensation: profit/loss • easier to terminate relationships

  10. Types of Intermediaries: Direct Channel • Foreign Distributor • Foreign Retailer • State-Controlled Trading Company • End User

  11. Types of Intermediaries: Indirect Channel • Export Broker • Manufacturer's Export Agent or Sales Representative • Export Management Company (EMC) • Cooperative Exporter • Purchasing/Buying Agent • Country-Controlled Buying Agent

  12. Types of Intermediaries:Indirect Channel • Resident Buyer • Export Merchant • Export Drop Shipper • Export Distributor • Trading Company

  13. Channel Decisions • Channel length • Number of times a product changes hands among intermediaries • Channel width • Number of middlemen at a particular point in the channel • Number of channels • Single channel vs. dual/multiple channels

  14. Determinants of Channel Types • Legal Requirements • Product Image • Product Characteristics • Middlemen's Loyalty and Conflict • Local Customs • Power and Coercion • Control

  15. Representation Agreement and Termination • paying attention to agency termination laws • having agreements in writing • avoiding evergreen contract

  16. Gray Market • Causes • Price differential • Legal Dimension • Protecting independent U.S. trademark owner • Ethical Dimension • Product Quality

  17. Gray Marketing: Manufacturers’ Strategies • Identifying and punishing offenders • Educating consumers • Standardized worldwide price • Multiple brands

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