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Chapter 12

Chapter 12. Channels of Distribution. Chapter Outline. Direct and Indirect Selling Channels Types of Intermediaries: Direct Channel Types of Intermediaries: Indirect Channel Channel Development Channel Adaptation Channel Decisions. Chapter Outline. Determinants of Channel Types

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Chapter 12

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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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