Global Marketing Management A European Perspective

1. Global MarketingManagementA European Perspective GLOBAL LOGISTICS AND CHANNEL DECISIONS Warren J. Keegan Bodo B. Schlegelmilch

2. Overview • The Nature of Global Logistics and Channel Decisions • In-Bound and Out-Bound Logistics • International Channel Strategies • Characteristics Impacting on Channel Design and Strategy • Global Trends in Channel Design and Strategy • Summary

3. Learning Objectives • Recognise the complexity of global logistics • Know the key decisions within in-bound logistics and the factors impinging on these decisions • Learn about out-bound logistics and know which tasks need to be taken care of in this respect • Know which characteristics influence the design of distribution channels for international markets • Know how new developments reshape international distribution

4. The Nature of Global Logistics and Channel Decisions I • International distribution encompasses two areas of responsibility: • Channel management • identifying, selecting and supporting distribution partners • distribution partners bridge the gap between manufacturer and customer • Global logistics • ensuring adequate supply • the right products are made available to customers when and where they want them

5. The Nature of Global Logistics and Channel Decisions II • The value chain

6. The Nature of Global Logistics and Channel Decisions III • The value chain provides a useful framework for integrating various organisational activities related to global distribution • Today, distribution activities are becoming increasingly intertwined, i.e. • sourcing material and parts for production • taking care of product shipment • selecting suitable distribution partners

7. In-Bound Logistics I • In-bound logistics describes the process of moving products and materials from suppliers to the factory • Six factors must be taken into account • factor costs and conditions • transport costs • country infrastructure • political risk • market access • currency issues

8. In-Bound Logistics II • Factor costs and conditions • land • labour, including the cost of workers • manufacturing and production • professional and technical • management • capital cost • The cost of these factors depends on • availability • relative abundance

9. In-Bound Logistics III • World factor costs that affect manufacturing • industrialised countries • factor costs are tending to equalise • industrialising countries (Singapore, other Pacific Rim countries) • offer significant factor costs savings • offer an increasingly developed infrastructure and political stability • Russia and other countries • lower factor costs (especially wages) are offset by limited infrastructure development and greater political uncertainty

10. In-Bound Logistics IV • Transport Costs • Country Infrastructure • Political Risk • Market Access • Foreign Exchange

11. Out-Bound Logistics • Moving products from the factory to customers • It involves aspects of • transportation, • inventory control, • order processing and • warehousing

12. International Channel Strategies • The purpose of marketing channels is to create utility for customers • place • time • form • information • Two forms of channel strategy • direct involvement • indirect involvement

13. Characteristics Impacting on Channel Design and Strategy I • Customer characteristics • customer number, geographic distribution, income, shopping habits, reactions to different selling methods • Product characteristics • perishability, service requirements or unit price

14. Characteristics Impacting on Channel Design and Strategy II • Middleman characteristics • attitude towards the manufacturer • selection and care of distributors and agents • distributor and agent performance • termination • Environmental characteristics • economic, social and political dimensions

15. Global Trends in Channel Design and Strategy I • Global Retailing • today • future • Direct Marketing • distribution system, where sales to customers are carried out via telephone, mail or door-to-door • one-on-one approach is effective for products which need demonstration or complex explanation

16. Global Trends in Channel Design and Strategy II • E-Commerce and International Distribution Strategies • Design of appropriate distribution systems • E-Tailing • describes the increasing trend of retail operations globalising via the Internet • presenting and selling a product range over the Internet gains increasing importance

17. Global Trends in Channel Design and Strategy III • Alternative Channel Responses

18. Summary • Channel decisions are difficult to manage globally • A global marketer must • tailor the marketing program to different types of channels • or introduce new retail concepts • Retailing will see an increasing trend towards globalisation of operations