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Global Perspective A Single Stick of Doublemint Today – 18 Billion Tomorrow

Global Perspective A Single Stick of Doublemint Today – 18 Billion Tomorrow. A product must be made accessible to the target market at an affordable price Getting the product to the target market can be a costly process

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Global Perspective A Single Stick of Doublemint Today – 18 Billion Tomorrow

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  1. Global Perspective A Single Stick of Doublemint Today – 18 Billion Tomorrow • A product must be made accessible to the target market at an affordable price • Getting the product to the target market can be a costly process • Forging an aggressive and reliable channel of distribution may be the most critical and challenging task facing the international marketer • Competitive advantage will reside with the marketer best able to build the most efficient channel from among the alternatives available

  2. Channel-of-Distribution Structures • All consumer and industrial products eventually go through a distribution process. • Physical handling and distribution of goods • Passage of ownership • Buying and selling negotiations between producers and middlemen • Buying and selling negotiations between middlemen and customers • Each country market has a distribution structure through which goods pass from producer to user.

  3. Import-Oriented Distribution Structure • Demand exceeds supply • The customer seeks the supply from a limited number of middlemen • Distribution systems are local • Few countries fit the import-oriented model today In an import-oriented or traditional distribution structure, an importer controls a fixed supply of goods and the marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers.

  4. Japanese Distribution Structure • A structure dominated by many small middlemen dealing with many small retailers • Channel control by manufacturers • A business philosophy shaped by a unique culture • Laws that protect the foundation of the system

  5. Comparison of Distribution Channels between the United States and Japan • Insert Exhibit 14.1

  6. High Density of Middlemen • Not unusual for consumer goods to go through three or four intermediaries before reaching the consumer • In Japan, small stores account for 57.7 percent of retail food sales • In the U.S., small stores generate 19.2 percent of food sales • Japan has a large number of independent groceries and bakers, unlike America with an emphasis on supermarkets, discount food stores, and department stores

  7. Business Philosophy • Emphasizes loyalty, harmony, and friendship • Supports long-term dealer-supplier relationships • The cost of Japanese consumer goods are among the highest in the world • Japanese law gives the small retailer enormous advantage over the development of larger stores

  8. Large-Scale Retail Store Law and Its Successor • Daitenho – the Large-Scale Retail Store Law • Large stores must have approval from the prefecture government • All proposals first judged by the Ministry of International Trade and Industry (MITI) • Then, if all local retailers unanimously agreed, the plan was approved • Could be a lengthy process • Applied to both domestic and foreign companies • Replaced by the Large-Scale Retail Store Location Act of June 2000 • MITI out of the process • Relaxed restrictions

  9. Changes in the Japanese Distribution System • Structural Impediments Initiative • Deregulation • Wal-Mart • “New” retailers • The Internet

  10. Alternative Middleman Choices • Seller must exert influence over two sets of channels: • One in the home country • One in the foreign-market country • Agent middlemen – represent the principal rather than themselves • Merchant middlemen – take title to the goods and buy and sell on their own account

  11. Foreign-Country Middlemen • Manufacturer’s representatives • Distributors • Foreign-country brokers • Managing agents and compradors • Dealers • Import jobbers, wholesalers, and retailers

  12. Government-Affiliated Middlemen • Marketers must deal with governments in every country of the world • Products, services, and commodities for the government’s own use are always procured through government purchasing offices at federal, regional, and local levels • Efficiency of public sector versus the private sector

  13. Factors Affecting Choice of Channels • Cost • Capital requirements • Control • Coverage • Character • Continuity

  14. Locating, Selecting, and Motivating Channel Members • Locating middlemen • Selecting middlemen • Screening • The agreement • Motivating middlemen • Terminating middlemen • Controlling middlemen

  15. Summary • The international marketer has a broad range of alternatives for developing a distribution system. • Three primary alternatives for using agent middlemen: • Agent middlemen • Merchant middlemen • Government-affiliated middlemen • Channel structure may vary from nation to nation or from continent to continent. • Information and advice are available relative to the structuring of international distribution systems. • Traditional channels are being challenged by the Internet, which is offering an ever-wider range of possibilities for entering foreign markets.

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