Welcome to class of International Distribution by Dr. Satyendra Singh University of Winnipeg Canada
International Distribution • • Factors Affecting Choice of Channels Locating and Managing Channel Members Internet Intermediary Choices – Home – Foreign – Government
Factors Affecting Choice of Channel… • Objectives – Volume, market share, profit, control, length of channel, terms of sales – The 5 C’s of distribution • Character of your Company and the market – Perishable items, complexity of sales requires, SAS, value of the product – Own sales force vs. distributor’s, aggressive managers (NY, fast cities) • Coverage – – • Distribution intensity, 100%! Has impact on market share/penetration/$ Several channels may be needed (full service vs. no service) 2 -3 cities may be enough (Paris 30% of France population vs. NY only 5%) More distributors are needed in US than France to achieve the same market share Continuity – Serious issue if family-owned channel. Coca-cola lured Pepsi’s distributor in Brazil – May not carry the line with less margin
Factors Affecting Choice of Channel • Control – Own/short channel more control on price, volume, promotion – Enthusiastic invest time to promote your product • Cost – Developmental and maintenance costs – Transporting and sorting, breaking bulk, provide credit, local advertising, sales representation, negotiations – If possible, set up your own channel own sales force – However other costs remain same– consignments, loan, floor plans, etc.
Locating and Managing Channel Members • Locating – Tradeshow, governments (DFAIT), third party recommendations, websites • Selecting – Trustworthy, references, finances, size of firm, experience, resources – Go to foreign market and see the channel members • Motivating – Financial, psychological rewards (trip to head office, recognition), communications (newsletter, new product info. ), corporate rapport • Controlling – Measurable performance indicators sales volume, market share, inventory turnover, accounts per area… • Terminating – Easy in US, not in international markets may claim up to 10% of sales as compensation x no of years served
Internet • Culture – Polite words, color, – 70% user Sweden vs. 1% in China vs. 40% France – Need broad-band, China allows only access to approved websites • Adaptation – Global or local – 50, 000 pages! Translation in +50 languages! • Local Contact – Customer enquiries, product return, payment where credit card is not possible, delivery of the purchased product • Promotion – – – Website is a store; we need to bring customers there Search engine registration, banners display, press release, local news group, … Different e-mail marketing strategy in EU– more privacy by law Vacation packages are more popular in the UK than US Germany may be interested in different destinations than Canadians
Intermediary Choices
Intermediary Choices… • Home-Country Intermediaries – Global retailer • – Export Management Companies • • • – Ikea, Wal-Mart, Costco, Toys “R” Us… Usually works on commission (but may buy merchandize) Good for small companies – does not want to have own people Minimum investment, no commitment But no deep distribution ATM Export Management, MARAC Enterprizes Trading Companies • • • Not very popular in US/Canada Generally in developed countries Accumulate, transport and distribute in many countries Strategies www. strategis. gc. ca Ontario association of trading houses www. oath. on. ca
Intermediary Choices… • Home-Country Intermediaries – Home-Country Brokers • • • – Buying Offices • • • – Bring buyer and seller together Low-cost agent service, Does not have continuing relationship www. aacb. com Does not provide selling services Grey marketing! Does not provide continuing source of representation Selling Group • • Works under government sanctions Canadian wheat board
Intermediary Choices… • Foreign-Country Intermediaries – Producers’ retail stores • – Distributors • • – – Tim Horton, Nygard International… May be exclusive rights High degree of dependence Long-term continuous basis Control over price, promotional efforts, inventories, servicing Foreign Country broker Dealers • • • Very powerful within a geographic areas Retailers – consumers Dealers– industrial and capital items
Intermediary Choices • Government-Affiliated Intermediaries – Government purchasing offices • – – Selling to governments is complex and competitive Good understanding of governments • – Keep an eye on government spending Be on the government buyer’s list • • • – National, Regional and Local levels Military supplies Office supplies Construction Can be very lucrative
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