Welcome!
International Distribution
Dr. Satyendra Singh
Professor, Marketing & International Business
University of Winnipeg, CANADA
sites.google.com/view/drsatsingh
s.singh@uwinnipeg.ca
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International distribution
Distribution Structure
Traditional, Modern, Retail Giants, Concession, Informal…
Factors Affecting Choice of Channel
Character, Coverage, Continuity, Control, Cost
Locating and Managing Channel Members
Locating, Selecting, Motivating, Controlling, and Terminating
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International intermediaries
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Africa and Asia
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North American distribution structure (automobile)
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Japanese distribution structure (automobile)
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Retail penetration in selected countries
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Traditional
Import-oriented structure 🡪 prevent in emerging markets
High price, small no of affluent customers
Sellers market 🡪 demand exceed supply
Absence of cars and telephones
Local monopoly of small stores
Buy daily in developing country vs bi-weekly in Canada
Intermediaries do not perform specific activities
Import-wholesalers perform marketing function
Advertising, marketing research, warehousing, financing, storage
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Modern (and Online)
Hypermarkets, shopping malls, catalogue, Internet
Brick-mortar eg. Dell, Brick-click eg Amazon, DHL, UPS
Discount, self-service, mass merchandizing, return policy…
Higher margin in EU than US
Internet-based system for ordering and delivering (low cost, efficient)
Convenience store as a pickup points for web-orders
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Retail Giants
Carrefour (France), Praktikar (Germany), Ikea (Sweden)…
Wal-Mart, McDonald’s, Home Depot take risk in foreign markets
Europeans are quick to enter foreign market, emphasis on being first, retail strategy, local needs and taste
Americans are exploit domestic market first, emphasis on efficiency, standardization and value to customers
International retailers have advantages over local retailers
World-class business processes, Technology, Financing, Organizational capabilities, Greater buying power, Superior service…
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Factors affecting choice of channel (the 5 Cs)…
Objectives
Volume, market share, profit, control, length of channel, terms of sales
① 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)
② 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 needed in US than France to achieve the same market share
③ Continuity
Serious issue if family-owned channel. Coca-cola lured Pepsi’s distributor in Brazil
May not carry the line with less margin
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Factors affecting choice of channel (the 5 Cs)
④ Control
Own/short channel 🡪 more control on price, volume, promotion
Enthusiastic 🡪 invest time to promote your product
⑤ 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
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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
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Reilly’s law of retail gravitation
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If population of A = 100,000 and B = 900,000 and they are 100 km apart, Breaking point = 25 km from city A
A
B
Point of indifference
25 km
Breaking point distance from city A =
Huff Gravity Model
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A = attractiveness (eg. size etc.) of store. D = distance from city Centre. a= store location. b=store location.
A=5, B=6 (7-pt scale), Da=10km, Db=6 km. Population of the city is one million.
So p(a) = .23. Pb= 1- pa. visitors (a) = .23 x population
A=5
B=6
City center
10 km
6 km
Questions?�s.singh@uwinnipeg.ca