Global Distribution Strategies

Global Distribution Strategies:-

Too many U.S. manufacturers think their job is done once the product leaves the factory. They should instead note how the product moves within the foreign country and take a whole-channel view of distributing products to final users.

CHANNEL ENTRY:-

Three links between the seller and the final buyer. In the first, seller’s international marketing headquarters, the export department or international division makes decisions about channels and other marketing activities. The second link, channels between nations, gets the products to the borders of the foreign nation. Decisions made in this link include the types of intermediaries (agents, trading companies), type of transportation (air, sea), and financing and risk management. The third link, channels within foreign nations, gets products from their entry point to final buyers and users. When multinationals first enter a country, they prefer to work with local distributors with good local knowledge, but friction often arises later.74 The multinational complains that the local distributor doesn’t invest in business growth, doesn’t follow company policy, and doesn’t share enough information. The local distributor complains of insufficient corporate support, impossible goals, and confusing policies. The multinational must choose the right distributors, invest in them, and set up performance goals to which they can agree.

CHANNEL DIFFERENCES:-


Distribution channels across countries vary considerably. To sell consumer products in Japan, companies must work through one of the most complicated distribution systems in the world. They sell to a general wholesaler, who sells to a product wholesaler, who sells to a product-specialty wholesaler, who sells to a regional wholesaler, who sells to a local wholesaler, who finally sells to retailers. All these distribution levels can make the consumer’s price double or triple the importer’s price. Taking these same consumer products to tropical Africa, the company might sell to an import wholesaler, who sells to several jobbers, who sell to petty traders (mostly women) working in local markets. Another difference is the size and character of retail units abroad. Large-scale retail chains dominate the U.S. scene, but much foreign retailing is in the hands of small, independent retailers. Millions of Indian retailers operate tiny shops or sell in open markets. Markups are high, but the real price comes down through haggling. Incomes are low, most homes lack storage and refrigeration, and people shop daily for whatever they can carry home on foot or bicycle. In India, people often buy one cigarette at a time. Breaking bulk remains an important function of intermediaries and helps perpetuate long channels of distribution, a major obstacle to the expansion of large-scale retailing in developing countries. Sometimes companies mistakenly adapt infrastructure strategies that were critical success factors, only to discover that these changes eroded the brand’s competitive advantage. Dell Computer initially abandoned its direct distribution strategy in Europe for a traditional retailer network of existing channels, with poor results. Ignoring critics who claimed the direct distribution model would never work in Europe, Dell then revamped its direct approach, relaunching its personal computer line with a new management team to execute the direct model it had pioneered in the United States, finding greater success as a result. Increasingly, retailers are moving into new global markets, offering firms the opportunity to sell across more countries and creating a challenge to local distributors and retailers.France’s Carrefour, Germany’s Metro, and United Kingdom’s Tesco have all established global positions. But some of the world’s most successful retailers have had mixed success abroad. Despite concerted efforts and earlier success in Latin America and China, Walmart had to withdraw from both the German and South Korean markets. Final buyers Seller Channels between nations Seller's international marketing headquarters Channels within foreign nations Whole-Channel Concept for International Marketing 

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