International Marketing 国际市场营销学 School of International Trade, Shandong University of Finance and Economics 山东财经大学（筹） · 国际贸易学院

International Marketing

国际市场营销学School of International Trade,

Shandong University of Finance and Economics

山东财经大学（筹） · 国际贸易学院

山东财经大学（筹） ·国际贸易学院School of International Trade, Shandong University of Finance and Economic

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International Distribution Channels

Chapter 11


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Chapter Outline

1. Nature of Distribution Channels 1. Nature of Distribution Channels

2. Distribution Channels Strategy2. Distribution Channels Strategy

3. Distribution Channel Structures3. Distribution Channel Structures

4. Locating Selecting and Motivating Channel Members

4. Locating Selecting and Motivating Channel Members

5. Internet and Distribution Channels5. Internet and Distribution Channels


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1. Nature of Distribution Channels

1.1 Distribution channel– Channels of Distribution is known as "Place" in the "4 P's"

model of Marketing. Distribution Channels provide the utility of place, of having products where the customer wants when the customer wants them.

– Channels of Distribution is defined as an organized network (system) of agencies and institutions which, in combination, perform all the functions required to link producers with end customers to accomplish the marketing task.

– Distribution has two dimensions: Logistics- Physical movement of goods Strategy- Who participates and what they do


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1.2 Distribution channel functions1. Information

2. Promotion

3. Contact

4. Matching(including such things as manufacturing, grading, assembling, and packaging)

5. Negotiation

6. Physical Distribution(transporting and storing)

7. Financing

8. Risk Taking


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1.3 Intermediaries (Middlemen)– Intermediary within a channel of distribution used to transfer

products from the manufacturer to the end user. – Those who actually take title to the products and resell them

are merchant middlemen. Those who act as brokers but do not take title are agent middlemen.

– Merchant middlemen include wholesalers and retailers. Agent middlemen include manufacturer's representatives, brokers, and sales agents.


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Nature of Distribution Channels


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Home-Country Middlemen

1. Manufacturers’ Retail Stores

2. Global Retailers

3. Export Management Companies

4. Trading Companies

5. U.S. Export Trading Companies

6. Complementary Marketers

7. Manufacturer’s Export Agent

• Home-country middlemen, or domestic middlemen, provide marketing services from a domestic base and find foreign markets for products for local manufacturers

• Home-country middlemen, or domestic middlemen, provide marketing services from a domestic base and find foreign markets for products for local manufacturers

Frequently used types of domestic intermediaries include:Frequently used types of domestic intermediaries include:

8. Home-Country Brokers

9. Buying Offices

10. Selling Groups

11. Webb-Pomerene Export Associations

12. Foreign Sales Corporation

13. Export Merchants

14. Export Jobbers


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Foreign-Country Middlemen

1. Manufacturer’s Representatives

2. Distributors

3. Foreign-Country Brokers

4. Managing Agents and Compradors

5. Dealers

6. Import Jobbers, Wholesalers, and Retailers

• Some of the more important foreign-country middlemen, who find markets for foreign manufacturers include:

• Some of the more important foreign-country middlemen, who find markets for foreign manufacturers include:


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Think and Answer

You’ve probably heard someone say, “The reason products cost so much is all the intermediaries.”– --Do intermediaries increase the cost of

products?– --Would consumers be better off or worse off

without intermediaries?


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2.Channel-of-Distribution Strategies

Types of intermediaries (Length of Distribution Channel)

Distribution Intensity (Width of Distribution Channel )


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– Direct Distribution (short) A channel whereby goods and services are sold

directly from producer to final user without involvement of other independent middlemen.

Dell, Direct-distribution model– Eliminates wholesalers and retailers.– Complete control over inventory levels and

distribution costs.– Direct monitor its customers’ needs.

“You can eliminate the middleman, but not the function.”


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– Indirect Distribution (long) A channel whereby goods and services are

sold indirectly from producer through independent middlemen to final users.


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Think and Answer

Dell Computer has used one simple supply chain system—direct sales over the Internet or by phone to both business and consumer users.

--If you were a marketing executive at Dell, what new supply chain options would you suggest?


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Distribution Intensity (Width of Distribution Channel )

– Intensive Distribution (广泛分销 ) Stocking the product in as many outlets as possible Used for Convenience Goods

– Selective Distribution (选择性分销 ) Using more than one but fewer than all of the intermediaries

who are willing to carry the company's products Used for Shopping Goods

– Exclusive Distribution (独家分销 ) Giving a limited number of dealers the exclusive right to

distribute the company's products in their territories Used for Specialty Goods


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3.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.


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Japan VS. US Channel structure (P251)


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German, Japan, US Retail structure (P251)


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Think and Answer

Learning the above materials, what can you tell the distinguishing differencies that Japan’s Distribution Channel structure has between US’s?


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1. Cost

2. Capital Requirements

3. Control

4. Coverage

5. Character

6. Continuity

Channel strategy itself is considered to have the following six specific strategicgoals:

Channel strategy itself is considered to have the following six specific strategicgoals:

4.Choice of Channels- 6Cs


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Locating Middlemen

(a) reputation

(b) creditworthiness

(c) markets served

(d) products carried

(e) number of stores

(f) store size

In selecting middlemen, the following criteria should be adopted.

In selecting middlemen, the following criteria should be adopted.


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Motivating Middlemen

Motivational techniques may be grouped into

five categories:

(1) financial rewards

(2) psychological rewards

(3) communications

(4) company support, and

(5) corporate rapport

There is a clear correlation between the middleman’s motivation and salesvolume

There is a clear correlation between the middleman’s motivation and salesvolume


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5.The Internet

When using the internet for distribution purposes, the following factors should be considered:

1. Culture

2. Adaptation (especially of language)

3. Local contact information

4. Payment form

5. Delivery

6. Promotion

• E-commerce is used to market business-to-business services, consumer services, and consumer and industrial products via the World Wide Web

• E-commerce is used to market business-to-business services, consumer services, and consumer and industrial products via the World Wide Web

• The Internet is an important distribution method for multinational companies

• The Internet is an important distribution method for multinational companies


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Chapter Summary

From the foregoing discussion, it is evident that the international marketer has a broad range of alternatives for developing an economical, efficient, high-volume international distribution system. To the uninitiated, however, the variety may be overwhelming.

Careful analysis of the functions performed suggests more similarity than difference between international and domestic distribution systems; in both cases the three primary alternatives are using agent middlemen, merchant middlemen, or government-affiliated middlemen.

In many instances, all three types of middlemen are employed on the international scene, and channel structure may vary from nation to nation or from continent to continent.


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Chapter Summary

The neophyte company in international marketing can gain strength from the knowledge that information and advice are available relative to the structuring of international distribution systems and that many well-developed and capable middleman firms exist for the international distribution of goods.

Although international middlemen are more numerous, more reliable, and more sophisticated within the past decade, traditional channels are being challenged by the Internet, which is rapidly becoming an important alternative channel to many market segments.

Such growth and development offer an ever-wider range of possibilities for entering foreign markets.


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Key Terms

distribution process distribution structure Large-Scale Retail Store

Location Act agent middlemen merchant middlemen compensation deal

counterpurchase product buy-back

agreement transfer pricing advanced pricing

agreement administered pricing cartel

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International Marketing 国际市场营销学 School of International Trade, Shandong University of Finance and Economics 山东财经大学（筹） · 国际贸易学院