9 Logistical Challenges: Avoiding Price Escalation & Piracy Flashcards
List the role of intermediaries.
- Coordinating - demand with product availability & facilitating negotiation
- Protecting - buyer/seller from opportunism
- Reducing - transaction costs by smoothing bargaining process
- Matching - buyers with sellers + facilitating exchange between parties
- Providing - necessary physical distribution/logistical support
Recap of market entry options.
- Export intermediaries
- Direct export
- Exporting intellectual content
- Licensing
- Franchising - Manufacturing
- Assembly
- Contract manufacture
- Joint Venture
- Acquisition - Strategic Alliances
List the different distribution criterias.
- Structural Dimensions
- Channel Availability
- Cultural Issues
- Commercial Environmental
List the structural dimensions.
- Length: how many intermediaries required to reach end consumer?
- Width: how many intermediaries at each level?
- Density: what level of market coverage is required?
- Alignment: how closely will each level coordinate?
- Logistics: who handles the physical transfer?
Channel availability?
- Does it exist?
- Does it reach the target market?
- Do competitors occupy/control key channels?
- Can you identify complementary channels?
Cultural Issues?
- Psychic distance – attitude and perception
2. Affects trust, risk, knowledge
Government/Legal Constraints?
- Trade barriers & Protective regulation
2. Retail price maintenance, turnover tax, liability, contracts, territory restrictions etc.
Commercial/Environmental Constraints?
- Intermediary role
2. Competitive stance
Channel Configuration Decisions.
- Cost
- Control
- Commitment
- Nature of Product
- Nature of Market
Cost?
- Time and financial
- Inventory
- Order-handling
- Transportation
- Margins, mark-ups, commissions
- Sales, inventory, credit, advertising
Control?
- Influence over key marketing decisions
- Where and how it is being sold
- Can increase risk exposure
- Can trade off for greater local knowledge and access
Commitment?
- Sole (exclusive) distributor or open network of intermediaries
- Will influence market coverage, coordination of roles, entry/withdrawal expenses etc.
Nature of Market?
Gov control, buying preferences, demand cycles
Nature of Product?
Bulk, perishability, install/service requirements
Firm Objectives?
Profitability/market share
Factors to consider for Modes of Transport?
- Cost of alternatives
- Nature of the product
- Frequency of shipment
- Distance to location
- Value of shipment
- Availability of shipment
Shipping terms?
The exporter, importer and logistics provider all have responsibilities to one another (outlined in the export contract)
What are the risks that come with Payment Terms?
- credit risk
- foreign exchange risk
- transfer risk
- political risk
Why does Dropshipping work?
- Internet is too big
- Language/Knowledge barriers
- Marketing! positioning, targeting, value-add
What are the benefits of Dropshipping?
- Easy to start – low investment, experience
- No inventory management
- Control customer interface
- Easy to scale
What is the Gray Market?
Legal export/import transactions involving the importation of genuine products into a country by intermediaries other than the authorised distributors
What are the 3 forms of the Gray Market?
- Parallel importation
Export of the product to one of the product’s existing export markets by a party other than the manufacturer - Re-importation
Importing the product back into the home market - Lateral importation
Moving the product from one international market to another
What causes a Gray Market?
- Currency fluctuations
difference in prices is produced by movements in currency
allows the parallel importer to take an ‘arbitrage’ advantage - Differences in market demand
a product is in great demand in country A but not in country B. parallel importer brings (now discounted) product from country B to country A - Segmentation strategy
a product is priced differently in different countries to cater for different segments. Presents the parallel importer with an arbitrage opportunity
Customer Perspective of Gray Market?
+ Cheaper
+ In stock (Availability)
+ Range
- No warranty
- No protection under local law
Manufacturer Perspective of Gray Market?
- Brand reputation risks
- Loss of profits
- Contract/License complications
- Lose potential after sales service
+May possibly increase market share and brand awareness
