Chapter 15 Flashcards
What is the distribution process?
includes the physical handling and distribution of goods.
what is distribution structure?
each country has a a distribution structure through which goods pass from producer to user, includes middlemen, customary functions, services, market characteristics ect.
Import-oriented distribution structure
importer controls a fixed supply of goods, and the market develops arounf the philosophy of selling a limited supply of goods at high prices to a small number of customers.
In the resulting seller’s market, market penetration and mass distribution are not necessary because demand exceeds supply, and in most cases, the customer seeks the supply from a limited number of middlemen.
Japanese distribution structure
The traditional Japanese structure serves consumers who make small, frequent purchases at small, conveniently located stores
- structure dominated by many small middlemen dealing with many small retailers
- channel control by manufacturers
- business philosophy shaped by a unique culture
- laws that protect the foundation of the system—the small retailer.
Large-scale retail store law
Designed to protect small
retailers from large intruders into their markets, the law required that any store larger than 5,382 square feet (500 square meters) must have approval from the prefecture government to be “built, expanded, stay open later in the evening, or change the days of the month they must remain closed.”
Retail patterns
Retailing shows even greater diversity in its structure than does wholesaling. In Italy and
Morocco, retailing is composed largely of specialty houses that carry narrow lines, whereas
in Finland, most retailers carry a more general line of merchandise
Direct selling
selling directly to the consumer
through mail, by telephone, or door-to-door
often the approach of choice in markets with insufficient or underdeveloped distribution systems
Distribution patterns and resistance to change
Efforts to improve the efficiency of the destruction system, new middlemen and other attempts to change the traditional system is often seen as threatening.
But ultimately, the consumer will prevail
What is an agent middlemen?
work on commission and arrange for sales in the foreign country, but do not take title to the merchandise.
the manufacturer assumes trading risk but maintains the right to establish policy guidelines and prices
What is a merchant middleman?
Merchant middlemen actually take title to manufacturers’ goods and assume the trading risks, so they tend to be less controllable than agent middlemen
Primarily concerned with sales and profit margins, not concerned with the best interest if a manufacturer
Home-country middleman (domestic middleman)
located in the producing firm’s country, provide marketing services from a domestic base.
Most likely to be used when the marketer is uncertain or desires to minimize financial and management investment.
offer many advantages for companies with small international sales volume, those inexperienced with foreign markets
What are manufacturers retail stores?
An important channel of distribution for a large number of manufacturers is the owned, or perhaps franchised, retail store. Disney, Benetton, and many of the classic Italian luxury goods makers take this approach
Global Retailers
IKEA, Costco, Sears Roebuck, and Walmart expand their global coverage, they are becoming major domestic middlemen for international markets
Export management companies (EMC)
Important middleman for firms with relatively small international volume or those unwilling to involve their own personnel in the international function
How does EMC’s work?
Working under the names of the manufacturers, the EMC functions as a lowcost,
independent marketing department with direct responsibility to the parent firm. The working relationship is so close that customers are often unaware they are not dealing directly with the export department of the company
The export management company may take full or partial responsibility for promotion of the goods, credit arrangements, physical handling, market research, and information on financial, patent, and licensing matter
Usually work on commission
What are trading companies?
Trading companies accumulate, transport, and distribute goods from many countries-
Usually located in developed countries, selling manufactured goods to developing countries and buy raw materials and unprocessed goods (dependency theory baby!)
Ex: Gary MacKenzie for UK
What is the export trading company act?
law in US that allows producers of similar products to form export trading companies without violating antitrust provisions
ETC Act created a more favorable environment for the formation of joint export ventures
Complementary marketers (piggybacking)
the businesses involved target a similar customer base but offer different products or services that complement each other
accepts products that are noncompetitive but complementary and that add to the basic distribution strength of the company itself.
The classic example was Gillette distributing batteries
in less-developed countries, years before Gillette bought Duracell
Manufacturer’s export agents (MEA)
The MEA is an individual or agent firm that provides selling services for manufacturers. it does not serve as the producer’s export department, but short-term for one or two markets.
Similar to EMCs, but EMS services as an export department
Webb-Pomerene export associations (EPEAs)
