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 around 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 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 does 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
