Description
Marketing channels exist to create utility for
customers
• Place utility—availability of a product or service in
a location that is convenient to a potential
customer
• Time utility—availability of a product or service
when desired by a customer
• Form utility—availability of the product
processed, prepared, in proper condition and/or
ready to use
• Information utility—availability of answers to
questions and general communication about
useful product features and benefits
1
Global Marketing Channels Global Marketing Channels
and Physical Distribution and Physical Distribution
Global Marketing
Chapter 12
1 Global Marketing- Schrage 12
Channel Objectives Channel Objectives
• Marketing channels exist to create utility for
customers
• Place utility—availability of a product or service in
a location that is convenient to a potential
customer
• Time utility—availability of a product or service
when desired by a customer
• Form utility—availability of the product
processed, prepared, in proper condition and/or
ready to use
• Information utility—availability of answers to
questions and general communication about
useful product features and benefits
12-2 Global Marketing- Schrage 12
Distribution Channels: Distribution Channels:
Terminology and Structure Terminology and Structure
• Distribution is the physical flow of goods through
channels
• Channels are made up of a coordinated group of
individuals or firms that perform functions that add
utility to a product or service
• Distributor—wholesale intermediary that typically
carries product lines or brands on a selective basis
• Agent—an intermediary who negotiates transactions
between two or more parties but does not take title to
the goods being purchased or sold
12-3 Global Marketing- Schrage 12
Consumer Products Consumer Products
12-4 Global Marketing- Schrage 12
Customers Customers
Retailer Retailer Retailer Retailer Retailer
Agents &
Brokers
Wholesaler
Wholesaler
Wholesaler
Manufacturer
Sales Force
Manufacturer
Sales Force
Manufacturer
Sales Force
Peer Peer- -to to- -Peer Selling Peer Selling
• The Internet and other related media
are dramatically altering distribution
• Ebay pioneered P2P and now helps
Disney and IBM set up websites for
fixed price selling as well as B2C
auctions
• Interactive TV may become a viable
direct marketing channel in the future
12-5 Global Marketing- Schrage 12
Door Door- -to to- -Door Selling Door Selling
• Mature form in the
United States
• Growing popularity in
China—AIG Insurance,
Mary Kay, Tupperware,
Avon, Amway
• Avon has been very
successful in Brazil in
the Amazon region
especially
12-6 Global Marketing- Schrage 12
2
Consumer Channels Consumer Channels
• Manufacturer-owned stores
• Walt Disney opening 600 new stores globally
• Nike, Levi Strauss, Apple
• Independent franchise
• Independent retailers
• Wal-Mart
12-7 Global Marketing- Schrage 12
Consumer Products Consumer Products
• Piggyback marketing
• Channel innovation that has grown in
popularity
• One manufacturer distributes product by
utilizing another company’s distribution
channel
• Requires that the combined product lines
be complementary and appeal to the same
customer
12-8 Global Marketing- Schrage 12
Industrial Products Industrial Products
12-9 Global Marketing- Schrage 12
Customers
Manufacturer Manufacturer Manufacturer Manufacturer
Wholesaler Wholesaler Wholesaler
Manufacturer’s
Sales Force
Distributor
or Agent
Establishing Channels Establishing Channels
• Direct involvement—the company establishes
its own sales force or operates its own retail
stores
• Indirect involvement—the company utilizes
independent agents, distributors, and/or
wholesalers
• Channel strategy must fit the company’s
competitive position and marketing objectives
within each national market
12-10 Global Marketing- Schrage 12
Working with Channel Working with Channel
Intermediaries Intermediaries
• Select distributors—don’t let them select you
• Look for distributors capable of developing markets, rather
than those with a few good customer contacts
• Treat local distributors as long-term partners, not temporary
market-entry vehicles
• Support market entry by committing money, managers, and
proven marketing ideas
• From the start, maintain control over marketing strategy
• Make sure distributors provide you with detailed market and
financial performance data
• Build links among national distributors at the earliest
opportunity
12-11 Global Marketing- Schrage 12
Global Retailing Global Retailing
• Department stores
• Specialty retailers
• Supermarkets
• Convenience stores
• Discount stores and
warehouse clubs
• Hypermarkets
• Supercenters
• Category killers
• Outlet stores
12-12 Global Marketing- Schrage 12
3
Top 10 Global Retailers 2005 Sales; Top 10 Global Retailers 2005 Sales;
Millions Millions
1. Wal-Mart USA $285,222
2. Carrefour France 90,297
3. Home Depot USA 73,094
4. Metro AG Germany 70,094
5. Royal Ahold Netherlands 64,615
6. Tesco UK 62,284
7. Kroger USA 56,434
8. Sears USA 55,800
9. Rewe Handelgruppe GER 50,698
10. Costco USA 48,107
12-13 Global Marketing- Schrage 12
Global Retailing Global Retailing
• Environmental factors
• Saturation in the home-country market
• Recession or other economic factors
• Strict regulation on store development
• High operating costs
• Critical question
• What advantages do we have relative to the
local competition?
12-14 Global Marketing- Schrage 12
Classifying Global Retailers Classifying Global Retailers
12-15 Global Marketing- Schrage 12
Gap Gap
IKEA IKEA
Virgin, Virgin,
Toys “R” Toys “R”
Us Us
Marks & Marks &
Spencer Spencer
IGA IGA
Carrefour Carrefour
Few Product Categories
Many Product Categories
Own-label Focus Manufacturers brands
Global Retailing Strategies Global Retailing Strategies
•• Organic growth Organic growth
• Company uses its own
resources to open a
store on a Greenfield site
or acquire one or more
existing retail facilities
•• Franchise Franchise
• Appropriate strategy
when barriers to entry
are low yet the market is
culturally distant in terms
of consumer behavior or
retailing structures
12-16 Global Marketing- Schrage 12
•• Chain acquisition Chain acquisition
• A market entry strategy
that entails purchasing a
company with multiple
existing outlets in a
foreign country
•• Joint venture Joint venture
• This strategy is advisable
when culturally distant,
difficult-to-enter markets
are targeted
Global Retailing Strategies Global Retailing Strategies
12-17 Global Marketing- Schrage 12
Organic
Chain
acquisition
Franchise
Joint
Venture
Culturally Distant
Culturally Close
Difficult to enter
Easy to enter
Innovation in Global Retailing Innovation in Global Retailing
• Innovation takes place only in the most highly developed
systems.
• The ability of a system to successfully adapt innovations
is directly related to its level of economic development.
• Even when the economic environment is conducive to
change, the process of adaptation may be either
hindered or helped by local demographic factors,
geographic factors, social mores, government action,
and competitive pressures.
• The process of adaptation can be greatly accelerated by
the actions of aggressive individual firms.
12-18 Global Marketing- Schrage 12
4
Innovation in Global Retailing Innovation in Global Retailing
12-19 Global Marketing- Schrage 12
Supply Chain Definitions Supply Chain Definitions
• Supply chain
• Includes all the firms that perform support
activities by generating raw materials, converting
them into components or finished products, and
making them available to customers
• Logistics
• The management process that integrates the
activities of all companies to ensure an efficient
flow of goods through the supply chain
12-20 Global Marketing- Schrage 12
Physical Distribution, Supply Physical Distribution, Supply
Chains, and Logistics Management Chains, and Logistics Management
• Order processing
• Includes order entry in which the order is actually
entered into a company’s information system;
order handling, which involves locating,
assembling, and moving products into distribution;
and order delivery
• Warehousing
• Warehouses are used to store goods until they
are sold
• Distribution centers are designed to efficiently
receive goods from suppliers, and then fill orders
for individual stores or customers
12-21 Global Marketing- Schrage 12
Physical Distribution, Supply Physical Distribution, Supply
Chains, and Logistics Management Chains, and Logistics Management
• Inventory management
• Ensures that a company neither runs out of
manufacturing components or finished goods nor
incurs the expense and risk of carrying excessive
stocks of these items
• Transportation
• The method or mode a company should utilize
when moving products through domestic and
global channels; the most common modes of
transportation are rail, truck, air, and water.
12-22 Global Marketing- Schrage 12
Supply Chain Supply Chain
Global Marketing- Schrage 12 12-23
Transportation Transportation
Channel
strategy—
analyzing each
shipping mode to
determine which
mode, or
combination of
modes, will be
both effective and
efficient in a
given situation
Global Marketing- Schrage 12 12-24
5
MODES MODES
Mode Cost Speed Accessibility Capability Reliability
Ease of
tracing
Pipeline Low Slow Low Low High Moderate
Water Low Slow Low High Low Low
Truck Varies Fast High High High High
Rail Average Average Average High Average Low
Air High Fast Low Moderate High High
Internet Low Mod-fast Increasing Low High High
Global Marketing- Schrage 12 12-25
Selection of Port also critical Selection of Port also critical
Global Marketing- Schrage 12 12-26
Rail Service Rail Service
Global Marketing- Schrage 12 12-27
Global Marketing- Schrage 12 12-28
The Panama Canal
The program includes the widening of the narrow Gaillard Cut
allowing two-way traffic for even the largest ships and increasing
Canal capacity.
Canal currently at 95% capacity, by 2007 expected to be capacity
constrained
• Over 13,000 ships transit the Canal each year, hauling an estimated 4% of the
world's goods around the globe.
• Has implemented a $1billion improvement program to maintain the Canal and keep
it competitive.
Global Marketing- Schrage 12 12-29
Panama Panama – – Transportation Hub of the Transportation Hub of the
Americas Americas
doc_594826406.pdf
Marketing channels exist to create utility for
customers
• Place utility—availability of a product or service in
a location that is convenient to a potential
customer
• Time utility—availability of a product or service
when desired by a customer
• Form utility—availability of the product
processed, prepared, in proper condition and/or
ready to use
• Information utility—availability of answers to
questions and general communication about
useful product features and benefits
1
Global Marketing Channels Global Marketing Channels
and Physical Distribution and Physical Distribution
Global Marketing
Chapter 12
1 Global Marketing- Schrage 12
Channel Objectives Channel Objectives
• Marketing channels exist to create utility for
customers
• Place utility—availability of a product or service in
a location that is convenient to a potential
customer
• Time utility—availability of a product or service
when desired by a customer
• Form utility—availability of the product
processed, prepared, in proper condition and/or
ready to use
• Information utility—availability of answers to
questions and general communication about
useful product features and benefits
12-2 Global Marketing- Schrage 12
Distribution Channels: Distribution Channels:
Terminology and Structure Terminology and Structure
• Distribution is the physical flow of goods through
channels
• Channels are made up of a coordinated group of
individuals or firms that perform functions that add
utility to a product or service
• Distributor—wholesale intermediary that typically
carries product lines or brands on a selective basis
• Agent—an intermediary who negotiates transactions
between two or more parties but does not take title to
the goods being purchased or sold
12-3 Global Marketing- Schrage 12
Consumer Products Consumer Products
12-4 Global Marketing- Schrage 12
Customers Customers
Retailer Retailer Retailer Retailer Retailer
Agents &
Brokers
Wholesaler
Wholesaler
Wholesaler
Manufacturer
Sales Force
Manufacturer
Sales Force
Manufacturer
Sales Force
Peer Peer- -to to- -Peer Selling Peer Selling
• The Internet and other related media
are dramatically altering distribution
• Ebay pioneered P2P and now helps
Disney and IBM set up websites for
fixed price selling as well as B2C
auctions
• Interactive TV may become a viable
direct marketing channel in the future
12-5 Global Marketing- Schrage 12
Door Door- -to to- -Door Selling Door Selling
• Mature form in the
United States
• Growing popularity in
China—AIG Insurance,
Mary Kay, Tupperware,
Avon, Amway
• Avon has been very
successful in Brazil in
the Amazon region
especially
12-6 Global Marketing- Schrage 12
2
Consumer Channels Consumer Channels
• Manufacturer-owned stores
• Walt Disney opening 600 new stores globally
• Nike, Levi Strauss, Apple
• Independent franchise
• Independent retailers
• Wal-Mart
12-7 Global Marketing- Schrage 12
Consumer Products Consumer Products
• Piggyback marketing
• Channel innovation that has grown in
popularity
• One manufacturer distributes product by
utilizing another company’s distribution
channel
• Requires that the combined product lines
be complementary and appeal to the same
customer
12-8 Global Marketing- Schrage 12
Industrial Products Industrial Products
12-9 Global Marketing- Schrage 12
Customers
Manufacturer Manufacturer Manufacturer Manufacturer
Wholesaler Wholesaler Wholesaler
Manufacturer’s
Sales Force
Distributor
or Agent
Establishing Channels Establishing Channels
• Direct involvement—the company establishes
its own sales force or operates its own retail
stores
• Indirect involvement—the company utilizes
independent agents, distributors, and/or
wholesalers
• Channel strategy must fit the company’s
competitive position and marketing objectives
within each national market
12-10 Global Marketing- Schrage 12
Working with Channel Working with Channel
Intermediaries Intermediaries
• Select distributors—don’t let them select you
• Look for distributors capable of developing markets, rather
than those with a few good customer contacts
• Treat local distributors as long-term partners, not temporary
market-entry vehicles
• Support market entry by committing money, managers, and
proven marketing ideas
• From the start, maintain control over marketing strategy
• Make sure distributors provide you with detailed market and
financial performance data
• Build links among national distributors at the earliest
opportunity
12-11 Global Marketing- Schrage 12
Global Retailing Global Retailing
• Department stores
• Specialty retailers
• Supermarkets
• Convenience stores
• Discount stores and
warehouse clubs
• Hypermarkets
• Supercenters
• Category killers
• Outlet stores
12-12 Global Marketing- Schrage 12
3
Top 10 Global Retailers 2005 Sales; Top 10 Global Retailers 2005 Sales;
Millions Millions
1. Wal-Mart USA $285,222
2. Carrefour France 90,297
3. Home Depot USA 73,094
4. Metro AG Germany 70,094
5. Royal Ahold Netherlands 64,615
6. Tesco UK 62,284
7. Kroger USA 56,434
8. Sears USA 55,800
9. Rewe Handelgruppe GER 50,698
10. Costco USA 48,107
12-13 Global Marketing- Schrage 12
Global Retailing Global Retailing
• Environmental factors
• Saturation in the home-country market
• Recession or other economic factors
• Strict regulation on store development
• High operating costs
• Critical question
• What advantages do we have relative to the
local competition?
12-14 Global Marketing- Schrage 12
Classifying Global Retailers Classifying Global Retailers
12-15 Global Marketing- Schrage 12
Gap Gap
IKEA IKEA
Virgin, Virgin,
Toys “R” Toys “R”
Us Us
Marks & Marks &
Spencer Spencer
IGA IGA
Carrefour Carrefour
Few Product Categories
Many Product Categories
Own-label Focus Manufacturers brands
Global Retailing Strategies Global Retailing Strategies
•• Organic growth Organic growth
• Company uses its own
resources to open a
store on a Greenfield site
or acquire one or more
existing retail facilities
•• Franchise Franchise
• Appropriate strategy
when barriers to entry
are low yet the market is
culturally distant in terms
of consumer behavior or
retailing structures
12-16 Global Marketing- Schrage 12
•• Chain acquisition Chain acquisition
• A market entry strategy
that entails purchasing a
company with multiple
existing outlets in a
foreign country
•• Joint venture Joint venture
• This strategy is advisable
when culturally distant,
difficult-to-enter markets
are targeted
Global Retailing Strategies Global Retailing Strategies
12-17 Global Marketing- Schrage 12
Organic
Chain
acquisition
Franchise
Joint
Venture
Culturally Distant
Culturally Close
Difficult to enter
Easy to enter
Innovation in Global Retailing Innovation in Global Retailing
• Innovation takes place only in the most highly developed
systems.
• The ability of a system to successfully adapt innovations
is directly related to its level of economic development.
• Even when the economic environment is conducive to
change, the process of adaptation may be either
hindered or helped by local demographic factors,
geographic factors, social mores, government action,
and competitive pressures.
• The process of adaptation can be greatly accelerated by
the actions of aggressive individual firms.
12-18 Global Marketing- Schrage 12
4
Innovation in Global Retailing Innovation in Global Retailing
12-19 Global Marketing- Schrage 12
Supply Chain Definitions Supply Chain Definitions
• Supply chain
• Includes all the firms that perform support
activities by generating raw materials, converting
them into components or finished products, and
making them available to customers
• Logistics
• The management process that integrates the
activities of all companies to ensure an efficient
flow of goods through the supply chain
12-20 Global Marketing- Schrage 12
Physical Distribution, Supply Physical Distribution, Supply
Chains, and Logistics Management Chains, and Logistics Management
• Order processing
• Includes order entry in which the order is actually
entered into a company’s information system;
order handling, which involves locating,
assembling, and moving products into distribution;
and order delivery
• Warehousing
• Warehouses are used to store goods until they
are sold
• Distribution centers are designed to efficiently
receive goods from suppliers, and then fill orders
for individual stores or customers
12-21 Global Marketing- Schrage 12
Physical Distribution, Supply Physical Distribution, Supply
Chains, and Logistics Management Chains, and Logistics Management
• Inventory management
• Ensures that a company neither runs out of
manufacturing components or finished goods nor
incurs the expense and risk of carrying excessive
stocks of these items
• Transportation
• The method or mode a company should utilize
when moving products through domestic and
global channels; the most common modes of
transportation are rail, truck, air, and water.
12-22 Global Marketing- Schrage 12
Supply Chain Supply Chain
Global Marketing- Schrage 12 12-23
Transportation Transportation
Channel
strategy—
analyzing each
shipping mode to
determine which
mode, or
combination of
modes, will be
both effective and
efficient in a
given situation
Global Marketing- Schrage 12 12-24
5
MODES MODES
Mode Cost Speed Accessibility Capability Reliability
Ease of
tracing
Pipeline Low Slow Low Low High Moderate
Water Low Slow Low High Low Low
Truck Varies Fast High High High High
Rail Average Average Average High Average Low
Air High Fast Low Moderate High High
Internet Low Mod-fast Increasing Low High High
Global Marketing- Schrage 12 12-25
Selection of Port also critical Selection of Port also critical
Global Marketing- Schrage 12 12-26
Rail Service Rail Service
Global Marketing- Schrage 12 12-27
Global Marketing- Schrage 12 12-28
The Panama Canal
The program includes the widening of the narrow Gaillard Cut
allowing two-way traffic for even the largest ships and increasing
Canal capacity.
Canal currently at 95% capacity, by 2007 expected to be capacity
constrained
• Over 13,000 ships transit the Canal each year, hauling an estimated 4% of the
world's goods around the globe.
• Has implemented a $1billion improvement program to maintain the Canal and keep
it competitive.
Global Marketing- Schrage 12 12-29
Panama Panama – – Transportation Hub of the Transportation Hub of the
Americas Americas
doc_594826406.pdf