International Distribution Management

1
International Distribution Management
2
Global Trends inDistribution Systems

• Larger-Scale Retailers
• International Retailers
• Direct Marketing
• Discounting
• Information Technology

3
Wholesaling

• Most European countries are on par, relative to
  the population
• The United States has relatively few
  establishments, each of larger scale
• The Japanese have many units and a large number
  of people in wholesaling
• The size distribution of wholesalers in many
  countries seems to approximate the well-known
  80-20 rule 80 percent of the transactions are
  handled by 20 percent of the firms
• Vertical Integration
• Power and Competition
• Efficiency

4
Retailing

• Lifestyle
• Shopping represents both a tiresome job and a
  leisure activity for individuals everywhere and
  is both a reflection of and a formative influence
  on the lifestyle of the people in a country
• Creating New Channels
• The rapid deployment of point-of-purchase
  information technology

5
Categories of Retail Stores

• Department stores Macys Mitsukoshi
• Specialty retailers Laura Ashley Gap Starbucks
• Supermarkets Tesco Sainsbury Sparr
• Convenience stores 7-Eleven
• Discount stores
• Full-line discounters (Tati (France) Wal-Mart
  (U.S.))
• Warehouse club (Sams Club (U.S.)
• Hypermarkets Carrefour
• Supercenters Wal-Mart
• Category killers Toys R Us Home Depot Ikea

6
Developments in the 1990s

• The border-hopping of the 1980s has accelerated
  in the 1990s
• German companies Metro, Rewe, and Tengelmann
  entered the Czech Republic, Hungary, and Poland
• Growth in the scope of internationalization
  companies entered many markets besides adjacent
  ones
• Food retailers in Western Europe Tengelmann
  (Germany) Ahold (Netherland) Delhaize Le Lion
  (Belgium) in the U.S., Central Europe, and the
  Far East
• U.K. retailers Marks Spencer The Body Shop
  Laura Ashley Tesco Sainsbury
• U.S. clothing chains Talbots and T.K. Maxx have
  seen the U.K. as a bridgehead into the
  continental Europe

7
Classification of the Global Retailers
Few Categories
C
A
Benetton, Ikea, Habitat, Gap, HM, CA
Toys R Us, Virgin, Douglas, Spar, Vobis
Own-Label Focus
Manufacturer Brands Focus
B
D
Carrefour, Makro, Promodes, Auchan, IGA, Yaohan
Marks Spencer, Migros
Many Categories
8
Global Retail Aspirants

• The hypermarket companies of France and the
  powerful Dutch and German food retailers
• Carrefour (France) in 15 countries Promodes
  (France) in 11 countries Metro (Germany) in 17
  countries
• The power-retailers that emanate mainly, but not
  exclusively, from the U.S.
• Ikea (Sweden) in 28 countries Toy R Us in 27
  Wal-Mart in the U.S., Canada, Argentina, Brazil,
  Mexico, Puerto Rico, China and Indonesia
• Niche retailers, particularly prominent in the
  U.K.
• The Body Shop in 46 countries Tie Rack in 30
  HMV in 9
• Designer brand companies, primarily in fashion
  and drawn principally from the U.S. and Western
  Europe
• Donna Karan and Ralph Lauren have been opening
  large flagship stores in capital cities

9
Dimensions of Distribution Strategy

• Distribution Density
• Density refers to the amount of exposure or
  coverage desired for a product
• Channel Length
• The concept of channel length involves the number
  of intermediaries involved in bringing a given
  product to the market
• Channel Alignment and Leadership
• The area of alignment deals with the structure of
  the chosen channel members to achieve a unified
  strategy
• Distribution Logistics
• Logistics involves the physical flow of products
  as they move through the channel

10
Constraints

• Customer Characteristics
• Product Characteristics
• Middleman Characteristics
• Environmental Characteristics

11
Channel Structure Alternatives for Consumer
Products

• Door-to-Door Sales Force
• Internet Marketing
• Mail-Order Marketing
• Manufacturer-Owned Stores

12
Entry Strategy Framework
Culturally Close
A
C
Organic
Chain Acquisition
Easy to Enter
Difficult to Enter
B
D
Franchise
Joint Venture
Culturally Distant
13
Entry Strategy

• Organic (Greenfield and Site Acquisition)
• Using its own resources to acquire existing sites
  from other retailers or to start from scratch
• Franchise
• Master franchise only one franchisee per country
  or region a sub-franchisee network
• Direct franchise several franchisees within a
  country, usually on a location-by-location basis
• Acquisition
• Involves purchasing multiple outlets in the
  target market
• Joint Venture

14
Gaining Access toDistribution Channels

• The Locked-Up Channel
• Alternative Entry Approaches
• Piggybacking
• Original Equipment Manufacturers (OEMs)

15
Rationalizing Local Channels

• Changing Distributors
• The termination of independent distributors or
  authorized dealers contracts
• Creating a wholly owned sales subsidiary
• Dual Distribution
• To differentiate the offerings in different
  channels

16
Global Logistics Decision

• Traffic or transportation management
• Air Express
• Ocean Carriers
• Overland Transportation
• Inventory control
• Order processing
• Material handling and warehousing
• Fixed facilities location management

17
Problems for Manufacturers

• The shift of bargaining power in the channel
• To serve local retailers and global retailers
  simultaneously
• Channel Captain
• Relationship Marketing
• Development of global brands