Chapter Fifteen Global Distribution

1
Chapter Fifteen Global Distribution
3-1

• MKT568
• Global Marketing Management
• Dr. Fred Miller

2
Sample Essay Question

• DeutscheDrives is German producer of
  computer storage devices and media. The firm
  wishes to build upon its success in European
  markets by expanding to Asia, Africa, North and
  South America.
• Identify and describe the three general
  international marketing strategies. (6 points)
• For each element of the marketing mix (product,
  price, promotion and distribution), identify and
  describe one benefit of a global strategy and one
  constraint to implementing such a strategy. (12
  points)
• Which of the three general marketing strategies
  do you recommend to DeutscheDrives? Explain why.
  (2 points)

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Benefits of Standardized Distribution

• Cost reduction
• shipping and merchandising costs
• channel management costs
• Control of marketing strategy
• Consistency of positioning
• Logistic efficiency

4
Constraints on Standardization

• Wholesaling and Retailing Structures
• wholesaling types, business practices,
  integration
• retailing practices integration, lifestyles,
  global retailing, retailing channel captains, PoP
  IT
• Adjusting Channel Relationships
• changing distributors, dual distribution
• shortening channels, integration
• creating new channels

5
Data ArchaeologyProfiling Web Customers
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Size and Number of Wholesalers in Selected
Countries
14-2
of enterprises Employees Revenue Emp/Ent Rev/Ent
(thousands) (thousands) (bill ECU) (mill ECU)
Belgium 48 202 85 4.2 1,771
Denmark 36 166 60 4.6 1,676
Greece 28 115 4.1
France 132 1,049 312 7.9 2,356
Ireland 4 40 12 11.5 3,429
Italy 193 1,084 5.6
Luxembourg 2 11 5 5.7 2,632
Netherlands 72 360 135 5.0 1,878
Portugal 31 200 6.4
United Kingdom 143 921 310 6.5 2,172
United States 470 4,578 1,260 9.8 2,684
Japan 436 4,332 2,651 9.9 6,075
Exhibit 14.1
Source Retailing in the European Single Market,
1993. These figures are adapted from Table
EUR1aImportance of Commerce in the ECabsolute
values (1987-91)
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Size and Number of Retail Outlets in Selected
Countries
14-7
of enterprises Employees Revenue/ Ret to Whol Ratio Emp/Ent Rev/Ent
(thousands) (thousands) (bill ECU) (mill ECU)
Belgium 128 275 35/41 2.1 274
Denmark 48 200 24/40 4.2 499
Greece 175 338 20 1.9 114
France 462 2,090 260/83 4.5 563
Ireland 29 131 11/92 4.5 375
Italy 930 2,401 230 2.6 247
Luxembourg 4 18 3/60 5.2 857
Netherlands 95 638 45/33 6.7 474
Portugal 173 366 20 2.1 115
United Kingdom 348 3,030 280/90 8.7 804
United States 1,504 19,085 1,350/107 12.7 898
Japan 1,620 6,851 682/26 4.2 421
Exhibit 14.4
Source Retailing in the European Single Market,
1993. These figures are adapted from Table EUR1a
Importance of Commerce in the ECabsolute
values (1987-91)
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Japanese Import Distribution Alternatives -
Distribution Route of Italian Spaghetti
14-3
Conventional Route
Small wholesaler
Producer
Processing and packing plant
Import agent
Primarywholesaler
Intermediary wholesaler
Retail price 170yen/300g package
Retailer
Restructured Route
Depots Distribution Wholesalers Distribution
centers
Processing and packing plant
Importing company A/C
Producer
Retailer
Savings 25
Retail price 128yen/300g package
Exhibit 14.2
Source Allied Import Company, as reproduced in
Michael R. Czinkota, and Jon Woronoff, Unlocking
Japans Markets. Chicago, IL Probus, 1991, p.
104. Used with permission.
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International comparison of Wholesale Trade
Practices
14-4
Exhibit 14.3
Source Distribution Economics Institute, Survey
on International Comparison on the Distribution
Industry, May 1990.
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Global Logistics and Channels

• Global Distribution
• issues of transportation between countries
• technology and competition
• Modes of Transportation
• air express business and consumer markets
• ocean carriers containerization
• overland rail, truck, roll-on-roll-off
• inventory management distribution centers

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Global Logistics and Channels

• Parallel Distribution
• definition and effects
• supply, dealer, demand interference and strategic
  attack
• Global Channels
• availability, tie-up, coordination and control

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Seikos Authorized and Unauthorized Channels of
Distribution
14-8
Europe
Hong Kong
Japan
North America
Importer
Importer
Importer
Distributors
Distributors
Distributors
Distributors
Retailers
Retailers
Retailers
Retailers
Solid arrows denote the flow of Seiko watches
through authorized channels of distribution.Broke
n arrows denote the flow of Seiko watches through
unauthorized channels of distribution.
Exhibit 14.5
Source Jack Kaikati, Parallel Importation A
growing Conflict in International Channels of
Distribution, Symposium on Export-Import
Interrelationships, Georgetown University,
November 14-15, 1985.
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KFC in Japan Video

• This video has content relevant for
  several topics in the course. Describe the
  challenges KFC has confronted in TWO of the
  following areas. Has the firm responded to these
  challenges effectively? Explain.
• Japanese management styles and practices
• Corporate strategies for international markets
• multidomestic, global, global with localization
• Product and branding strategies
• Market entry strategies
• Promotion strategies
• Distribution and locational strategies

14
Chapter Fifteen Global Distribution
3-1

• MKT568
• Global Marketing Management
• Dr. Fred Miller

15
Cola Wars Video

• In which countries, with what strategy and with
  what success has Mecca Cola chosen to challenge
  Coca Cola?
• In which countries, with what strategy and with
  what success has Qibla Cola chosen to challenge
  Coca Cola?
• How has Coca Cola responded to these challenges?

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Bonds Vodka Article

• The promotional technique discussed in this
  article is product placement. Describe this
  technique and explain its value, especially for
  an alcoholic beverage product.
• Why did Brown Forman spend as much as it did to
  insure that James Bond would drink Finlandia in
  his most recent movie? How does this effort mesh
  with the firms marketing strategy?
• In your opinion, how valuable is product
  placement for global marketing strategies?
  Explain.