Chapter Fifteen Global Distribution

Chapter Fifteen Global Distribution

MKT568

Global Marketing Management

Dr. Fred Miller

3-1

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.

1. Identify and describe the three general international marketing strategies. (6 points)

2. 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)

3. Which of the three general marketing strategies do you recommend to DeutscheDrives? Explain why. (2 points)

Benefits of Standardized Distribution

Cost reduction shipping and merchandising costs

channel management costs

Control of marketing strategy

Consistency of positioning

Logistic efficiency

Constraints on Standardization

Wholesaling and Retailing Structureswholesaling; types, business practices, integration

retailing practices; integration, lifestyles, global retailing, retailing channel captains, PoP IT

Adjusting Channel Relationshipschanging distributors, dual distribution

shortening channels, integration

creating new channels

Data Archaeology:Profiling Web Customers

Size and Number of Wholesalers in Selected Countries

Size and Number of Wholesalers in Selected Countries

14-2

Exhibit 14.1 Source: Retailing in the European Single Market, 1993. These figures are adapted from Table EUR1a:“Importance of Commerce in the EC—absolute values (1987-91)”

# 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

Size and Number of Retail Outlets in Selected Countries

Size and Number of Retail Outlets in Selected Countries

14-7

Exhibit 14.4 Source: Retailing in the European Single Market, 1993. These figures are adapted from Table EUR1a: “Importance of Commerce in the EC—absolute values (1987-91)”

# 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

Japanese Import Distribution Alternatives - Distribution Route of Italian Spaghetti

Japanese Import Distribution Alternatives - Distribution Route of Italian Spaghetti

14-3

Processing and

packing plant

Import agent

Producer

Primarywholesaler

Intermediary wholesaler

Small wholesaler

Retailer

Conventional Route

Restructured Route

Retail price: 170yen/300g package

Retail price: 128yen/300g package

Depots Distribution Wholesalers Distribution

centers

Retailer

Processing and

packing plant

Importing company

A/C

Producer

Savings: 25%

Source: Allied Import Company, as reproduced in Michael R. Czinkota, and Jon Woronoff, Unlocking Japan’s Markets. Chicago, IL: Probus, 1991, p. 104. Used with permission.

Exhibit 14.2

14-4 International comparison of Wholesale Trade Practices

International comparison of Wholesale Trade Practices

Practice Japan United States Britain

Returned Goods

• Returning unsold goods is common

• Doesn't exist except for imperfect or damaged goods

• Doesn't exist except for imperfect or damaged goods

Rebate system • Diverse complicated structure (volume, fixed date, evaluation, promotion)

• Long term in pay unit (yearly, half-year, etc.)

• Rebates are not necessarily open

• No rebates but discounts and allowances exist

• Open rule • Pay unit depends

• Quantitative and date fixed rebates exist

• Open rule • Pay unit depends

Quotations • MSRP’s exist • Written materials and

certain drugs and cosmetics are allowed to maintain resale prices

• Manufacturer's suggested retail prices exist

• Doesn't exist in principle

• Books and drugs are allowed to maintain resale prices Exhibit

14.3Source: Distribution Economics Institute, Survey on International Comparison on the Distribution Industry, May 1990.

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

Global Logistics and Channels

Parallel Distribution

definition and effects

supply, dealer, demand interference and strategic attack

Global Channels

availability, tie-up, coordination and control

Seiko’s Authorized and Unauthorized Channels of Distribution

Seiko’s Authorized and Unauthorized Channels of Distribution

14-8

Source: Jack Kaikati, “Parallel Importation: A growing Conflict in International Channels of Distribution,” Symposium on Export-Import Interrelationships, Georgetown University, November 14-15, 1985.

Distributors Distributors Distributors Distributors

Retailers Retailers Retailers Retailers

Importer Importer Importer

Europe Hong Kong Japan North America

Solid arrows denote the flow of Seiko watches through authorized channels of distribution.Broken arrows denote the flow of Seiko watches through unauthorized channels of distribution.

Exhibit 14.5

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 practicesCorporate strategies for international markets

multidomestic, global, global with localization

Product and branding strategiesMarket entry strategiesPromotion strategiesDistribution and locational strategies

Chapter Fifteen Global Distribution

Chapter Fifteen Global Distribution

MKT568

Global Marketing Management

Dr. Fred Miller

3-1

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?

Bond’s 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 firm’s marketing strategy?

In your opinion, how valuable is product placement for global marketing strategies? Explain.