Distribution decisions in international
context
External factors
 Structure of distribution/channel
 Conflict & Control issues
 Managing logistics
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Role of channel intermediaries
1.
coordinate and assemble international buyer demand
and product availability
reduce bargaining asymmetry between buyers and
sellers in different countries and cultures
2.
protect buyers and sellers from opportunistic behavior
to serve as agents of trust in cross-cultural context
3.
reduce market transaction costs
4.
match buyer and sellers in different countries –
establish contacts and customer relations in selected
markets
5.
provide physical distribution/logistical support
necessary for the company’s product category
Considerations in developing an
international distribution strategy
Customer characteristics
 Product characteristics
 Distribution channels
 Environmental characteristics
 Corporate objectives
 Financial
 Control
 Profit potential
 Investment requirements
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Distribution channel selection criteria
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Distribution density refers to the coverage a
product will have within a market, I.e. can you reach
all your customers?
Channel length refers to the number of
intermediaries directly involved in the physical or
ownership path from producer to customer.
Number of intermediaries are influenced by: (1) a
product’s distribution density, (2) the average order
quantities and (3) channel membership availability.
Channel alignment aims to ensure that all the
distribution intermediaries co-ordinate their actions to
ensure efficient delivery of products. Distribution logistics - refers to the physical
movement of goods through the distribution
channels.
Guidelines for anticipating and correcting
problems with international distributors
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Select distributors – do not let them select you
Look for distributors capable of developing markets
Treat the local distributors as long-term partners
Support market entry by committing money,
managers, and proven marketing ideas
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
Multiple Channels serve international markets
Home Country
International Market
End-user/
Customer
Firm
Regional
distribution
centre
Wholesaler
Sales
Subsidiary
Trading
Company
Buying
Organisation
Export
Agent
Distributor/
Importer
Retailer
Selecting an international intermediary
to be considered:
 geographical area and market segments
covered
 the
need to avoid domain conflict among agents or
distributors

range of products and companies already
presented
 complementary
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or competitive
customers served and trade contacts used
product knowledge and application experience
servicing and after-sales service capability
level and form of commission of margins
required
legal rights and responsibilities
Conflict of interests?
Manufacturer
Intermediary
Value added
in the
downstream
channel
Supplier
replaceability
Transaction costs reduction
Mutual support and trust
Intensive, selective and exclusive distribution
M = Manufacturer
W= Wholesaler
R = Retailer
Source: Lewison, 1996, p. 271.
Channel cooperation, conflicts and trust
channel conflict arises when one channel member perceives another to be
impeding the achievements of its goals
There are three main sources of conflict:
incompatible goals between large manufacturer
exporters and small retailers
domain conflict where manufacturers compete with
wholesalers for market territory
incongruent perceptions of the distribution task
and how it should be performed
Support measures the company can take:
 to provide sales and promotional
materials written in the local language
 to
visit the agent or distributor
regularly and to visit customers together
 invite
agents-distributors to company
premises regularly
 to
ensure that the price structure provides
a genuine financial incentive
 to
provide updates on products, markets,
and company developments
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International Marketing