Distribution channels and their impact on the level of standardization of multinational

corporations

Introduction and justification

The first question that arises from the review of the issue is what kind of research is to be
realized: pure or applied. And this leads us to try to define what is and what is the other, and so
we have to Starr (1979) says “the best definition is that pure research is not applied, ie no
immediate or obvious utility for increasing the convenience of man or give physical satisfaction
or increase their control over the environment. Pure research is, therefore, comparable to the
pursuit of knowledge for knowledge. “

After the decision of that kind of research is to make searching for the best method to follow,
however Durkheim (1982) states that “Before investigating what is the appropriate method to
study the facts social care to know what are the facts which are well known. “

He also tells us that social phenomena are things and should be treated as such, since it means
everything else is given, all it requires observation. It also provides several rules for research:
“We must systematically rule out all previous notions,” meaning that the conventional nature of
a practice should not ever assume.

“I never intended to make research more than a group of phenomena previously defined by
certain external characteristics that are common and include in the same investigation to all who
meet this definition” (Durkheim, 1982).

The growth of cities is given, among other factors, the commercial development that can be
achieved due to its interaction with various markets and whether national or international.

Today’s markets are increasingly globalized, ie trade and political barriers that countries had to
protect their local markets have been declining with the international agreements and free trade.

There are different forms of integration of multinational enterprises (MNE, for its acronym in
English) for entry in various markets and according to Chan and Hwang (1992) and found that
may be foreign direct investment (FDI its acronym in English), through franchises or through
licensing.

This has caused the explosive arrival in recent years CD. MNE victory so it is of interest to
researchers to know the advantages that the plaza offers investors, and if the way they meet their
raw material requirements for the development of its operations influencing the level of
standardization of products or services.
Development of the theory

The theory of channel development featuring Gillespie (1996) attempts to describe and explain
observed patterns of change in marketing channels and predict future changes. He also tells us
that there are two basic approaches to developmental theory of channels that have particular
relevance to emerging markets: an economic development approach and an approach where
culture dominates.

At this stage theory, we propose a hypothesis in which the wholesale and retail institutions move
to features and product offerings increasingly complex. Thus the channels in developing
countries are similar to those in developed countries and emerging paradigms of this approach
can be applied to all nations and cultures.

Celly (1996) in their research tells us about the importance of distribution channels and the
impact it has on the result of business experience having the dealer to meet the target market and
its relations with the
marketing program managers of the company.

It also raises the confidence to take the company as a distributor will have a better coordination
is reflected in the performance of its business goals “.

Stanton (1998) referred to in the way that companies can use existing channels or new ones to
provide better service to its customers. By selecting the channels trying to get a distinct
advantage.

These can be.

Distribution direct or indirect distribution, channel formed by the producer, the consumer end
and at least one level of intermediaries.

On the other hand Rugman (1998) shows us that a conventional ethnocentric MNE is
characterized by a concentration of FSA (firm-specific advantages, for its acronym in English) in
the country of origin with a replica of the production approaches and administration of the
country of origin in the host country. In contrast, a geocentric MNE’s about finding the balance
between the FSA and the interests of the host country.

The standardization of products or services is a reality in the field of global markets, however,
the dispute centers if the strategy with which foreign companies enter the market caters more to
an overall strategy or to adapt their products or services local markets.

It Levitt (1983) who the author is perhaps more representative of the overall strategy and
standardization He says: “The result is a new commercial reality – the emergence of global
markets for standardized consumer products on a scale previously unimaginable . Corporations
keep this new reality benefit from enormous economies of scale of production, distribution,
marketing and administration. Transforming these benefits into reduced world prices, they can
bend to competitors who are still alive clinging to old interpretations about how the world works.

Salazar Carvajal, R (2005) states: “Globalization means operate at relatively low costs, as if the
world or the most important regions, were a single entity. Sell the same and in the same way will
result in a significant change in deciding to adopt new forms of management within companies
framed the new current global market, and
that the support base of this process is a high level of competitiveness.

In the work of Subhash, C. Jain (1989) Factors affecting the program of standardization are
examined critically. In an attempt to establish a research agenda on the issue of standardization,
the author develops the research purposes for each factor.

The probability of program standardization depends on various factors such as type of market,
market position, the nature of the product and the environment.

The standardization of international marketing strategy refers to a stock price of the product,
distribution and promotion program on a global basis … .. A decision on the standardization is
not a choice between complete standardization and customization. There may be degrees of
standardization.

The authors of “The myth of globalization” indicate the three main ideas underlying the
approach to standardization globalization as assessed by Dr. Levitt.

Levitt 1983, quoted by Douglas, 1987, wrote:

1 .- The needs and interests of consumers have a worldwide trend towards homogenization.
2 .- The people around the world are sacrificing preferences in product features, designs, similar
features and lower prices and high quality.
3 .- substantial economies of scale in production and marketing can be achieved through
providing global markets.
Universal price for a low price and acceptable quality
With respect to this approach that guides and informs the authors of Globalization Myth of
Globalization object:

“The aggressive setting low prices for quality products that meet the common needs of customers
in markets around the world believes in the future can expand markets firms”
Economies of scale of production
In this third objection raised by the authors note:

“The third idea underlying the approach to globalization is a key that leads to this strategy is the
product technology and economies of scale can be achieved to provide global markets.
On the other hand after making a detailed questioning of the subject, raising m
any cases and cases the authors conclude:
“The main thesis of this paper is that the design of an effective global strategy does not
necessarily require standardized product marketing and global brands.” (Subhash, 1989)

Is a framework for determining the degree of standardization possible in a particular case. The
following key concepts underlie the rationale for this framework.

• The probability of program standardization depends on various factors such as type of market,
market position, the nature of the product and the environment. The explanation of these factors
is given in Figure 1

• The effective implementation of the standardization strategy is influenced by the prospects of

the organization.

• The total standardization is unthinkable.

• In the degree of standardization in a product / market situation must be examined in terms of

long-term benefit.

Conceptually, standardization of one or more parts of the marketing program is a function of five
factors identified in table 1. Individually and collectively these factors affect the standardization
differently in different areas of decision “Subhash (1989)

The model taken from the authors is as follows:

In summary, the theoretical framework was drawn from the theory Subhash C. Jain (1989),
driving the 6 elements such items, thereby allowing for the level of standardization.
Presentation of Hypothesis

In the present study tested the hypothesis .-

Ho .- the distribution channel selection does not impact the standardization (H0: ?1-?2 = 0)
H1 .- The selection of distribution channel impacts the standardization (Ha: ?1, ?20)

Research Methodology

For the present study were surveyed through a questionnaire to a random sample from the
existing MNE CD. Victoria Tam.

Of a total of thirty-three companies have received replies from twelve of them representing a
36.36% of the total market.

In the works consulted, the average response rate of 24.30%

The research is experimental, with 9 factors, of which 3 are to construct channels and 6 to
construct standardization.
Presentation and analysis of results

With the results obtained with this information we proceeded to validate the sample through the
determination of a confidence interval, we can say with 98% confidence which has the average
of the results of the questions.

To test the first hypothesis, the procedure for comparison in this case is to calculate the
differences of the n pairs of observations and calculations, that is, if you have:

Decision: if | tc | ? t (n-1, a / 2), H0 is rejected with a significance.

When analyzing the data we find that tc = 1.94 and the value of tt (12-1, a / 2) is 2,201 at 0.05
level of significance so we accept the hypothesis Ho and we can conclude that the choice of
channel does not affect standardization.
But in the analysis of correlation between different variables found the following results .-

1.-between provider experience variable (channel) and trade promotion variable (standardization)
positive correlation (0.568) statistically significant at 5%

2 .- among the variables that make up the constucto standardization with regard to pairs of
variables treatment policies customer vs. product placement, a positive correlation (0.563)
significant at 5%.

3 .- The marketing variable vs customer care policy is (626) significant at 5%.

4 .- vs. variable product placement advertising is (802) significant at 1%.

5 .- advertising vs variable customer care policy is (658) significant at 1%

When plotting the responses of the questionnaires filled in by enterprises (Figure 1) shows a
behavior of standardization presents the midline, reflecting the level of standardization of the
companies reviewed, indicating a mixed strategy.
 Conclusion

According to the results we can conclude with regard to standardization factor which according
to the revised theory of corporate behavior is expected.

But in terms of distribution channels need to rethink approaches and the literature reviewed no
parameters marks us to follow what we can say that is an area where you can drill down to that
future work can evaluate in greater depth.

DEFINITIONS AND CONCEPT OF CANAL

DISTRIBUTION:
Is the design of arrangements for transferring ownership of a product and transport it where it is
made they finally consumed.
Bibliography: Fundamentals of MKT, William J. Stanton. 1st Edition

Is a system that physically moves the products from where they are produced to the place where
you can take possession of them and use them.
Bibliography: Basic Strategies MKT, Robert W. 1 st Edition Frye

DEFINITION CHANNEL:

Conduit through which goods move from producer to consumer.

Bibliography: Glossary of MKT, Virgilio M. Torres Mc. Graw Hill

Are groups of individuals and organizations that direct the flow of goods to consumers.
Bibliography: Marketing, William M. Pride

A series of interdependent organizations involved in the process of getting the product reaches
the consumer or end user.

BASIC CHANNEL IN THE DEFINITION OF DISTRIBUTION:

Link, Media, Career, Placement, Displacement, intermediaries, final consumer, product / service.

1.2 CLASSIFICATION OF CHANNELS

Channel distribution of consumer goods. Is to deliver perishable products through various

distribution channels into the hands of consumers quickly and easily. Example: Farmers can get
their products through a central supply or through sales agents.

Distribution channel for industrial goods. It is when you have several channels to reach
organizations that incorporate products its manufacturing process or operations. Example:
Companies that manufacture parts for the production of an order, give automakers to carry out
their production.

Channel distribution services. The nature of services gives rise to special needs in their
distribution. And you can take two forms:

• A is that the service applies to the applicant at the time it occurs. Example: A person claiming
massage service, it applies at the same time it occurs.

• Another way may be that the applicant receive the service until the desired use. Example:
When a person makes a hotel reservation, arguably the service is already purchased and
produced. But come to be used until the applicant decides.

“The distribution channel is formed by a group of interrelated intermediaries.”

Businesses need the support of a distribution channel to facilitate the arrival of products more
quickly and as close as possible from the hands of the plaintiffs.

1.3 LEVELS OF INTERMEDIARIES

Each product requires special handling by the distribution channel to reach consumers in good
condition. Example: The fish needs to quickly reach the point of sale so it is best to use a rapid
distribution channel for the product does not lose its color, freshness and flavor.

The selected channel affects the other elements of the mixture of MKT.

Each company will have to identify alternatives to reach their target markets, ranging from direct
sales to the use of channels with one, two, three or more tiers of intermediaries.

As intermediate levels means the number of intermediaries who will be involved in the
transportation of consumer products.

Producer – Consumer. This is the most short, items are sold directly from manufacturer to
consumer.

Producer – Retailer – Consumer. At this level an intermediary (retailer) buy the products then
sell them to the manufacturer for the final consumer.

Producer – Wholesaler – Retailer – Consumer. This channel is the most feasible and traditional,
the wholesaler buys the product from the manufacturer, the wholesaler can then sell either
wholesale or retail, if it is in bulk, retailers buy products in those stores to finally sell to
consumers .

Producer – Agent – Wholesaler – Retailer – Consumer. Manufacturers use the agents, who in
turn used to selling wholesale to large chain stores or small shops.

PRODUCERS OF INDUSTRIAL GOODS:

Producer – User. Represents the direct distribution, higher revenue intake. At the time of
distribution by manufacturers such as aircraft or machinery prefer direct sales.

Producer – Industrial Distributor – User. At this level, producing small parts or construction
materials sold its products to a distributor so that they reach users faster.

Producer – Agent – User. This level is used in factories that have no sales and have to find an
agent to help put your product on the market, distribute and make the contacts to be exposed and
come into the hands of consumers.

PRODUCERS OF SERVICES:
Producer – Consumer. By nature of the services are not tangible, often require a personal contact
with the customer who requires the service we offer advice (lawyers, doctors, teachers,
transportation, aesthetics).

Producer – Agent – Consumer. Although in most cases the services is direct contact, may have
its exceptions, a sales agent in an example of this level as they are in charge of the transaction
between the manufacturer and consumer services.

1.4 TYPES OF FLOWS

The channel flow is the movement of goods and services, distribution network, between 2 or
more participants in the channel.

Physical flow. It is the most visible of all, since it is the actual product transportation from one
place to another.

Flow property. Some participants in the channel do not own the product. A person so you can
distribute the product does not necessarily have to be the manufacturer, but someone who has the
task of distributing the product as agents who transfer the products to a wholesaler or retailer.

Financial flow. It is necessary to perform the movements of money or credit for a product arrives
at a particular location. This flow is from the user to the manufacturer.

Flow of information. It is most important, because if there is no communication between all

elements of the channel is not going to be good coordination but a poor distribution. If there is a
poor transfer of information can block the distribution system.

Flow risk. Is the least appropriate that there because it increases the chances of uncertainty. This
factor can not be defined but should be predicted.

Flow promotion. It is here that collects information about the benefits a product offers the
consumer. Here are influenced by factors that will help the product is known and can be accepted
by the consumer.

Control and distribution system of sales

I. – CHANNEL OF DISTRIBUTION

The distribution channel is formed by a group d interrelated intermediaries do get products and
services from manufacturers to consumers and end users.

1. Distribution Channels for Industrial Products

The industrial products have a different distribution of consumer products and employ four
channels are:
· Producers – industrial users: this is the usual channel for industrial products because it is
shorter and more direct, sales representatives use their own factory. Examples: large metal
manufacturers, conveyor belt producers, manufacturers and other construction equipment.

· Manufacturers – Industrial Distributors – industrial consumers: in this case industrial

distributors perform the same functions of wholesalers and sometimes play the roles of
wholesalers and sometimes play the roles of the sales force of the manufacturers.

· Producers – Agents – Industrial Distributors – industrial users: this channel agent function is to
facilitate product sales and distributor function is to store the goods until they are required by the
industrial user.

· Producers – agents – industrial users: in this case industrial distributors are not required and,
therefore, are removed. Example: agricultural products.

1. Distribution Channels for Consumer Products

The Channels for consumer products are divided into five types which are considered the most
common:

· Producers Consumers: This is the shortest and fastest route used in these products. The most
commonly used form is the door to door sales, mail order, telemarketing and telesales.
Intermediaries fall outside this system.

· Producer – retailers – consumers: this is the most visible channel for end consumers and large
number of purchases that he made the general public is through this system. Examples of this
distribution channel is automate dealers, gas stations and shops. In these cases, the producer
generally has a sales force to take charge of making contact with retailers who sell products to
the public and make the order after which they sell to the consumer.

· Producer – wholesalers – retailers or retailers, this type of channel is used to distribute products
such as medicine, hardware and food. Use with products in high demand as producers are unable
to bring its products to the whole consumer market.

· Producers – middlemen – wholesalers – Consumers: This is the longest canal is used to

distribute the products and provides an extensive network of contacts, and for this reason,
manufacturers use intermediaries or agents. This is very common in perishable foods.

The fact that these channels are referred to the way that has become not mean they are the only
ones sometimes it is a combination of them.

1. Integration of distribution channels

Producers and dealers work together for mutual benefit. Sometimes the channels are organized
by agreement; there are others who are organized and controlled by the initiative of a single
director can be an agent, a manufacturer, wholesaler or retailer. The director may establish
policies for it and coordinate the development of the marketing mix.

The links of a channel can be combined horizontally and vertically under the administration of a
leader of the canal. The combination may stabilize supplies, reduce costs and increase
coordination of channel members.

Vertical integration channels. Do combine channel or more stages under one management. This
results in the purchase of the operations of a link channel or performing operations on this link to
perform the functions. For example, a large mass merchant sales, and discount stores can store
and transport the products that you buy the manufacturer, thus eliminating the need for the
wholesaler.

This integration includes control of all functions from production to final consumption.

Horizontal integration of the channels. Is to combine institutions at the same level of operations
under a single administration. An example will be the department stores. This integration
provides significant savings in advertising specialist, market research, shopping and more. And
can hold an organization to merge with other organizations or increase the number of units.

The horizontal integration is not the best management approach to improve the distribution and
among their limitations include:

• Difficulty to coordinate more units.

· Less flexibility
• Increased planning and research to deal with larger scale operations.
· Markets more heterogeneous.

1. Criteria for the Selection of Distribution Channel

The distribution decisions must be made based on the objectives and overall marketing strategies
of the company.

Most of these decisions are made goods producers, who are guided by three management
criteria:

• The market coverage. In the channel selection is important to consider the size and potential
market value that you want to serve. As mentioned intermediaries reduce the amount of
transactions you need to do to come into contact with a given market size, but is necessary to
take into account the consequences of this fact, for example, if a producer can make four contacts
with end consumers, but makes contact with four retailers who to see what he does with end
users total number of contacts in the market will have grown to sixteen, which indicates how
increased market coverage with the use of intermediaries.
• Control. It is used to select the right distribution channel, ie the control of the product. When
the product leaves the hands of the producer, you lose control because it becomes property of the
buyer and it can do what he wants with the product. This means that you can leave the product in
a store or who appears differently on their shelves. Therefore it is more convenient to use a short
channel of distribution because it provides more control.

· Costs. Most consumers think. That when the channel is shorter, lower distribution costs and
therefore lower the price to be paid. However, it has been shown that brokers are specialists who
perform this function more effectively than would a producer, so distribution costs are generally
lower when using intermediaries in the distribution channel.

From the above we can deduce that using a shorter distribution channel gives a generally a very
limited market coverage, control of the products higher and higher costs, on the contrary, a
longer channel resulting in wider coverage, lower product control and lower costs.

The most economical like a distribution channel, the less there is conflict and rigid. In making
the assessment of the alternatives you have to start considering their impact on sales, costs and
profits. The two known alternative distribution channels are the company’s sales force and sales
agency producer. As we know the best system is one that produces the best ratio between sales
and costs. We begin the analysis with an estimate of the sales made in each system, since some
cost depends on the level of the same.

1. Importance of Distribution Channels

The decisions about distribution channels give the products the benefits of the place and time
benefits to the consumer.

The charity instead refers to the fact of bringing a product close to the consumer so it will not
have to travel long distances to obtain and to satisfy a need. The benefit of place can be seen
from two perspectives: the first identifies the products whose purchase is favored when they are
very close to the consumer, who is not willing to make a major effort to get them. The second
view sees the exclusive products, which are found only in certain places so as not to lose its
exclusivity in this case, the consumer is willing to make some effort, to varying degrees, to
obtain the product as concerned.

The benefit is a consequence of the previous time and that without the benefit of all, this can not
happen. Is to bring a product to t
he consumer at the right time. There are products that must be available to consumers at a time
after which the purchase is not made, while others must be sought for some time towards higher
customer satisfaction.

2. Intermediaries
The marketing intermediaries are companies or individuals who cooperate with the company for
the promotion, sale and distribution of their products to final buyers. Include intermediaries,
physical distribution companies, marketing service agencies and financial intermediaries.

A. Definition

The intermediaries are companies that serve as distribution channels and help the company find
customers or sell them. Are wholesalers and retailers that buy and resell merchandise (often
called resellers. The main method of marketing for the marketing of their product is selling
hundreds of independent traders who resell it at a profit.

The intermediaries are independent groups that are responsible for conveying the product from
manufacturer to consumer, thereby obtaining a utility and providing the buyer with various
services. These services are very important because they constitute a more effective distribution.

B. Features

Marketing. Adapt the product to market needs

Pricing. The products assigned prices high enough to make possible the production and low
enough to encourage sales.

Promotion. Caused to the consumers a favorable attitude toward the product or to the sponsoring
firm.

Logistics. Transport and store goods.

In addition there are a number of services provided by intermediaries such as, give, purchase,
sale, transportation, bulk shipment, storage, financing, risk taking and administrative services.

C. Importance of Intermediaries

The producers have all the freedom to sell directly to end consumers, but they do and use to
intermediaries for various reasons, among which include the following:

• Very few producers have the economic capacity to make a direct marketing program for your
product.
· Of achieve this, it would be necessary for many producers of complementary goods would
serve as intermediaries for other producers to achieve the mix of goods required for efficient
distribution. Very few producers have the capital needed for this.
· The producers have the resources to create their own distribution channels prefer to devote to
other aspects of production, where its value increased to a greater extent.

So, the importance of intermediaries in the distribution channel is arguable, moreover, through
the performance of its duties and functions to provide commercial product distribution
experience, specialization trade relations, ETC. which could not be better if the product do so at
their own expense.

A. Agents

Are the ones who are responsible for handling transactions accelerate the product within the
distribution channel, without receiving the ownership title to the product. Only receive a
commission for its activity.

Some companies do not have much choice with respect to intermediaries, because they and their
competitors use the same type of channel.

The number of intermediaries who choose the company will be related to the degree of exposure
you want to give your product. In general, there are three degrees of market exposure.

• Distribution Intensiva. It consists in getting the product to as many shops as possible. This is
vital to know all the dealers use.

• Distribution Exclusive. To confer rights of exclusive distributors in certain territories. By

granting these rights the producer requires the trader does not work lines of competition. This
type of distribution has its advantages: it develops a greater sales effort, more control is exercised
by the producer pricing, promotion, on credit and other services.

• Distribution selective. Imitation is the use of stores territory. Used with famous brand products
and products that keep consumers loyal.

There are many criteria on which the producer or manufacturer has to determine the quality of
intermediaries in its distribution channel, the most important is that the agent should supply the
market with which the manufacturer wants to go. Other criteria are also used: the location of the
intermediary, its financial situation, your ability to do advertising or product line that operates
and its relationship with the product or line drive, which provides services and administrative
talent to perform a good distribution.

A. Intermediaries Dealers

They can be classified in many ways and are a function of the number of distribution channels
that consumers want and that organizations can design.

Are receiving the ownership title to the product and resell them. These are classified according to
the volume of business, at:

• Increased
· Retailers
The main objective of the wholesalers is for exchanges of products for resale or use the goods in
their business. Any transaction by a producer directly to another is classified as a wholesale
transaction.

This type of trade include anyone who performs any person or organization as long as they are
not final consumers. The wholesalers acquire ownership of the goods and perform the operations
necessary to transfer through distribution channels and there are also wholesale agents who do
not acquire ownership of the products but if they perform many of the activities of wholesalers.

There are three general categories of wholesale brokers:

1. Wholesalers. Are the property dealers and buy the products they distribute. Based on the
services provided are classified as full-service wholesale and limited service. The full-service
dealers are offering almost all services provided by a wholesaler and are classified into two:

Those of general merchandise service

Those of limited line.

The full-service managed an extensive line of non-perishable items and come into to many
retailers.

The full-service handle a limited line of products lines, but offer a diverse range of services and
tend to serve one-line retailers or limited lines.

The limited services are those that offer a range of services. In general, these wholesalers do not
play a role in the distribution of products.

A. Wholesale cash without delivery. Is an advantage for small retailers, since they often pay cash
and transport the products themselves, which pays off an important and cost horrors.
B. Wholesalers selling through trucks. Trucks used as the point from which to market their
products and provide almost always full service.
C. Sellers in displays or shelves. It could be said to be innovative wholesalers. Are similar to
wholesalers in trucks and exhibit, you shelving products in store.

1. Agents and brokers. He does not acquire title to the goods and only accelerate the sales
process. Sometimes provide limited services and generally receive a commission have a
customer base.

2. Sales branches manufacturers. The manufacturers set their own sales facilities, provide
services, etc.

The retailers are those traders whose activities relate to the sale of Vienna and / or services to
final consumers are usually the property owners they serve. Are classified as:
1. Type of store. It refers to the effort that the consumer takes to make your purchase. They are
classified according to how consumers perceive the store or the image that is projected:

A. Shop fast. It is centrally located in residential neighborhoods or near the workplace.

B. Stores. They specialize in longer lasting consumer goods like clothing, electrical goods.
C. Specialty shops. They offer a specific type of product and have the preference of customers
and must fight to ensure their loyalty.
D. Malls. Location of different types of facilities that allow customers are several options.

2. Form of ownership. Retailers can operate independently or as part of chains: chains voluntary,
cooperative or franchise. They are c
lassified into five categories:

A. Independent retailer. He is the owner of the establishment and is not affiliated to any group.
B. Chain stores. Consist of two or more establishments owned by a person or organization.
C. Cooperative organization. Group of traders who come together to combine their resources and
achieve benefits for large-scale purchases.
D. Voluntary chains. Group of traders who combine their resources, only that they are directed
by a wholesaler that is organizing the chain.
E. Franchise. It is an association formed by contract between a wholesale manufacturer or
service organization and an independent company that buys the right to operate one or more
units, the difference between franchise and concession is that the first is acquiring not only the
name but the company Buyer must be set management standards wings, local ambience, types of
employees, etc.., since the sellers take good care of uniformity in service and quality partners.

2. Product lines. The third way to classify based retailers is the variety and range of products
offered to the public.

A. General merchandise retailers. From one point of view is the ideal classification because it
gives consumers a lot of articles from the most diverse lines.
B. Limited retail lines. This type of merchant offers a line of complementary products or more
just a guy looking to meet needs in a comprehensive manner.
C. Retail special lines. Offer only one or two product lines designed to meet a kind of necessity
in a profound way.

II .- PHYSICAL DISTRIBUTION

1. Importance

The physical layout can be a meter between success and failure in business. At this stage you can
make the greatest savings because the exchange is facilitated through activities that help to store,
transport, handling and processing orders for products.
The physical layout involves planning, implementation and monitoring of the physical flow of
materials and finished goods from its image point to the places of their use, in order to meet the
needs of customers in exchange for gain. The higher cost of physical distribution for the
transport, followed by inventory control, warehousing and order fulfillment to customer service.

The administrators have become concerned about the total cost of physical distribution, and
experts believe they can make big savings in this area. Wrong decisions on the physical layout
can result in huge costs. Even big companies sometimes use too little of modern decision support
tools to coordinate inventory levels, forms of transport and the location of the plant, warehouse
and shops.

For example, at least partly to blame for the slow growth and declining profits in recent years
Sears correspond to its costly and outdated distribution system. Its old multi-storey warehouses
and automated equipment does not have many less efficient than its competitors. Distribution
costs account for 8 percent of sales, compared with less than 3 percent for its nearest
competitors, such as K mart and Wal-Mart.

Also, the physical layout is not only a cost but a powerful tool for creating demand. Companies
can attract more customers by giving better service or lower prices through better physical
distribution. Instead, they lose customers when they fail to deliver the goods on time.

2. Types of Distribution

Many companies express their goal as bringing the right goods at the right places at the right
time and at less cost. Unfortunately, no physical distribution system can both maximize customer
service and minimize distribution costs. A maximum level of customer service involves large
inventories, the best means of transport and many wineries, all of which raises the cost of
distribution. Minimal distribution costs implies a means of cheap transport, reduced inventories
and a few wineries.

The company can not simply let each physical distribution manager to limit its own costs. In fact,
transportation costs, storage and processing of orders interact, often in reverse. For example, low
inventory levels reduce such costs, but also increase representing the lack of supplies, back
orders, paperwork, special production cycles and faster freight shipments, which are more
expensive. As costs and acts of physical distribution imply big transactions, decisions should be
based on the entire system.

The starting point for the design of the system is studying what consumers want and what
competitors offer. The first asked several things of their suppliers on time delivery, inventory it
ba

DISTRIBUTION STRATEGIES
Between the consumer or end user and the manufacturer or service provider usually has one or
more intermediaries that add value to the exchange transaction.

There are two ways to analyze the activities through which they send to market goods and
services. The first approach takes the push and pull as a basis for understanding the vertical
relationships between distribution channel members. The second, takes the process approach as a
basis for understanding the horizontal relationships between them.

Conceptually, you can define a distribution channel as a set of interrelated intermediaries to

cover the distance between supplier and customer, adding value to the transaction in terms of
location, time and possession.

This traditional view fits well with the approach of ‘push’ to see the distribution as a way to
bring products and services from where they are generated to where the customer or end user
may purchase. The focus is on these activities, but without losing sight of those who serve as
“attraction” of customers, such as advertising or sales promotion. The basic idea is that the
market share of a company’s balance sheet to achieve to match clients and satisfactions at the
point of sale.

The importance of using the traditional term distribution channel is that it allows to realize that
through that channel comes a two-way flow of physical goods, services, money, deeds,
information, promotion and risk.

On the other hand, the early 90′s developed the simple but powerful idea that companies should
not be viewed in terms of functional, divisional or products and markets, but in terms of
processes. Today the term value chain seem to replace traditional distribution channel expression
in the same way that favors the use of terms such as distribution logistics and others refer to a
particular aspect of the supply chain.

The complexity of a global economy, the speed of technological change, risks of an open market
and the limited resources of a company have to seek alliances that translate into competitive
advantages. Then, the elements of the value chain are those related to the process of operational
effectiveness.

Unlike what usually occurs between members of a distribution channel, which is a relation that is
limited to about compromise, the horizontal view of the value chain leads to identify patterns of
collaboration, particularly among members the same stage, but in the end are alliances between
suppliers, distributors and end customers.

The objectives to be achieved by establishing collaborative partnerships are typically related to

providing greater value to customers, respond quickly to diversity, to the turbulence of
technological change and the risks of participating in a global economy.
Also, to cover deficiencies in productive resources, cost or efficiency, financial and information
technology. But perhaps the most important objective is that of some alliances to gain access to
the market.

Typically, there are collaborative partnerships between companies at the same level within the
value chain and result in a combination of complementary resources and skills of each company.
Are based on contracts between them, looking for a win – win and seek to achieve an integration
of work systems (technology, operations, distribution, service, administration) to achieve
common goals. And displays a long-term relationship is not limited to business aspect, but
extends to the cultural and personal.

There are some critical questions that need to be answered when evaluating the candidate to form
an alliance.

– What is the strategic reason for each of the two parties to collaborate?
- What is the cost / benefit of the collaborative relationship
- To what extent is essential to have that relationship?
- To what extent is fair to both parties?
- Are they reconcilable organizational cultures?
- Are there better candidates than is being evaluated?

The truth is that collaborative partnerships can be between members of all levels and different
levels of the value chain. For example, we see that: – The Automotive Industry is forming
alliances with its suppliers, who called OEMs (original equipment manufacturers). An example
followed by other industries. – In Spain, Mexico, some companies in the United States and
Canada who seek to be a competitor to them, but to ally with him and facilitate their entry into
this market. – Also in Mexico, the brewers have established partnerships with retailers who
referred customers to order, ensuring the release of their beers on a preferential basis. – Frequent
Flyer Programs of any airline started as a partnership between the company and its customers
and has been extended to comprehensive programs that include other airlines (competitors),
hotels, shops, restaurants, credit cards, etc.

The answer is that a company can partner with any other, or with any other companies seeking
competitive advantages for all, within a win – win.

While the vertical view of a distribution channel is for tactical decisions and operational
(transactional), the horizontal view of the value chain is for strategic decisions (collaborative).

Well as the design of a distribution channel, or setting up a strategic alliance begin by

considering the characteristics and needs of customers to serve them better and better than the
competition, the outcome of the decisions of distribution and logistics must be evaluated in terms
of customer satisfaction.
Fundamental concepts on the distribution of goods and services a small business

One of the purposes of marketing is meeting the needs of consumers, then how come the
company’s products to the final consumer? We can say that the distribution is the part of
marketing that achieved the goods or services produced by the company to reach consumers to
meet their needs. Well, who delivers its products, such as delivery, which means of transport
used for this purpose, in terms of packaging and storage, which presents your business needs.
These and other questions are answered with what is called the distribution system.

Be aware that the distribution depends largely on the stability of your business, so it is a
fundamental activity for their success. For a product, whatever it is, reaches its final destination,
or rather, its final consumer, it is quite likely to have to pass through several hands, this is the
way the specialists call the distribution channel, which in many cases is the difference between
staying or leaving the market.

In a nutshell the distribution channel is the path that takes the product to go from business to
consumer, but not always the same and that as it may be that the product coming directly from
producer to consumer, may also be used to distributors or other producers and in other cases
including the institutional means. When we talk about direct path we mean the shortest between
the producer and consumer, ie the distribution is direct, but while the consumer gets closer to the
producer is also distinguished by its high frequency in sales but in a few quantities.

A more complex the channel of distributors, which are individuals or companies in charge of
making the goods or services produced by the company from reaching the hands of end
consumers, with an increase in the cost of intermediation. Dealers are of various types:
Providers: persons who are responsible for selling the product at wholesale or retail.
Intermediaries: characteristic of the agricultural sector. Consumer cooperatives: in general are
stores that distribute basic necessities. As already mentioned there are also institutional channels,
which are composed of representatives of institutions that buy products for the benefit of its
consumer group, among them schools, hospitals, etc. When we speak of other producers, we
mean that if the company produces semi-finished products others are responsible for completing
the product for delivery to the consumer. The options for micro-enterprise can be reduced to two:
1. Selling directly to consumers (direct) 2. Sell through distributors. (Indirect) Both options have
advantages and disadvantages, depending on the type of product, nature of business, the needs of
consumers, driving sales volumes or needs, the periods of those who are talking, can be more
desirable one than the other. Perhaps in an analysis of your company finds that at an equilibrium
point for a certain volume of sales costs are equal for both types of distribution, but above or
below this is a decision to minimize costs. On the other hand if it considers the geographical
location of your customers can make a combination that is directly and locally in remote areas is
indirect. Alternatively, the association with other producers to reduce fixed costs and other
leasing services and increase the variety and volume of goods, thereby increasing sales and
implementing direct marketing. As we have seen the distribution channels are limited by the
characteristics of: Consumers: such as what number and location of these, which impact on sales
volumes. The products, since the size of durability, the unit value, standardization, require
special qualities dealers, such as storage capacity, financial viability.
The ability of distributors to transport, advertise, give credit. The competition, if you want to be
competitive should be on par with its competitors and that means that less will use the same
channels as them. Let’s talk about accountability. Each of the members of a distribution channel
is taking responsibility, making promises and executes tasks to achieve the objective of the
distribution. The tasks, commitments and responsibilities are given about the payment terms,
prices, product transport, storage and security, packaging, promotion, granting of credit, delivery
terms, etc. This requires absolute clarity between conforming channel about the responsibilities.
If possible to avoid misunderstandings or des understood, it is best that everything is in writing.
The company should state very clearly and precisely the basic prices and discounts granted. This
will avoid problems later. Since arbitrary deductions are a source of discord and undermine the
company.

In fact, the discounts are justified when they come from a reduction in costs or increases in
company revenue. On the other hand the prices and discounts should look the same transparency,
and much more in terms of payment that should not be the most expensive, but once accepted
must be met. Remember to make the reservations on defective items when these deals agreed
upon to give serious respect and trust for your business. Note that the conditions should be the
same for all dealers, it is unethical to sell to others close under different conditions, other than
that this did not please their distributors and very probably even discourage continue selling their
product when what is looking for just the opposite. Finally it is vital to regularly assess its
dealers to support them if any plane or exchange them for others that offer better performance.
An easy way is to calculate the total cost of production is what it costs to produce the good that
we sell to the retailer plus the cost of direct and indirect marketing and this was subtracted the
sales revenue that represents us the dealer by multiplying the number of products the selling
price and so we come to performance.

Distribution alternatives for SMEs that want to export

When you start an export is important to consider all the steps that our products must overcome
to reach the hands of the consumer. When choosing an importer lose contact with the final
consumer and the marketing and commercialization policy in the media destination is not
replicated globally.

Some alternatives to this distribution system are:

A-distribution itself a destination for retail sale: have its own distribution in the target market.

Requires having a natural or legal person authorized to make the importation to Customs and to
bill and collect the products to retailers. Physical distribution (transport) can be outsourced.

This approach does take into account the financing of operations, as the local producer may not
charge sales figures until it is satisfied with the retail distribution channel.

On the other hand, has the advantage of tighter control of the marketing policy and the
elimination of an intermediary in the distribution chain (importer).
B-Direct export to retailers: in this case, unlike the previous one, it will be small consignments
door to door can be made using simplified schemes courier.

Where shipments are within the imposed maximum volumes for export and import at the
destination, courier operators (TNT, UPS, DHL, Fedex, etc.) Cause the export formalities and
import source destination, allowing the door to door delivery.

The advantages of this system consist in the simplicity of the operative, but more expensive the
final price of the product and can only be used for small-scale businesses.

C-Sales to final consumers via web, TV, magazines: this system can be applied in very small
markets where there is a distribution channel developed and where the price of client
homecoming of products from their country of origin not lead consumers to discard the purchase.

It applies to sophisticated products, exotic or custom which can not be found on the market
where the purchaser resides.

The clearest advantage lies in the direct relationship with consumers, while the disadvantage is
the final price at which the product reaches the consumer’s home.

D-Use of a sales representative: commercial agents and representatives of foreign companies

exist in all markets as an alternative to traditional direct export.

The agent or representative can serve many functions (import their own products, work them on
consignment, etc.) Or simply taking steps to trade within a marketing plan and positioning that
will trace the production company.

This figure is recommended when the products have significant growth potential in the market,
hence it should not relax the policy of marketing and positioning in the hands of an importer.

The managed sales representatives or agents in the distribution channel to mark the Marketing
Plan (wholesalers, retailers, direct sales or final consumer, etc.).

The substantial advantages lie in controlling the marketing policy and the minimal financial
investment to have a permanent presence in the export market.

The disadvantages are focused on the difficulty of finding solid representatives established in the
market, knowing the inner workings of the portfolio of products and companies represented who
compel him to work with our products achieved satisfactory results.

E-Development of a franchise: if the production company has developed a system that works in
the domestic market successfully, the business and systems may enable the company to use the
figure of export as a model franchise.

The franchise is a business model on the rise around the world and involve a replica of a business
system proven success.
For the system does all the business, from its products and production techniques, to the circuit
and generation of brand marketing.

In these cases, the franchisor can grant master franchises by country, then the master franchisee
sub-franchise business by opening new outlets. You may get a full exemption (including the
license to manufacture the products) or limit the marketing system products and use of the mark,
but reserving the producer of the design phase of the same.

The advantages of these models are quite clear for export, mainly because we are not only
generating foreign exchange through exports, but also royalties for transfer of know-how and
brand use.

In summary, to assess the best distribution scheme for your company should take into account
the following elements:

– Control over the marketing policy in the target market.

- Increase in the price of products, margins.
- Scale of business.

Do not rush, think about these alternatives before proceeding as they will be very important to
the success of your project exporter.

Global Network of Export. Foreign Trade

MARKETING IN THE LARGE DISTRIBUTION

The phenomenon of large retailers in Spain is relatively recent. In years 74 and 75, Carrefour is
implanted in our country with a supermarket in El Prat de Llobregat (Barcelona). This
hypermarket would emerge a generation of young Spanish people who would trek distribution
professional, traveling and introducing new formulas to the beat of the opening of new
hypermarkets in the French firm.

The picture of the distribution in Spain, until then, was limited to a few chain supermarkets and
department stores Simago epitomized El Corte Inglés and Galerías price represents the
modernity. The other, arguably most, was formed by the traditional trade family tent covering
the various sectors of the distribution.

The arrival of large retailers in Spain is not only a more modern European and distribution, but
the advance of radical changes in Spanish society. These new habits of Spanish society go hand
in hand four important factors:

* The addition of Spanish women to employment

* The engine and car park expansion
* A more affluent family
* Low modernization of commercial structures.
These four factors, among others in my opinion key factors accounted for the successful
implementation of the mass distribution in Spain.

Note that at first, but many industry experts who predicted a major failure of these new
“intruders.” Of course they were wrong, the traditional trade sector suffered among many other
evils:

“A little modern business training

-Total lack of marketing strategies in the short and medium term
-Low vision of radical change was coming in the customs of the Spanish in consumption.

All these shortcomings attached to:

“Poor fit between the services and products demanded by customers

-Margins times higher than in those practiced in Spain
“Unwillingness to innovate
-Spirit continues inherited from generation to generation the traditional trade

They made their weakness another factor of success of new competitors.

Distributors, manufacturers, chambers of commerce, government and institutions swashbuckling

defended the indefensible:

A traditional trade poorly trained and competitive, more focused on satisfying their own benefits
to customer satisfaction.

If there is a sector that faces the daily pleasure of the public that is the distribution sector. This
customer focus was and is ultimately what certainly consolidated and strengthened the
development of superstores in Spain.

Glowing Palmito With a large size

The size matters a lot. Tell that if not for women to have a size from 42 to 56 and can not buy
anything in stores. Or at least nothing that is modern, nice and an attractive price. One frustration
that from now disappear thanks to “Sweet Size” (size Sweet), clothing line developed by
SANDRO Ferron (the renowned Italian brand that 30 years after triumphing in the country
trasalpino just landed in our country) and already in the windows of our country. “If in sizes
known as normal (36 to 40) the textile industry is still unable to solve the problem of sizing and a
brand to other measures of the same item arrive to vary up to 10 inches, the difficulty is most
evident in the case of larger sizes. No supply for the demand of society. Something that
nevertheless does not happen in Sandro Ferrone as always we are concerned and occupied by
this population of women of flesh and blood do not give way to dress modern, elegant and
carefree, “says Luca Gambat, Director General for Spain Sandro Ferrone.

And why do not you miss this policy. And anthropometric study of the Ministry of Health
conducted in 2008 to establish a uniform sizing for the Spanish female population such as that
collected complaints, 43.4% of consumers had difficulty in finding his size as garments or are
small (22.8%) or too big or not fit to your measurements (25.6%). “Sweet Size is antithetical to
these claims as not only follows a pattern of real measures that range from a size 42 to 56 but
also has a very wide range of models for the different collections that are over a year . In this
way we get to plus-size women feel beautiful thanks to a skirt, dress or tailored pants to his
actions, “he adds Gambat.

Also the way in which the collections are produced “Sweet Size” is also different. “Sandro
Ferrone never chooses a model of the classic way, that is producing the pattern and then
choosing the color or fabric and prints based on samples. What we do is create the garment and
with her hand we tested our models to suit their ways and go making any necessary changes until
they perfect it is. Once this is done is when you choose the printing and the colors with which the
product will be produced and sold in stores, “concludes Gambat Luca, Director General for
Spain Sandro Ferrone.