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Channel Of Distribution
In every country and in every market, all consumers and industrial products eventually go through a distribution process. The distribution process includes physical handling and distribution of goods, the passage of ownership. Each country market has a distribution structure through which goods pass from producer to user
business philosophy ( emphasizes loyalty, harmony and friendship) shaped by a uniculture. Laws that protect the foundation of the system the small retailer.
The
Distribution patterns
I. General patterns
1. Middlemen services The service attitudes of people in trade vary sharply at both retail and wholesale levels from country to country. In Egypt . E.g. the primary purpose of the simple trading system is to handle the physical distribution of available goods. In other countries both wholesalers and retailers try to offer extra services to make their goods attractive to customers.
2. Line breadth : Every nation has a distinct pattern relative to the breadth of line carried by wholesalers and retailers. The distribution system of some countries is characterized by middlemen who carry or can get everything; in other ways every middlemen is a specialist dealing only in extremely narrow lines .
3. Costs and margins : cost levels and middlemen margins vary widely from country to country, depending on the level of competition , service offered, and geographical and turnover factors related to market size, purchasing power, tradition and other determinants. 4. Channel length: Some correlation may be found between the stage of economic development and the length of marketing channels . In general there is a inverse relationship between channel length and size of purchase.
5. Non existent channels : In many instances, appropriate channels do not exist; in other ways part of a channel system are available but other parts are not. 6. Blocked channels : International marketers may be blocked from using the channel of their choice. Blockage can result from competitors already established lines in the various channels or from trade associations or cartels having closed certain channels. Association of middlemen sometimes restrict the number of distribution alternatives available to a producer.
.Stocking: The high cost of credit ,the danger of loss through inflation ,lack of capital, and other concerns cause foreign middlemen in many countries to limit inventories.
8. Power of competition Distribution power tends to concentrate in countries where a few large wholesalers distribute to a mass of small middlemen Large wholesalers generally finance middlemen downstream The strong allegiance they command from there customers enables them to effectively block existing channels and force an outsiders to rely on less effective and more costly distribution.
Retail patterns
Size patterns The retail structure and the problem it engenders cause real difficulties for the international marketing firm selling consumer goods. Large dominant retailers can sold direct , but there is no adequate way to directly reach small retailers go in the aggregate handle a grate volume of sales. Direct marketing: Selling directly to the consumer through the main , by telephone , or door-to-door is often the approach of choice in markets with insufficient or underdeveloped distribution system
1. Home country middlemen's 2. Foreign country middlemen's In home country seller must have an organization (generally international marketing division of a company) to deal with channel members needed to move goods between countries. In the foreign market ,the seller must supervise the channels that supply the product to the end user.
Key elements in Distribution Decisions: Cost Capital requirement Control Character Coverage Continuity
The important elements of the cost behave in the following fashion: Cost element Cost element for for Air Surface transport transport Freight Depot Cost Fixed inventory Packaging Insurance High Low Low Low Low Low High High High High
It is found that transport by Airway turn out be a cheaper compare to Surface Transport
The different criteria for making decisions regarding the mode of transport is Nature of product Time to delivery Volume of requirement
Warehousing
The need for warehousing in a corporate unit may arise for the following reasons: Season ability Variation in demand Speculation Product conditioning
International Retailing
Chapter Objectives
Provide an overview and description of the general merchandise retailing category and offer examples and illustrations Provide an overview and description of the food retailing category and offer examples and illustrations Provide an overview and description of the non-store retailing category and offer examples and illustrations Address issues related to legislation, taxation, and retailing practices around the world
All the activities involved in selling products and services to final international consumers for their personal consumption.
Specialized Markets
Cont
Department Stores
Offer a broad variety of goods and wide assortments U.S. and Canada: recent substantial losses Europe: expansion of national chains throughout the European Union Asia: on the decline
Sell high volumes of merchandise Offer limited service Charge lower prices Types: - All-purpose: offer wide variety of merchandise and limited depth - Category specialists (category killers): carry a narrow variety of merchandise and offer a wide assortment
Cont
Off-Price Retailers
Sell brand name and designer merchandise at below regular retail prices Overruns, irregular products, previous seasons products Examples:
- Factory outlet stores - Close-out retailers (broad, inconsistent assortments) - Single-price retailers (all products for the same price)
Catalog Showrooms
Offer high-turnover, brand name goods at discount prices Internationally, however, goods sold through this venue tend not to be brand name, but, rather, goods that have not sold the last season through the catalog
Self-service retailers with annual sales higher than $2 million and less than 20,000 square feet of store space
Superstores
Combination stores (food and drug) Hypermarkets combine supermarket, discount, and warehouse retailing
Require members to pay an annual fee Operate in low-overhead, warehouse-type facilities Offer limited lines of brand-name and dealer-brand merchandise at a substantial discount
Cont
Convenience Store
Small residential retailers or retail chains consisting of small neighborhood stores Open long hours Carry limited lines of higher-turnover necessities One-stop shopping
Non-store Retailing
Internet Retailing
Also known as interactive home shopping or electronic retailing Includes both new dot-com companies and traditional retailers attempting additional market penetration Increase company diversification
Vending Machines
Cont
Television Home Shopping
A venue for selling merchandise to consumers in their homes using cable channels Examples: infomercials and direct response advertising Popular in North America and Europe, and becoming increasingly popular in Asian markets
Venues for selling merchandise to consumers using catalogs and other types of direct mail It allows for the international expansion of retailers Must be adapted to local market needs and practices Obstacles in developing countries:
deficient telephone service unreliable mail service low income unavailability of credit cards
Cont
Direct Selling
A retailing venue whereby a salesperson, typically an independent distributor, contacts a consumer, demonstrates product use and benefits, takes orders and delivers the merchandise Direct selling firms are most active in the growth markets (in emerging markets, in particular)
Network Marketing
Variation on direct selling Involves signing up sales representatives to go into business for themselves with minimal start-up capital and sell more "distributorships" and merchandise Network marketing is growing rapidly, especially in emerging markets