3. Distribution
Learning Objectives:
• Evaluate channels of distribution/logistics
• To differentiate complexities of international
distribution
• To contrast service & product distribution
4. Background
4
• Efficiently & Effectively
• Decreases in transportation costs
• Reliability increased
• Opening up of markets
• Increases chance of success
5. Definition
• “defined as the design and management
of a system that directs and controls the
flows of materials into, through and out of
the firm across national boundaries to
achieve its corporate objectives at a
minimum total cost”
source: Kotabe & Helsen, (2011) Global Marketing
Management, 5th edn, p500
8. Complexity of Physical
distribution
• Distance –higher costs, eg insurance and
transport, pilferage, warehousing
• Exch Rate fluctuation
• Foreign Intermediaries – in Asia its who
you know to get things moving
• Regulation – US domestic shipping regs
• Security – 9/11
9. Modes of Transport
• Value-to-volume ratio determined by how much value
is added to the materials used in the product
• Perishability – quality degradation over time
• Cost of transportation – see above dependencies
10. How do we get there Sir?
• Ocean shipping – Liners or Bulk Shipping
(container cargoes)
• Air freight – expensive, prob high value eg
semi conductors
12. Key issues
How do you hedge against inflation/currency
fluctuations?
Tax differentials transfer from country A to B to C
so an export from country B? assembled in country
C gets tax breaks?
Logistical Integration/Rationalisation
E-Commerce – so what happens once you are on
the web?
13. E-commerce
• Amazon.com
• 5 million books
• Which one? Who do
you buy from?
• Dymocks Australia
• 100,000 books
• Who is truly global?
Why?
16. Channel Management
An indirect distribution channel threatens control
Some guidelines:
• Seek intermediaries capable of developing
markets, not just those with good contacts
• Regard intermediaries as long term partners – not
as a means to get entry
• Actively search and select intermediaries
• Support your intermediaries with mktg/know how
• Attempt to control as much as you can over
marketing
17. Retailing
• Growth
• Own label lines
• e-tailing
• Wal-Mart are P&Gs largest customer,
buying more than the whole of Japan
18.
19. SWOT
• Choose:
• Nike or
• Adidas or
• Puma
• Complete a SWOT for one of the above in
Germany (Nike), Adidas (China), Puma (Brazil)
20. Retailing differences across
the world
• Japan, historically tight regulation, department stores
led, no cars for shopping, smaller stores/head of
population, no parking
• Germany –no Sunday opening, close at 6pm, open 1
Saturday in a month
• UK Sunday opening is the only limitation
• Asia, fresh produce, markets very strong. Low incomes
21. Question
• Carrefour, being the 2nd largest retailer in
the world, what are the implications of its
pull-out from Japan for other global
retailers such as Wal-Mart which is
struggling to survive ?
Criticism – too general to relate to consumption patternsValue based segmentation schemes not always actionable, effective segmentation needs to be actionableUnstable, values change over timeLifestyles can vary from region to region
