International Distribution System I - UW

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International Distribution System I - UW Powered By Docstoc
					  Welcome to class of
International Distribution

  Dr. Satyendra Singh
 University of Winnipeg
          International Distribution
• Distribution Structure
    – Traditional
    – Modern
    – Retail Giants
• Distribution Patterns
    – General
    – Retail
              Distribution Structure…
•       Difference Between Domestic and Foreign Structure
    –     PEST
    –     Super-efficient system in the USA vs. highly complex in Japan

•       Traditional Distribution Structure
    –     Import-oriented structure
    –     High price, small no of affluent customers
    –     Sellers market  demand exceed supply
    –     Absence of cars and telephones
    –     Local monopoly of small stores
    –     Buy daily in developing country vs bi-weekly in Canada
    –     Intermediaries do not perform specific activities
    –     Import-wholesalers perform marketing function
          •   Advertising, marketing research, warehousing, financing, storage
Distribution Structure…
            Distribution Structure…
•       Japanese Channel Structure
    –     Small intermediaries and dealers
    –     Manufacturers control the channel
    –     Business philosophy is rooted in the unique culture
    –     Laws protect small retailers
Distribution Structure…
                Distribution Structure…
•       Modern Channel Structure
    –     Change in discounting, self-service, mass merchandizing, return
    –     Change in direct marketing
          •   Door-to-door selling, hypermarkets, shopping malls, catalogue,
    –     Wal-Mart, Carrefour (France), Praktikar (Germany), Ikea
    –     Higher margin in EU than US
    –     Internet-based system for ordering and delivering (low cost,
          •   GM, Ford, Nissan, Renault and DaimlerChrysler
          •   Roebuck and Carrefour
    –     Brick-mortar eg. Dell, Brick-click eg Amazon, DHL, UPS
    –     Convenience store as a pickup points for web-orders
                  Distribution Structure
•       Retail Giants Structure
    –     Retailers cannot export except by Internet
    –     Wal-Mart, McDonald’s, Home Depot take risk in foreign markets
    –     Europeans: quick to enter foreign market, emphasis on being first,
          retail strategy, local needs and taste
    –     Americans: exploit domestic market first, emphasis on efficiency,
          standardization and value to customers
    –     International retailers have advantages over local retailers
          •   World-class business processes
          •   Technology
          •   Financing
          •   Organizational capabilities
          •   Greater buying power
          •   Superior service…
World’s 10 Largest Retailers
                  Distribution Pattern…
•       General Pattern
    –     Foreign channels are not the same as domestic channels
    –     Intermediary services are different
          •   Storage and wait for customers to come and see them, India, Egypt
    –     Line breadth
          •   Dealing-only narrow lines
          •   Requires government license
    –     Cost and margin
    –     Shorter channel for industrial or expensive goods
    –     Inverse relationship b/w length of channel and size of purchases
    –     Non-existent channels – selling on the roads!
    –     Blocked channels – competitors or relationships
    –     Power and competition – large whole sellers finance downstream
    –     Limited stocking – pickup from factory/distributor, if possible
                    Distribution Pattern
•       Retail Pattern
    –     Product lines: narrow (Italy,Morocco) vs. broad (Japan)
    –     Size pattern
          •   No of person served per retailer– higher in developed countries
          •   May be difficult to reach so many small retailers across a country
          •   Depends of economic development – single cigarette
    –     Direct marketing – mail, tel, door-to-door
          •   Usually best for developed economy, but Eastern European gaining
              popularity; e.g., Amway
    –     Resistance to change
          •   Government attitude
          •   Local retailers need to compete
              –   Product selection
              –   Greater convenience
              –   Customer service
              –   Liberal store hours
              –   Retailers cannot close/open stores at their wish
Retail Structure in Selected Countries