28 Questions
What is the main purpose of distribution channels?
To transport products from manufacturers to consumers
Which type of channel member in international markets purchases goods in their own name and develops their own marketing strategies?
Intermediaries
What is the key difference between local wholesalers and local agents?
Local wholesalers take title to products
In international markets, who makes money from commissions or fees?
Retailers
What should marketers consider when designing a distribution strategy for an international market?
Distribution Density
Which type of distribution involves stocking the product in as many sales outlets as possible in a given market area?
Intensive Distribution
What is the role of local wholesaler in the distribution channel?
Move manufacturer products to retailers
What is the primary function of retailers in the distribution channel?
Sell products to end consumers
Which channel member makes margin on what they sell, rather than taking title to goods?
Retailers
What does an exclusive distribution right for a specific geographic area or country mean for a local wholesaler?
They can only sell within that specific area or country
What is the primary factor influencing the length of a distribution channel?
Product's distribution density
Which term refers to the co-ordination of various channel members to provide a unified marketing strategy?
Channel Alignment
Who is known as the dominant channel member that often dictates terms of pricing, delivery, and sometimes products?
Channel Captain
What is a key product consideration affecting the selection of a channel member?
Perishability
Which factor can make a manufacturer more likely to choose shorter channels for distributing a product?
Product's technical level
What does 'synergy' refer to in the context of selecting channel members?
Skills or expertise complementary to the manufacturer
'Distribution density' primarily influences which aspect of a distribution channel?
Length of the distribution channel
'Control' in selecting channel members refers to what aspect?
'Amount of control offered to manufacturers in a channel arrangement
'Coverage' in selecting channel members is related to what factor?
'Reaching a geographic area that a manufacturer wants to cover'
'Costs affecting the selection of channel members' include which type of costs?
Maintenance costs, Logistics costs, and Initial costs
What term is used to describe when a manufacturer is unable to convince an intermediary to work with it despite market and economic considerations?
Locked-Up Channel
In the context of market entry, what does the term 'Piggybacking' refer to?
One company distributing another company's products through established channels
What does 'Joint Ventures' in the context of market entry involve?
Forming a new legal entity by two companies
Which factor determines the cost differences in modes of transportation according to the text?
Transit time
Why might some companies prefer Just-in-time (JIT) delivery of parts and components in inventory control?
To save capital costs of tied-up inventory
What directly influences the ability to shorten the order cycle in the context of order processing?
Availability of communications systems and software
What does 'Fixed Facilities Location Management' primarily focus on in global logistics?
Selecting optimal production facility locations
Which factor has a significant impact on warehousing practices according to the text?
Climatic changes and product holding duration
Study Notes
Distribution Channels
- A strategy to transport products from manufacturing locations to the consumer, which can be done by the manufacturer or through intermediaries (agents, wholesalers, distributors, and retailers)
Channel Members in International Markets
- Import Intermediaries: identify needs in local markets and search the world to satisfy those needs, purchasing goods in their own name and acting independently of manufacturers
- Local Wholesalers or Agents: move manufacturer products to retailers, with varying roles by country
- Retailers: purchase products for resale to customers, taking title to goods, selling directly to end-users, and making a margin on sales or earning commissions
Analyzing National Channels
- Distribution Density: the number of sales outlets or distribution points used for a given geographic area, which affects consumer shopping behavior
- Channel Length: the number of intermediaries involved to bring a product from the manufacturer to the consumer, influenced by distribution density, average order quantity, and availability of channel members
- Channel Alignment: the coordination of channel members to provide a unified marketing strategy, with the dominant channel member (Channel Captain) often dictating terms of pricing, delivery, and product
Factors Influencing the Selection of Channel Members
- Costs: initial, maintenance, and logistics costs affect channel selection
- Product Considerations: perishability, technical level, and breadth of product line influence channel selection
- Control, Coverage, and Synergy: control, geographic coverage, and complementary skills affect channel selection
Alternative Approaches for Market Entry
- Piggybacking: an arrangement where one company distributes another company's products through its established channels
- Joint Ventures: when two companies form a new legal entity
- Acquisitions: purchasing an existing company to gain immediate access to a distribution system
- Locked-Up Channel: a situation where a manufacturer is unable to convince an intermediary to work with them, often due to competitive agreements or cultural forces
Global Logistics
- Planning, implementing, and controlling the physical flow of materials and finished products from points of origin to points of consumption
- Traffic or Transportation Management: deals with modes of transporting products, considering cost, lead time, and transit time
- Inventory Control: ensuring adequate inventories to avoid breakdowns in the logistics system
- Order Processing: quickly processing orders, with efficient ordering systems providing a competitive advantage
- Materials Handling and Warehousing: storing and preparing materials for transportation, with climatic changes and warehousing practices influencing storage
- Fixed Facilities Location Management: locating production facilities and warehouses to serve customers worldwide, balancing timely delivery with logistics costs
Predictions and Trends in Supply Chain and Logistics
- International companies need to balance timely delivery and logistics costs, while considering differences in local habits and culture
- Technology is reshaping and adding greater efficiency to global distribution
Test your knowledge on strategies to transport products from manufacturing locations to consumers, including the role of intermediaries like agents, wholesalers, distributors, and retailers in international markets. Explore how import intermediaries identify local market needs and develop their own marketing strategies.
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