International Distribution and Retailing PDF

International Distribution and Retailing  Channel-of-Distribution 1 5 Structures All consumer and industrial products eventually go through a distribution process – Physical handling and distribution of goods –...

International Distribution and Retailing  Channel-of-Distribution 1 5 Structures All consumer and industrial products eventually go through a distribution process – Physical handling and distribution of goods – Passage of ownership – Buying and selling negotiations between producers and middlemen – Buying and selling negotiations between middlemen and customers Each country market has a distribution structure – Goods pass from producer to user 2  Import-Oriented 1 5 Distribution Structure In an import-oriented or traditional distribution structure: – The Importer controls a fixed supply of goods – Marketing system develops around the philosophy of selling a limited supply of goods at high prices to a small number of affluent customers 3  Import-Oriented 1 5 Distribution Structure, Cont … Demand exceeds supply The customer seeks the supply from a limited number of middlemen Distribution systems are local rather than National Few countries fit the import-oriented model 4  Japanese Distribution 1 5 Structure, 1. A structure dominated by many small middlemen dealing with many small retailers 2. Channel control by manufacturers Due to vertical integration 3. A business philosophy shaped by a unique culture 4. Laws that protect the foundation of the system: Prevents Large-scale retail store proliferation 5  1 High Density of Middlemen 5 Not unusual for consumer goods to go through three or four intermediaries before reaching the consumer Japan has a large number of independent groceries and bakers (94.7% or all retail stores) In western markets such as U.S.A, emphasis is on supermarkets, discount food stores, and department stores 6  1 Channel Control 5 Inventory financing For example- coca-cola gets paid every 6 months in Japan Cumulative rebates For remaining loyal for cooperating for quantity etc Merchandise returns Promotional support 7  1 Business Philosophy 5 Emphasizes loyalty, harmony, and friendship Supports long-term dealer-supplier relationships The cost of Japanese consumer goods are among the highest in the world Japanese law gives the small retailer enormous advantage over the development of larger stores 8  Large-Scale Retail Store Law 1 5 and Its Successor Daitenho – the Large-Scale Retail Store Law – Applies to the right to open Stores that are Larger than 500 square meters, for these store to Stay Open Late hours, or to change their days Off. – All proposals first judged by the Ministry of International Trade and Industry (MITI) – Applied to both domestic and foreign companies Replaced by the Large-Scale Retail Store Location Act of June 2000 9  Alternative Middleman 1 5 Choices Seller must exert influence over two sets of channels – One in the home country – One in the foreign-market country Agent middlemen – represent the principal rather than themselves Merchant middlemen – take title to the goods and buy and sell on their own account 10  1 Channel Management 5 Locating middlemen Selecting middlemen Motivating middlemen Terminating middlemen Controlling middlemen 11  1 Logistics 5 Logistics management is a total system’s approach to the management of the distribution process that includes all activities involved in physically moving raw material, in-process inventory, and finished goods inventory from the point of conception to the point of use or consumption. The physical distribution system involves more than the physical movement in goods; it includes the location of Distribution plants, warehousing, transportation mode, inventory management, and breaking-bulk. 12  1 Logistics, Cont … 5 Substantial savings can result from the systematic examination of logistics costs and the calculation of total physical distribution costs The concept behind physical distribution is the achievement of the optimum (lowest) system cost, consistent with customer service objectives of the firm (Efficiency) One of the major benefits of the European Union’s unification is the elimination of transportation barriers among member countries. 13