Chapter 15: International Marketing Channels

What are 3 types of international channels of distribution structures?
Import Oriented

Consumer Oriented

Integrated Logistics

Characteristics of Import Oriented (Traditional)
♣ Limited number of import middlemen control the channel
♣ They follow a marketing philosophy of selling a limited supply of goods at high prices to a small number of affluent customers
♣ Customers must seek the supply of goods
♣ Sellers Market
Characteristics of Consumer Oriented (push)
-No single supplier dominates supply
– Supply can be increased or decreased
– Economies of scale in production
– Buyer’s market
– Producers use many distributors to push goods to customers
Characteristics of Integrated Logistics (pull)
– Distributors control the channel

– They use EDI (Electronic Data Interchange) to coordinate all aspects of distribution (inventory control, warehousing, transportation)

– The process is now one of “management of the supply chain.”

What are the characteristics of the Japanese distribution system?
– High Density of Middlemen

– Channel Control by Manufacturers

– Business Philosophy Shaped by a Unique Culture

– Large-Scale Retail Store Law

– Changes Effected by the SII

What are the 4 ways in which Japanese manufacturers maintain control over their channel of distribution?
o Inventory Financing to Middlemen
o Cumulative Rebates to Middlemen
o Merchandise returns of unsold goods
o Marketing assistance to retailers
What are the buying habits of Japanese consumers?
– Have Brand Loyalty

– Prefer Service and Quality Over Price

– Make Small, Frequent Purchases in Their Neighborhood

Under the original “Large-scale Retail Store Law,” who judged first on proposals for stores larger than 500 square meters in Japan? Who also had to unanimously approve the plan?
o First MITI
o And the prefectural (county) government
o Local retailers must unanimously approve plan
Under the new “Large-scale Retail Store Location Act” in Japan, who is taken out of the approval process?
MITI
What is the difference between an agent middleman and a merchant middleman?
o Agent middleman: represents you the principal rather than themselves (you have more control). But they don’t give you many services.

o Merchant middleman: take title to the goods and buy and sell on their own account (You have less control but you have more services)

What is an Export Management Company?
A consultant who comes in and becomes your export
What is “piggybacking?”
Using somebody else’s distribution channel (also known as complementary marketers)
What is a norazi agent?
Smugglers
What is usually the “quid pro quo” of an exclusive territory agreement when negotiating a contract with a middleman?
What did I get for what I give you? I’ll give you this but I have to get something back in return

Exclusive representation (exclusive dealing)

What is going to determine whether you are going to distribute your product through a local distributor or a foreign distributor?
Capability
The costs (financing to do so)
The risk and control