Global Marketing Channels

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CHAPTER 12

GLOBAL
MARKETING
CHANNELS
PAPIA, friska
The American Marketing
Association defines

distribution channel as
“an organized network of agencies and
institutions which, in combination, perform all
the activities required to link producers with
users to accomplish the marketing task.”

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CHANNEL
DISTRIBUTION
Marketing channels exist to create utility for
customers.
Major categories of channel utility are
❑ Place Utility
the availability of a product or service in a location that is
convenient to a potential customer
❑ Time Utility
the availability of a product or service when desired by a customer

❑ Form Utility
the availability of the product processed, prepared, in proper condition
and/or ready to user
❑ Information Utility
the availability of answers to questions and general communication about
useful product features and benefits
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DISTRIBUTION CHANNELS:
Terminology and Structure

❑ Distribution is the physical flow of goods through channels


❑ Channels are made up of a coordinated group of individuals or firms
that perform functions that add utility to a product or service

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DISTRIBUTION CHANNELS:
Terminology and Structure

❑ Distributor – wholesale intermediary that typically carries product


lines or brands on a selective basis

❑ Agent – an intermediary who negotiate sales transactions between


two or more parties but does not take title to the goods being
purchased or sold

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ALTERNATIVES
DISTRIBUTION
Consumer Products &
Industrial Products
Marketing Channel Alternatives:
Consumer Products

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CONSUMER PRODUCTS

❑ Piggyback Marketing
❏ channel innovation that has grown in popularity
❏ One manufacture distributes product by utilizing another
company’s distribution channel
❏ Requires that the combined product lines be complementary and
appeal to the same customer

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Marketing Channel Alternatives:
Industrial Products

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ESTABLISHING CHANNELS

❑ Direct involvement – the company establishes its own sales force or


operates its own retail stores
❑ Indirect involvement – the company utilizes independent agents,
distributors, and/or wholesalers

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GLOBAL
RETAILING
any retailing activity that crosses national boundaries

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GLOBAL RETAILING
❑ Department stores
❑ Specialty retailers
❑ Supermarkets
❑ Convenience stores
❑ Discount stores
❑ Hypermarkets
❑ Supercenters
❑ Category killers
❑ Outlet stores
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GLOBAL
RETAILING
Top 10 Global
Retailers 2019

Source: Kantar Consulting


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GLOBAL RETAILING
❑ Environmental Factors
❏ Saturation in the home country market
❏ Recession or other economic factors
❏ Strict regulation on store development
❏ High operating costs

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Classifying Global Retailers

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Global Retailing Strategies

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Global Retailing Strategies

Organic Franchise
Company uses its own resources to Appropriate strategy when barriers to
open a store on a green field site or entry are low yet the market is
acquire one or more existing retail culturally distant in terms of consumer
facilities behavior or retailing structures

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Global Retailing Strategies

Chain Acquisition Joint Venture


A market entry strategy that entails This strategy is advisable when
purchasing a company with multiple culturally distant, difficult-to-enter
existing outlets in a foreign country markets are targeted

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Innovation in Global Retailing

❑ Innovation takes place only in the most highly developed systems


❑ The ability of a system to successfully adapt innovations is directly related to
its level of economic development
❑ Even when the economic environment is conducive to change, the process of
adaptation may be either hindered or helped by local demographic factors,
geographic factors, social mores, government action, and competitive
pressures
❑ The process of adaptation can be greatly accelerated by the actions of
aggressive individual firms

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SUMMARY

❑ Achieving retailing success outside the home-country market is not simply a


matter of consulting a matrix and choosing the recommended entry strategy.
❑ Management must also be alert to the possibility that the merchandise mix,
sourcing strategy, distribution, or other format elements will have to be
adapted.
❑ If a country market has reached a stage of economic development that will
support a channel innovation, it is clear that the action of well-managed firms
can contribute considerably to the diffusion of the channel innovation.

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THANK
YOU!
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