Distribution Channels

Distribution Channels

The international company must rf 'ke a 'whole­channel view of the problem of distributing products to final consumers. Figure 5.4 shows the three main links between the seller and the final buyer. The first link, the seller's headquarters organisation, supervises the channels and is part of the channel itself. The second link, channels between nations, moves the products to the borders of the foreign nations. The third link, channels within nations, moves the products from their foreign entry point to the final consumers. Some manufacturers may think their job is done once the product leaves their hands, but they would do well to pay more attention to its handling within foreign countries.

Another difference lies in the size and character of retail units abroad. Whereas large­scale retail chains dominate the British and US markets, most retailing in the rest of Europe and other countries is done by many small indepen­ dent retailers. The variety of anecdotes that we have offered, in relation to the penetration of Japanese markets by western firms, suggests that getting to grips with a country's distribution structure is often crucial to achieving effective market access. The firm must therefore invest in acquiring knowledge about each foreign market's channel features and decide on how best to break into complex or entrenched distribution systems (see Marketing Highlight 5.6).

216 • Chapters The Global Marketplace

Figure 5.4

Whole­channel concept for international marketing

Organizing an Operational Team and Implementing a Marketing Strategy

The key to success in any marketing strategy is the firm's ability to implement the chosen strategy. Because of the firm's distance from its foreign markets, interna­ tional marketing strategy implementation is particularly difficult. The firm must have an organization structure that fits with the international environment. It has

to be flexible to implement different strategies for the various markets it operates in. Companies manage their international marketing activities in at least three

different ways. Most companies first organize an export department, then create an international division and finally become a global organization.

export department A/arm uf international

Export Department

marlteting organisation

that comprises a sales manager and a few

A firm normally gets into international marketing by simply shipping out its assistants waftosejob is

goods. If its international sales expand, the company organizes an export depart­ to organise the shipping

ment with a sales manager and a few assistants. As safes increase, the export out of the company's

department can then expand to include various marketing services, so that it can goods 10 foreign

actively go after business. If the firm moves into joint ventures or direct invest­ markets.

ment, the export department will no longer be adequate.

international division Aform of international

International Division

marketing organisation

in which tin: division handles alt of the firm's

Many companies get involved in several international markets and ventures. A international activities.

company may export to one country, license to another, have a joint­ownership Marketing,

venture in a third and own a subsidiary in a fourth. Sooner or later it will create an manufac Curing,

international division or subsidiary to handle all its international activities. research, planning and

International divisions are organized in a variety of ways. The international specialist staff are

division's corporate staff consists of marketing, manufacturing, research, finance, organised into operating

planning and personnel specialists. They plan for and provide services to various units according to

operating units. Operating units may be organized in one of three ways. They may geography or product

be geographical organizations, with country managers who are responsible for international subsidiary'

groups, or as an

salespeople, sales branches, distributors and licensees in their respective coun­ responsible for its own

tries. Or the operating units may be 'world product groups, each responsible for sales and profitability.

worldwide sales of different product groups. Finally, operating units may be inter­ national subsidiaries, each responsible for its own sales and profits.

Organizing an QperatiaiKil Tkam and Implementing a Marketing Strategy • 217