2. Distribution process includes the physical
handling and distribution of goods. This
includes buying and selling negotiations
between producers and middlemen and
between middlemen and customers.
Each market has a distribution structure
through which goods pass from producers to
users
3. Traditional or import oriented structure:
An importer controls a fixed supply of goods,
and the marketing system develops around
the philosophy of selling a limited supply of
goods at high prices to a small number of
customers. In this distribution structure
market penetration and mass distribution are
not necessary why?
Because demand exceed supply, and the
customers seeks the supply from limited
number of middlemen.
4. Japanese distribution structure: it has four
distinguishing features:
1. it is dominated by many small middlemen
dealing with many small retails
2. channel controlled by manufacturers
3. a business philosophy is shaped by a
unique culture
4. there is a law that protect the foundation
of the system
5. Many middlemen: as the Japanese structure is
useful for consumers who make small,
frequent purchases from small and
convenient located stores. Large number of
middlemen supports the high number of
small stores with small inventories.
Consumers goods get through three or four
intermediaries before reaching the
consumers.
6. These small stores serves as an important
role for Japanese consumers. Why?
High population destiny
The tradition of frequent trips to the stores
An emphasis on freshness
An emphasis on quality
7. Channel control: this means that middlemen
are tied to manufacturers by a set of practices
and incentives designed to ensure strong
marketing support of their products and to
exclude competition from the channel
Control is maintained through the following
elements:
1. inventory financing: sales are made on
credits basic extended for several months
8. 2. Cumulative incentives: incentives are given
annually to middlemen for achieving sales
targets, performing services, maintaining
specific inventory levels, remaining loyal to
manufacturer, maintaining the manufacturer
pricing policy
3. Merchandise returns: all unsold goods can
be returned to the manufacturer
4. Promotional support: Middlemen receives
management education programs, in store
demonstration and advertising layout
9. This includes direct marketing, door to door
selling, hypermarkets, shopping malls,
catalogue selling, the internet and other
distribution methods are introduced for
effective distribution process
10. The marketing or distribution process range
from handling the entire distribution activity
to depending on middlemen or intermediaries
for product distribution
Two types of middlemen needed:
1. Home country middlemen: or domestic
middlemen located in the producing firm’s
country.
11. Domestic middlemen offer many advantages
for companies with small international sales
volume, inexperienced with foreign markets,
those who do not want to become
immediately involved with the complexities of
international marketing and those who want
to sell abroad with minimal financial and
management commitment
Examples of domestic middlemen are global
retails, export management companies and
trading companies
12. Foreign country middlemen: it is a sales
corporation set up in a foreign country.
Foreign country middlemen got the
advantage of shorter channels.
using foreign country middlemen moves the
manufacturer closer to the market and
involves the company more closely to
problems of language, physical distribution ,
communication and financing
13. 1. identifying specific target markets within
and across countries
2. Specifying marketing goals in terms of
volume, market share and profit margin
requirement
3. specifying financial and personnel
commitments to the development of
international distribution
4. indentifying control, length of channel,
term of sales and channel ownership
14. There are two types of channel cost:
1. Capital or investment cost of developing
the channel
2. the continuing cost of maintaining it.
Marketing cost is the difference between the
factory price and the ultimate price that
customers pay for the goods
The middlemen cost includes transportation
and storing of goods, local advertising and
sales representative
15. International cost can be reduced by
eliminating inefficient middlemen or
intermediaries to shorten the distribution
channel
