International Distribution Decisions: Dr. Rakesh Mohan Joshi

International Distribution Decisions
Dr. Rakesh Mohan Joshi
www.rakeshmohanjoshi.com
Learning Outline:
Concept of international distribution system

Basic functions of distributor in international markets.
Alternate international marketing channels
Selecting channels of international distribution
International Logistics
Conceptulization, design, and implementation of a system to
direct flow of goods and services across national border.
It has two distinct components:
Materials Management
Physical Distribution
Channels of International Distribution

A set of interdependent organisations networked
together to make the products or services available to
the end consumers in international markets.
Fig. : Control of International Distribution
6
14
5.6
5.3
5.3
19
5.2
4.8
20
24
31
4.7
35
4.6
50
4.5
40
4
3.8
4.4
3.7
4.2
60
3.5
2.7
73
100
88
80
100
120
119
144
1 = not at all controlled by domestic companies, Controlled by foreign companies

7= Extensively owned and controlled by domestic companies
The Global Competitiveness Report 2014-15, World Economic Forum, Geneva, p. 525
Chad
Tanzania
Uganda
Pakistan
Russian Federation
India
South Africa
China
France
UK
Bahrain
Germany
USA
UAE
160
Japan
140
Major Functions of Distribution Channel:

Physical flow of goods
Transfer of ownership
Realization of payment
Regular flow of information
Promotion flow
Basic Functions of Distributor in International

Marketing
Making distribution possible
Producers
Intermediaries
Customer
Basic Functions of Distributor in International

Marketing
Contacting buyers
Order processing/documentation and billing
Transportation and documentation
Maintaining inventories
Breaking bulk
Merchandising
Financing
Criteria for Selection of International Distribution Channels

International marketing objectives of the firm
Financial resources
Organisational structure
Experience in international Markets
Firms marketing image
Existing marketing channels of the firm
Channel availability in the target market
Speed of market entry required
Legal implications
Specific product need, if any
Synergy with other elements of marketing mix
International Marketing Channels: Indirect

Agents
Broker/commission agent
Importers buying agent
Country controlled buying agent
Buying Office
International Marketing Channels: Indirect

Merchant Intermediaries
Merchant exporter
International trading companies
Export / trading house
International Marketing Channels: Direct

Agents
Broker/commission agent
Manufacturers agent/sales representative
Buying Agent

Merchant Intermediaries
Merchant Importer
Distributor
Wholesaler
Retailer

e-channels
Producers
Intermediaries
Customer
Problems in Planning an International

Distribution
Operating distribution system varies from one market to other.
Selecting of distribution channel
Distance
Physical Distance
Marketing Systems Distance
Problem in getting information about the channel.
Organising Resources
Financial
Personnel
Pricing Factors
Long term commitment
Distribution Channels : Japan

Automobile Parts
Automobile makers
affiliated parts
makers
Automobile makers
Dealers
Independent
parts makers
Repair parts
makers
Wholesalers
Special agents
Cooperative
sales companies
Sub-dealers
2nd-level
wholesalers
Retailers
Gasoline
stations
Large users
Automobiles
repair shops
End users
SOURCE: McKinsey industry studies
Distribution Channels : USA
Automobile Parts
Manufacturer
51%
Warehouse
distributor
Jobber buying groups
Jobber
Installer
10%
18%
Mass
merchandiser
21%
Repair
specialist
Primary channel
Secondary channel
Source McKinsey industry studies
Customer
Total Cost Concept for Selecting

Distribution Channel
D=T+W+I+P+O+S
D - Total distribution cost of system
T - Transport Cost
W - Warehouse Cost
I - Stocks and inventory costs
P - Packaging cost
O - Order processing and documentation
S - Total cost of lost sales due to not meeting service
standards set.
Fig. : Share of Top 250 Retailers by Region/ Country of Origin (2012)

Africa/Middle East
2.8%
Canada
3.6%
Japan
15.6%
U.S.
33.2%
Other Asia/Pacific
8.4%
France
4.8%
Latin America
3.6%
Germany
6.8%
Other Europe
15.6%
U.K.
5.6%
Sales Share of Top 250 Retailers by Region/Country, 2010

Africa/Middle East
1.20%
Latin America
1.80%
Other Europe
11.60%
Canada
2.60%
U.S.
41.70%
U.K.
6.50%
Germany
11.10%
France
9.50%
Other Asia/Pacific
5.40%
Japan
8.80%
Fig. : Revenue Share of Top 250 Retailers by Product Categories

Hardlines & Leisure
Goods
14.9%
Diversified
8%
Fashion Goods
8.8%
Fast-moving Consumer
Goods
68.3%
Global:Private Label Penetration by Value (in Percentage)

2010-15
47
46
Switzerland
UK
41
Germany
33
Netherlands
32
35
34
32
France
30
Australia
24
27
25
Denmark
24
Global Average
22
Canada
22
24
24
23
USA
21
19
18
Sweden
14
Italy
13
India
11
Japan
Brazil
China
Russia
0
43
14
11
10
20
2010
2015
30
40
50
World's Fovourite Online Retailers

Retailers
Headquarters
Main Product
Amazon
Seattle
Books
Ebay
San Jose, California
Online auction and shopping website
Walmart
Bentonville, Arkansas
General Merchandise
BestBuy
Richfield, Minnnesota
Electronics
Target
Minneapolis Mountain View
General Merchandise
NetFlix
Los Gatos, California
Movie Rental Site
IKEA
Delft, Netherlands
Funiture and Household
Macy's
New York
Clothing and Accessories
NewEgg
City of Industry, California
Computer Harware and Software
Sears
Hoffman Estates,Illionois
Genaral Merchandise
Class Assignment
There has been a lot of resistance to opening up
of Indian retail sector for foreign players. It is
often argued that FDI in retail is likely to
hamper interests of small retailers in
unorganized sector creating job losses. The
issue has often been vehemently debated.
Prepare your arguments for and against FDI in
India and discuss in groups in form of a debate
in the class.
THANKS

International Distribution Decisions: Dr. Rakesh Mohan Joshi

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International Distribution Decisions

Dr. Rakesh Mohan Joshi

Concept of international distribution system

Dr. Rakesh Mohan Joshi

Dr. Rakesh Mohan Joshi

Channels of International Distribution

Dr. Rakesh Mohan Joshi

Fig. : Control of International Distribution

1 = not at all controlled by domestic companies, Controlled by foreign companies

Dr. Rakesh Mohan Joshi

Major Functions of Distribution Channel:

Dr. Rakesh Mohan Joshi

Basic Functions of Distributor in International

Dr. Rakesh Mohan Joshi

Basic Functions of Distributor in International

Dr. Rakesh Mohan Joshi

Criteria for Selection of International Distribution Channels

International Marketing Channels: Indirect

Dr. Rakesh Mohan Joshi

International Marketing Channels: Indirect

Dr. Rakesh Mohan Joshi

International Marketing Channels: Direct

Dr. Rakesh Mohan Joshi

International Marketing Channels: Direct

Dr. Rakesh Mohan Joshi

International Marketing Channels: Direct

Dr. Rakesh Mohan Joshi

Problems in Planning an International

Operating distribution system varies from one market to other.

Selecting of distribution channel

Problem in getting information about the channel.

Long term commitment

Dr. Rakesh Mohan Joshi

Distribution Channels : Japan

Dr. Rakesh Mohan Joshi

Distribution Channels : USA

Jobber buying groups

Dr. Rakesh Mohan Joshi

Total Cost Concept for Selecting

Dr. Rakesh Mohan Joshi

Fig. : Share of Top 250 Retailers by Region/ Country of Origin (2012)

Dr. Rakesh Mohan Joshi

Sales Share of Top 250 Retailers by Region/Country, 2010

Dr. Rakesh Mohan Joshi

Fig. : Revenue Share of Top 250 Retailers by Product Categories

Dr. Rakesh Mohan Joshi

Global:Private Label Penetration by Value (in Percentage)

World's Fovourite Online Retailers

San Jose, California

Online auction and shopping website

Minneapolis Mountain View

Los Gatos, California

Movie Rental Site

Funiture and Household

Clothing and Accessories

City of Industry, California

Computer Harware and Software

Dr. Rakesh Mohan Joshi

Dr. Rakesh Mohan Joshi

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