International

Channel
Perspectives
 The International
Perspective

What drives the need to focus

on international markets?

Slow growth in domestic

markets

Fierce foreign competition

 The Complex Environment
Behavioral processes in
international channels

Environment
of Designing
From an
international international
International
channel channels
Perspective
management

Motivating international
channel members
Key Environmental Factors

a. Economic Factors
b. Competitive Environment
c. Sociocultural Environment
d. Technological Environment
e. Legal/Political Environment
 Economic Factors

Inflation Deflation

Fluctuating
Recession currency rates

Economic
conditions that
appear in the domestic
environment can also
occur in foreign environments,
but the changes can be more dramatic.
 Competitive Environment
Many less-developed
countries do not
have free & Different
open competition cultures

Different Different
languages currencies
Because competitive
structure in foreign countries
can be quite different
from that in the United States,
channel structure needs to be
able to adapt to a wide variety of circumstances.
Sociocultural Environment

Varying cultural Varying

attitudes
values

Varying behavior Varying

norms perceptions
Because sociocultural
elements can influence all
elements of the marketing
mix, the channel variable is
sensitive because of the often
necessary person-to-person or
organization-to-organization involvement.
 Technological Environment
Some less-developed
countries have In some developed
relatively primitive countries, technology often
communications matches or surpasses
& that of the
transportation United States.
technology

Varying levels of
technological
advancement around the
world require U.S. channel strategy
either to force foreign suppliers to
meet technological demands or to raise the bar
of their own levels of technology.
 Legal/Political Environment

Government
regulations Tariffs

Political Import
pressures restrictions

Policies Quotas
Firms seeking to establish
channels in foreign markets
need to investigate the legal
environment of each country
because of the wide array
of complex & burdensome issues.
 Behavioral Processes

In order to avoid negative conflict, use

power effectively, & establish good
communications, the channel manager must
understand the behavioral aspects of
channel systems.

• Japan & Bose speakers

 Designing
International Channels

Phase 1 Recognize that a channel design

decision must be made.

Phase 2 The design will need to reflect whether

the firm’s distribution objectives
specify reaching overseas markets.

Phase 3 The firm must examine carefully the

kinds of tasks that need to be performed
to successfully meet the firm’s
distribution objectives.

Phase 4 Develop a set of channel structure

alternatives for the specific international
environment.
 Alternative Channel
Structures

Indirect Exporting
A firm sells products in foreign
markets but does not have any
special division within its
organization or make any
significant effort at international
marketing.
Alternative Channel Structures

Indirect Exporting

Production
in home market

Indirect
export

Casual Trading Export Cooperative

exporting company management (piggyback)
company
 Casual Exporting

The firm is just beginning to sell its products

overseas.

Unsolicited orders from foreign countries may

also account for significant parts of this
type of exporting.
 Trading Companies

They are large and have

access to many world markets.

They can provide a U.S.

firm with rapid entry into foreign countries.

But because the trading companies are so large

U.S. firms have little influence over how their
products are sold.
 Export Management
Companies
Domestically based wholesalers or
manufacturers’ representatives who
specialize in overseas sales

They offer an attractive alternative to

the firm that seeks
a higher level of involvement in
international
marketing than that provided by
casual exporting
or trading companies.
 Cooperative or Piggyback
Arrangements
The carrier is the firm already
involved
in exporting.

The rider is the firm that

uses the international expertise
and capabilities of the carrier to
enter foreign markets.

This method can offer the rider an

opportunity
to gain entry into foreign markets with little
capital outlay, while the carrier can obtain
a desirable product to sell.
Alternative Channel
Structures
Direct Exporting
The manufacturer itself
gets directly involved in
exporting rather than
delegating all of the tasks
to others.
 Alternative Channel
Structures
Direct Exporting
Production
in home market

Direct
export

Foreign Agents Overseas

distributors marketing
subsidiary
Foreign Distributors
The manufacturer’s ability to exercise
control
over how its products are marketed by
distributors is a crucial issue in domestic
and in international marketing such as
they might not want to do things in the
manufacturer’s way.

But modern technology has made it much

easier
and more efficient for U.S. manufacturers
to communicate with foreign distributors.
 Foreign Agents

They are independent, but they

do not take title to, and
usually do not take physical
possession of,
the products they represent.

They can arrange for the

performance of most of the
international marketing tasks.
 Overseas Marketing
Subsidiary
When the manufacturer establishes its own
foreign
sales branch overseas and it can perform most
or all of the international marketing tasks

Requires substantial
commitment and investment
in international marketing

But because the subsidiary is owned by

the manufacturer, the degree
of control possible is greater.
 Motivating Channel Members

Three facets of motivation management:

1. Finding out the needs & problems of

channel members

2. Offering support to the channel

members that is
consistent with their needs & problems

3. Providing leadership through the

effective use
of power
 Leading Foreign
Marketing Channels
1. Roles & routines of foreign
distributors were not rigidly set by
overseas manufacturer, but were
adapted by distributor to changing
Effective circumstances in market
leadership 2. Marketing strategy decisions were
occurs under made jointly by manufacturer &
the following distributors
circumstances 3. High degree of personal contact
between manufacturer & foreign
distributors maintained through
personal visits, phone calls, & letters