Welcome to class of International Distribution by Dr. Satyendra Singh University of Winnipeg Canada

1. Welcome to class of International DistributionbyDr. Satyendra SinghUniversity of WinnipegCanada

2. International Distribution • Distribution Structure • Traditional • Modern • Retail Giants • Distribution Patterns • General • Retail

3. Distribution Structure… • Difference Between Domestic and Foreign Structure • PEST • Super-efficient system in the USA vs. highly complex in Japan • Traditional Distribution Structure • Import-oriented structure • High price, small no of affluent customers • Sellers market  demand exceed supply • Absence of cars and telephones • Local monopoly of small stores • Buy daily in developing country vs bi-weekly in Canada • Intermediaries do not perform specific activities • Import-wholesalers perform marketing function • Advertising, marketing research, warehousing, financing, storage

4. Distribution Structure…

5. Distribution Structure… • Japanese Channel Structure • Small intermediaries and dealers • Manufacturers control the channel • Business philosophy is rooted in the unique culture • Laws protect small retailers

6. Distribution Structure…

7. Distribution Structure… • Modern Channel Structure • Change in discounting, self-service, mass merchandizing, return policy… • Change in direct marketing • Door-to-door selling, hypermarkets, shopping malls, catalogue, Internet • Wal-Mart, Carrefour (France), Praktikar (Germany), Ikea (Sweden) • Higher margin in EU than US • Internet-based system for ordering and delivering (low cost, efficient) • GM, Ford, Nissan, Renault and DaimlerChrysler www.covisint.com • Roebuck and Carrefour www.gnx.com • Brick-mortar eg. Dell, Brick-click eg Amazon, DHL, UPS • Convenience store as a pickup points for web-orders

8. Distribution Structure • Retail Giants Structure • Retailers cannot export except by Internet • Wal-Mart, McDonald’s, Home Depot take risk in foreign markets • Europeans: quick to enter foreign market, emphasis on being first, retail strategy, local needs and taste • Americans: exploit domestic market first, emphasis on efficiency, standardization and value to customers • International retailers have advantages over local retailers • World-class business processes • Technology • Financing • Organizational capabilities • Greater buying power • Superior service…

9. World’s 10 Largest Retailers

10. Distribution Pattern… • General Pattern • Foreign channels are not the same as domestic channels • Intermediary services are different • Storage and wait for customers to come and see them, India, Egypt • Line breadth • Dealing-only narrow lines • Requires government license • Cost and margin • Shorter channel for industrial or expensive goods • Inverse relationship b/w length of channel and size of purchases • Non-existent channels – selling on the roads! • Blocked channels – competitors or relationships • Power and competition – large whole sellers finance downstream • Limited stocking – pickup from factory/distributor, if possible

11. Distribution Pattern • Retail Pattern • Product lines: narrow (Italy,Morocco) vs. broad (Japan) • Size pattern • No of person served per retailer– higher in developed countries • May be difficult to reach so many small retailers across a country • Depends of economic development – single cigarette • Direct marketing – mail, tel, door-to-door • Usually best for developed economy, but Eastern European gaining popularity; e.g., Amway • Resistance to change • Government attitude • Local retailers need to compete • Product selection • Greater convenience • Customer service • Liberal store hours • Retailers cannot close/open stores at their wish

12. Retail Structure in Selected Countries