Quiz 15: International Marketing Channels
Describe the following terms. Distribution process : It refers to the process of delivering the products to the customer and in a service business, it refers to the way a distributor delivers the products to the customer to perform the service. There are different methods through which products can be sold to the customer such as direct sales, indirect sales that includes retail and wholesale or multi-level marketing. Distribution structure: It basically includes distribution channel that refers to the path or route through which goods and services travel from the place of production to the final users. The supply chain includes wholesalers, retailers and the distributors. Large scale Retail Store law : It was a Japanese law that provided a system wherein a large retailer used to notify the local retailer of plans to build a large store in the area. Besides that, this law encouraged corruption as large retailers often had to make payments to powerful locals to gain acceptance of a new store. Agent middlemen : He/she basically is the middlemen who negotiate purchases or sales on an agency basis. Moreover, agent middlemen general don't bargain the goods they sell. His purpose is to bring together the buyers and sellers and this is how they earn as the commission of the sale price. Merchant middlemen : He basically buys and sells goods at profit and undertakes possession and ownership of goods in their own names. Besides that, they work for profits and endure the risks of trade. Moreover, merchant middlemen comprises of wholesalers and retailers. Home country middlemen: He is a middleman who is placed in the manufacturing firm's country and one who offer advertising services from a domestic base. Besides that, he offers companies with small worldwide sales volume and to those who are inexperienced with distant markets. Export Management Company : These are independent private firms that act like an export department for several non-competing manufacturers and producers. Besides that, these companies can be quiet varied and they can be either local or foreign owned and may operate on a fee basis. Trading companies : These are the businesses that work with diverse kinds of products which are sold for consumer, commercial and government purposes. Besides that, these companies buy a specific range of products, maintain a stock or a shop and distribute products to the ultimate customer. Export Trading Company : These are the independent companies that provide support services to the firms who are engaged in exporting. These services may include warehousing, insuring and billing on behalf of the client. Moreover, export trading companies helps manufacturers to find overseas buyers and provide them with other appropriate market information. Complimentary marketing : This type of marketing is basically an intersection of SEO (Search engine optimization) and Content marketing. The purpose of complimentary marketing is enhanced prominence and responsiveness. The more the one drive discernibility and awareness to the marketing efforts, the better all other promotional activities perform.
A distribution system may be defined as a sequential flow consisting of procedures, equipments, systems, methods, and activities of an organization with an aim to design, link, facilitate and monitor the movement of their goods and services from source to end-users. The distribution systems in Japan are pervasively known for affecting the nation's cultural, social and economic situations. Its distinguishing features make it tough for foreign players to adapt. Therefore, it functions as a non-tariff barrier preventing the unnecessary inclusions by global players in domestic markets. The features making it different from others are as follows: 1. The Japanese distribution systems are long channels with the presence of numerous intermediaries such as wholesalers, dealers, sub-dealers, special agents, retailers, regional players, independent part makers, repair shops, and local wholesalers, etc. 2. A prominent focus on small stores by distribution systems to continue the tradition of buying fresh and qualitative products in small lots or whenever required, through frequently emphasized trips to small stores instead of large discount and specialty hubs. 3. Japanese distribution systems maintain control on all their channel members and focus on maintaining long-term relationships with them by offering a multitude of services such as offering long-term extendable credits on consignments, offering frequent rebates, returning unused materials to manufacturer, and extending marketing promotional support. 4. The managers of Japanese distribution systems run their businesses on a unique philosophy focused on maintain long-term relationships with everyone based on harmony, loyalty and friendliness. They work with a properly defined system of business values and ethics, further contributing to maintain the society in general. 5. In addition, they have well-formulated strict laws in place which protects the business interests of small retailers and its effective implementations prevent global intruders other large marketers to affect the regional counterparts.
With recent accreditations in social, cultural, technological and marketing environments, the choice regarding maintenance of control over distribution channels is also diversifying, making it crucial for an organization to opt for a suitable strategic mix rather than choosing a solely focused strategy. The Japanese manufacturers effectively controls the overall distribution process ranging widely from a manufacturer to a retailer, with the aim focused on the establishment and maintenance of long term relationships. They try to keep together all the parties involved in the system, like a family, where everyone supports each other and prevent rivalries from entering the family (or channel). For this, a wholesaler sometimes acts as an agent middleman maintaining the tie-ups between parties. The elements, which are used to maintain an effective control over channels by strengthening their relationships with other channel members, are as follows: 1. The manufacturers in Japan provide sales consignments or other related services with long-term extendable credit systems. In fact, sometimes they even readily finance their inventories. 2. Annually, the Japanese manufacturers offer rebates to their distribution channel members for numerous different reasons, such as, a. For purchasing the products in large quantities, b. Making payments before last dates, c. Exhibiting high performances in the markets, d. Effectively maintaining certain levels of inventories, e. Participating in sales promotions campaigns, f. Showcasing loyalty towards the suppliers, g. Effectively maintaining promoting the price policies set by the manufacturer, h. Cooperating with all the parties involved, and i. Consistently contribute towards the manufacturer's overall success. 3. The return policy of Japanese manufacturers has made it easier for the parties to return the unused or unsold merchandise at any level of distribution channel. The Japanese manufacturers effectively cater to the local needs by promoting their products and services through local and regional intermediaries. They distribute displays layouts for advertisements, assist the intermediaries with in-store demonstrations, and create awareness through their education programs.