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Chapter 15 – International Marketing Channels
Teaching Objectives
In some markets the distribution system may be the single biggest impediment to successful marketing.
An inadequate distribution system may make the cost of reaching some consumers so high that it puts the
price of the product out of reach of the market. In China, for example, the market for a product that exists
in areas outside the major urban centers is often inaccessible because of a lack of a viable distribution
system. In others, the distribution system may be so structured and difficult to enter that is serves as a
major non-tariff barrier. Although beginning to show signs of weakening, the hold that wholesalers and
manufacturers have over many small retailers and laws that protect the system make the distribution
network almost inaccessible to an outsider. The broad focus of this chapter is to present an overview of a
range of distribution systems that confront an international marketer. The teaching objectives are to:
1) Present the variety of distribution channel structures and show how they affect cost and efficiency
in marketing.
2) Examine the Japanese distribution system as it exists today, changes that are rapidly occurring,
and speculate on the eventual changes that will come about there.
3) Detail both the home country and foreign country middleman alternatives available to an
international marketer.
4) Discuss the factors affecting the choice of a channel.
5) Review the methods of locating, selecting, and motivating channel members.
Comments and Suggestions
1. To illustrate the extreme channel structures that can confront an international marketer, we like to
begin the discussion of this chapter with a comparison of a channel structure with a minimum number
of middlemen (import-oriented distribution structure), the channel structure found in the United
States, and the Japanese distribution system. This discussion provides students with a comprehensive
view of some of the types of channel structures confronting the international marketer.
2. Following the discussion above, I present a brief overview of the international channel of distribution
alternatives, Exhibit 15.3 followed by a discussion of the six Cs of channel strategy.
3. Catalog sales and mail order are growing in importance as an effective way to enter some markets.
There have been a number of large U.S. catalog retailers, L.L. Bean, Lands’ End, and Eddie Bauer for
example, that are experiencing some success in Japan. Such companies have a good “quality” image
in Japan and, furthermore, U.S. goods are cheaper than comparable Japanese goods. The strength of
the yen helps U.S. companies to be price competitive but the biggest benefit may come from the
personal exemption on import tariffs a Japanese consumer receives when ordering from the U.S., up
to 10,000 yen (approximately $115) per order. With express shipping, a U.S. company can deliver in
72 hours.
4. Locating and the management of middlemen conclude the discussion on this chapter. Lecture
Outline
I Global Perspective
II. Channel of Distribution Structures
A. Import Oriented Distribution Structure
B. Japanese Distribution Structure
C. Trends – From Traditional to Modern Channel Structure
III. Distribution Patterns
A. Retail Patterns
IV. Alternative Middleman Choices
A. Home Country Middlemen
B. Foreign Country Middlemen
C. Government-Affiliated Middlemen
V. Factors Affecting Choice of Channels
A. Cost
B. Capital Requirement
C. Control
D. Coverage
E. Character
F. Continuity
VI. Channel Management
A. Locating Middlemen
B. Selecting Middlemen
C. Motivating Middlemen
D. Terminating Middlemen
C. Controlling Middlemen
VII. The Internet
VIII. Logistics
