Distribution Channels

The international company must rf'ke a 'whole-channel view of the problem of distributing products to final consumers. Figure 5.4 shows the three main links between the seller and the final buyer. The first link, the seller's headquarters organisation, supervises the channels and is part of the channel itself. The second link, channels between nations, moves the products to the borders of the foreign nations. The third link, channels within nations, moves the products from their foreign entry point to the final consumers. Some manufacturers may think their job is done once the product leaves their hands, but they would do well to pay more attention to its handling within foreign countries.

Another difference lies in the size and character of retail units abroad. Whereas large-scale retail chains dominate the British and US markets, most retailing in the rest of Europe and other countries is done by many small independent retailers. The variety of anecdotes that we have offered, in relation to the penetration of Japanese markets by western firms, suggests that getting to grips with a country's distribution structure is often crucial to achieving effective market access. The firm must therefore invest in acquiring knowledge about each foreign market's channel features and decide on how best to break into complex or entrenched distribution systems (see Marketing Highlight 5.6).

Figure 5.4

Whole-channel concept for international marketing

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