1) Delicate the challenges of managing channel relationships in International Marketing.
International marketing challenges
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Managing channel relationship
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Whole channel concept- Purpose of International marketing- types of marketing channel
International markets consist of these buyers in other countries, including consumers, producers, resellers and governments. International marketers face many additional complexities in designing their channels. Each country has its own unique distribution system that has evolved over time and changes very slowly. These channel systems can vary widely from country to country.
Whole channel view: designing international channels that take into account all the necessary links in distributing the seller’s products to final buyers, including the seller’s headquarters organization, channels among nations and channels with nations. Whole channel concept for international marketing shows the three major links between the seller and the final buyer. The first link, the seller’s headquarters organization, 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 US 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.
Seller → Seller’s headquarters organization for international marketing→ channels between nations → channels within nations → final user or buyer.
Channels of distribution with countries vary greatly from nation to nation. Firstly, there are the large differences in the numbers and types of intermediaries serving each foreign market. For example, a US company marketing in China must operate through a frustrating maze of state controlled wholesalers and retailers. Chinese distributors often carry competitors’ products and frequently refuse to share even basic sales and marketing information with their suppliers. Hustling for sales is an alien concept to Chinese distributors, who are used to selling all they can obtain. Working with or getting around this system sometimes requires much time and investment.
When Coke first entered China, for example, customers bicycled up to bottling plants to get their soft drinks. Many shopkeepers still don’t have enough electricity to run soft drink coolers. Now, Coca cola has set up direct- distribution channels, investing heavily in refrigerators and trucks, and upgrading wiring so that more retailers can install coolers. The company has also built an army of more than 10,000 sales representatives that makes regular visits on resellers, often on foot or bicycle, to check on stocks and record sales. “Coke and its bottlers have beeb trying to map every supermarket, restaurant, barbershop, or market stall where a can of soda might be consumed,” motes an industry observer. “Those data help Coke get closer to its customers, whether they are in large hypermarkets, Spartan noodle shop or schools.”
Another difference lies in the size and character of retail units abroad. Whereas large-scale retail chains dominate the US scene, much retailing in other countries is done by many small, independent retailers. In India, millions of retailers operate tiny shops or sell in open markets. Their markups are high, but the actual price is lowered through haggling. Supermarkets could offer lower prices, but supermarkets are difficult to build and open because of many economic and cultural barriers. Incomes are low, and people prefer to shop daily for small amounts rather than weekly for large amounts. They also lack storage and refrigeration to keep food for several days. Packaging is not well developed because it would add too much to the cost. These factors have kept large-scale retailing from spreading rapidly in developing countries.
