10.16 Distribution strategy
In Chapter 9 we considered one aspect of distribution strategy - exporting - which is the process of getting products to foreign markets. In this section, we deal with the distribution of products within each market.
Distribution systems may differ for a variety of reasons, including the:
- physical environment: This may make delivery by air more appropriate than delivery by truck. For example, the highlands of New Guinea rely in part on air delivery of goods.
- social customs: For example, door-to-door selling is acceptable in some societies while in others it would be considered anti-social.
- availability of services: The national infrastructure of road, rail, air and telecommunication services will influence the choice of distribution system.
- tradition: For example, in Japan it is common to use many intermediaries between the manufacturer and the final retailer and it is difficult to avoid these agents even though they add several layers to the distribution system.
Your textbook focuses on three aspects of distribution systems: retail concentration, channel length and channel exclusivity. Hill's (2005) coverage is excellent and there is little value in repeating it here.
The next topic is promotion, but before we discuss that 'P', read what Hill (2005) says about the place 'P' we are calling distribution. Two additional readings are included to round out your understanding of this topic. The first article gives more detail on international distribution decision areas. The second focuses on the Japanese distribution system which will assist you to appreciate the complexity of their distribution practices and justify why products are expensive by the time they reach the end customer.
In your text
Hill 2005, Chapter 17, pp. 589-592.
Reading 10.2
Albaum, G., Duerr, E. and Strandskov, J. 2005, International Marketing and Export Management , 5 th edn, Financial Times/Prentice Hall, Essex, England, pp. 577-595: 'Physical distribution'.
Reading 10.3
Martin, D., Howard, C. and Herbig, P. 1998, 'The Japanese distribution system', European Business Review , 98 (2), 109-121.
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