Page 334 - DMGT408DMGT203_Marketing Management

Unit 14: The Global Marketplace

14.4.4 Distribution Notes

As can be expected, the distribution system varies across countries. For example, the distribution
of goods for exporters to Japan is fairly complicated as more levels of resellers are involved and
product price to consumers shoots up. In broad terms, the purpose of distribution of goods and
services to points where consumer buy them is quite similar in different markets. Right
distribution strategy is as crucial for success in foreign markets as it is in the domestic market.
The international marketer strives to choose the best distribution network and many exporters
prefer to enter into partnerships with companies that are already established in foreign markets.

Self Assessment

Fill in the Blanks:
13. Microsoft sells the same software in all its global markets. It is an example of product
…………………….

14. …………………… price refers to price set for goods shipped to company’s subsidiary
abroad.
15. In case of perishable items, the packaging has to be developed according to a country’s
…………………… conditions.

14.5 Summary

Global marketing is the performance of marketing activities across national borders. The
difference between domestic marketing and international marketing is the manner in
which different activities are handled. It is crucial for companies to do business in other
foreign markets.

Exporting involves the lowest level of commitment to international marketing.
Contracting involves licensing or contract manufacturing.
Licensing is an arrangement in which the international marketer granting the license
permits to the licensee to manufacture goods under the brand name of the company,
patent rights, trademarks, raw materials, production processes and provides necessary
technical know-how.
A joint venture is a partnership between a domestic company and a foreign business house,
or it can be between two countries. Joint venture partner minimises risks associated with
political, economic, and cultural aspects. Strategic alliance is a form of joint venture in which
two or more firms join hands to create competitive advantage on worldwide basis.
Direct ownership is the highest level of commitment to international marketing by
multinational companies. The company is the sole owner and does not compromise on
any aspect of business, including manufacturing or marketing programmes and enjoys
greater control and flexibility.
Because of the uncertainties of foreign markets, international marketers study these markets
to assess political/legal, economic, social/cultural, and technological factors.

There is much debate over standardisation of product and promotion to gain economies
of scale. The other view is that consumers in different countries differ in many important
aspects and product and promotion adaptation is the right approach. Various authorities
and professionals suggest three approaches.
One is to adopt global approach for products. This means no product modification or
adaptation is required for certain types of consumer and B2B products. Another approach

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