Chapter 10

Managing Global Channel Relations

Imanuel Hutagalung
 Channel Design
The term channel design refers to the length and the width
of the channel employed.

Channel design is determined by 11 C’s: customer characteristics,

culture, competition, company objectives, character, capital, cost,
coverage, control, continuity, communication.

Customer Characteristics
Culture
Competition
 Customer Characteristics

Need to answer questions such as what

customer need-as well as why, when,
and how they buy-are used to
determine ways in which the products
should be made available to generate a
competitive advantage.
 Culture
In planning a distribution system, the marketer must analyze
existing channel systems, or distribution culture.

CHANNEL MEMBER

MANUFACTURER INTERMEDIARY RETAIL

Production Order Taking Selling

Advertising Inventory maintenance Organizing consumer
Nat’l Sales Promo Space control at the retail level In-store promo
Dealer aids Dispatching of sales support
Education of dealers personnel
Financing Area Marketing
Financing
Examples of Function Performance in the Channel Systems for the Japanese Cosmetic Industry
 Competition

Channels used by competitors may be the only product-

distribution system that is accepted by both the trade and
consumers
The alternative is to use a distribution approach totally
different and hope to develop a competitive
advantage.(5A)
The new approach will have to be carefully analyzed and
tested against the cultural, political and legal environment
in which it is to be introduced.
 Selection of Intermediaries

DISTRIBUTOR Agents: have less freedom of

INTERMEDIARIES movement because they operate
on a commission basis and
AGENTS
do not physically handle the
goods.(5B)

A distributor: will purchase the product, more

independent than agents. Distributors
provide a complete marketing service to int’l
marketer.(5B)
 Screening for Intermediaries

Performance(5C)(choose 2)
Financial standing of the candidate
Sales are excellent indicator
Distributor’s existing product lines
Market Coverage and how well the markets are served
Professionalism(5C)(choose 2)
Reputation
Distributor’s business strategy
Overall attitude in terms of cooperation and commitment to the
marketer by developing a local marketing plan.
 Gray Markets

Also known as parallel importation: authentic and legitimately

manufactured trademark items that are produced and purchased abroad
but imported or diverted to the U.S by bypassing designated
channels(5D)
Gray-market products vary from inexpensive consumer goods (candy)
to expensive capital goods (equipment)
Problems:
Price segmentation
Exchange rate fluctuation

Example: Japanese marketers often find it cheaper to go to Los

Angeles to buy export versions of Japanese-made products.