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10 The Management of International Distribution

Learning Outcomes

At the end of this unit you should be able to:

• Recognise the increasingly important role of distribution and logistics
in achieving success in international marketing strategies

• Discuss the different use of intermediaries in the international context

• Appreciate the different types of retailing structures in the world.

10.1 Introduction

Distribution refers to the route through which a product progresses from

the original manufacturer to the end consumer (Woods, 2001). The
question that faces international companies is how to take the product to
the overseas market. This is not an issue for companies that have taken a

decision to be involved in direct or indirect exporting or licensing, because
they will have to accept the foreign distribution offered by intermediaries.

The selection of the foreign distributor is the responsibility of companies
that have branches or wholly owned subsidiaries overseas. Terpstra and

Sarathy (2000) indicate that the first step for an international company to
select its channel of distribution is the identification of its goals in the
foreign market. Then the specific task to be performed by the channel in

the market must be identified. In international markets and as a result of
the Internet, international place is often replaced by the term ‘channel of

distribution’.

10.2 Different channels of distribution

The choices open to the organisation is dependent on whether they deal

in Business-to-Business transactions (B2B) or Business to Consumer
(B2C) transactions. The main channels of distribution for B2C markets are

highlighted in Figure 10.1. The diagram shows that if the organisation is
using indirect methods of market entry then the responsibility lies with the