International Distribution Channels and Market Entry Strategies

International Distribution Channels & Market Entry

Key Channel Functions

1. Distribution channels provide information and advice to buyers, including advice and promotions.
2. Direct access / channel involves reducing the number of contacts needed to reach the target audience.
3. Numerical distribution measures how many sales points carry a company's product.
4. A mixed channel combines direct and indirect market access strategies.
5. Logistics perform storage, transportation, and assortment diversification.

Channel Mapping Table

Market Entry Examples

• IKEA China -> Mixed access - joint ventures or piggybacking
• Ferrari in Switzerland -> Mixed access – licensing
• Samsung in the U.S. -> Indirect access – trading companies
• Case Study: Starbucks in China -> Direct access – subsidiary

SME and Brand Examples

Trendia: Piggybacking - Trendia could partner with an established U.S. online fashion retailer to sell through their platform, using existing distribution and customer reach.

Ecosip: Export consortiums - EcoSip could collaborate with other small Catalan organic brands to share export costs and logistics, making it more affordable to enter the German market while maintaining product quality.

Homesync: Trading companies – HomeSync could use a trading company to manage the export of its products, ensuring a strong distribution network without a large investment.

Bonbonvie: Purchasing agents - Bonbonvie could use purchasing agents to locate luxury chocolate shops, allowing the company to enter the market without setting up a local sales team.

Franchising: Advantages and Disadvantages

Advantages for the Franchisor

• Franchisees pay for store setup and operations.
• The franchisor earns steady income from fees and royalties.
• The brand remains consistent, ensuring customer loyalty.

Disadvantages for the Franchisor

• Training and support require investment.
• Maintaining quality across locations is difficult.
• Poor franchisee performance can harm the brand.

Advantages for the Franchisee

• Franchisees gain a trusted brand and a proven business model.
• Marketing and supply chain support reduce costs.
• Training helps even inexperienced owners succeed.

Disadvantages for the Franchisee

• High starting costs include fees and equipment.
• Royalties and advertising fees reduce profits.
• Strict corporate rules limit business flexibility.