The topic of company expansion came up during my last radio program, during the discussion I went on to give an explanation of some of the

[display_podcast]

options open to corporations looking to expand their businesses internationally.

Of course – the assumption is made that the company is making the moves to expand internationally for all of the right market driven reasons !

In terms of dealing with the path to deliver the product overseas, the company will typically make one of two choices :-

  • setup office in the target country
  • select a distribution partner to deliver the goods

Of course, in order to setup a direct organisation with sales force and all of the other necessary staff, the business would have to be able to justify this by the amount of revenue that it proposes to generate. On the other hand – by selecting a distributor the company will be able to enter into the market at a much lower cost.

On the surface – hiring a distributor and letting them get on with the job of selling seems quite straighforward – however, this is where we get into the sometimes complex, frustrating and challenging field of international distributor management.

Note that part of the battle will be in being able to gain distributor mindshare – this is because your products could well be one of literally hundreds that your new channel partner is selling. With that various products may well be providing your international channel partner with greater margins, more market share, more support and close relationships that what you currently have.

With so much of the cost of products being taken up by the delivery network and management, it is interesting to see how little time is spent dealing with this oh so necessary topic. Certainly when I studied my MBA and, specialised in International Trade and Finance there we minimal focus on this compared to topics such as the marketing mix for example.

Some of the greatets challenges facing companies today is in this area of international disributor channel management and; with very few managers being able to say how much cost of serving up the product through the channel …

  • gross margins ?
  • margin mix ?
  • contribution margin ?

… actually costs [and I mean documented quarter by quarter – and not anecdotal]; this will continue to be a management area that will by itself demand more focus and attention.

The financial section of my distribution channel management training is always one that provokes much discussion and with the international distributor being by definition removed from the supplier company – process management and data flow plays a significant part in the field of international partner channel management.

Questions, comments ? would love to hear from you.

-Stephen C Campbell

Intere

During my radio program today we discussed the marketing mix [many people know this as the 4 P’s] as this was requested by one of the listeners. For those of you who are not familiar with the Marketing Mix, the 4 P’s stand for :-

  • Product
  • Price
  • Promotion
  • Place

… now when we talk about distribution channels in marketing, this topic falls under that P of Place. That is to say, where will the end user customer actually end up purchasing the product and/or service that is produced by the company in question.

If you consider a company like coca cola and how you can go almost anywhere in the world and purchase this soft drink, you can begin to get an idea of how important channels of distribution in marketing are for businesses of all sizes. Of course none of us ever purchase Coca Cola from the company itself – instead we purchase from a retailer who would have in turn purchased from one of many possible distribution channels. There can be many intermediaries in the supply chain which of course all adds to the final price paid by the end user.

In my consulting and training work – this topic of distribution channel management is continuing to be an ever important one. How is your company doing in terms of actively managing your distribution partners ?

  • Are you working in partnership ?
  • Do you know their margins ?
  • Do you know their fixed costs ?
  • Do you know how much your products are contributing to their fixed costs ??

As the price that the end user pays for a product continues to be tied to the costs incurred in getting that product to the end user, training and consulting requirements on this subject matter will rise and those companies that make the incremental necessary changes in this respect will be those that take more market share and ultimately be the ones that excel.

As always, any thoughts, comments or consulting requirements ? don’t hesitate to get in touch.

-Stephen C Campbell