More likely to adapt when
More likely to standardise when
In practice, some degree of adaptation is almost certain
In practice, it is usually better to start with a limited range which can then be extended
Some firms supplement international distribution efforts by national service support: for some products and services, it is difficult to provide an adequate level of service from the home country or some other distant location – like an Asian call-centre for the UK or France. But this will mean training people locally to service the product: a significant investment
However, it can be a means to provide competitive advantage. And it may be essential if competing against strong local firms with local service. Warranties can also provide competitive advantage – e.g. look at the Japanese car companies that for many years provided car warranties that were superior to their rivals. But warranties are not cheap and may need to vary country-by-country
Unless the product is truly unique and in exceptional demand, most companies would opt for phasing new product launches mainly because of the heavy resources involved, e.g. Playstation 3 started in Japan, then North America, then Europe
So which country (or region) comes first? Often the home country to iron out any problems. Then the most likely target – often the USA because of its high wealth per head – with other countries to follow. Then usually, but not necessarily, the less developed countries.
They can be a major contributor to both profit and quality service internationally
It is important to distinguish between the basic decision on the method of market entry and the subsequent task of gaining distribution once this entry method has broadly been achieved. We are concerned with the latter here.
There are five main issues:
A distribution agreement is a legal document – whatever method is chosen above – that will specify the responsibilities of all parties above. The agreement will cover such matters as pricing, currency, the basis of payment – e.g. commission percentage, sales and marketing support, etc.
Distributors are, in many respects, a customer of the company and need to be motivated and communicated with if they are to give good service. For example, an export distributor will usually have an influence over the level of service to customers, the paperwork, the answering of queries, the return of damaged stock, etc. The distributor may also control the availability of stock, stock levels, invoicing, etc
How do you motivate the distributor to give good service? Some suggestions: regular communications, visits, training, incentives, audit procedures – perhaps involving independent customer surveys – regional meetings, joint participation in trade fairs.
Keypoint: all these issues must be matched to customer requirements.