The Challenge of Distribution in Large Domestic Markets

_ Distribution is the process of delivering products or service to consumers or to

the final – consumer via intermediaries.
_ There are important differences between marketing services within a compact
geographic area and in a federal nation covering a large geographic area. Take
physical logistics as an example, it is immediately become more challenging for
many types of services because of the distances involved and the existence of
multiple time zones.
_ Distributing service (e.g physical logistic) faces challenges due to:
+Distances involved
+Multiple time zones
+Multiculturalism
+Differences in laws and tax rates

Distributing Service Internationally

Nowadays, there are many firm that distribute their service in an international
way (namely Google, Amazon, Starbucks, McDonald, etc). So, what are the factors
that pushing these firms to go international or even global?
Factor Favouring Adoption of Transactional Strategies
Several forces can influence the trend toward firm’s globalization. These forces
are including 5 forces (drivers): Market, Government, Competition, Technology
and Cost.
+Market Driver: factors that stimulate the move toward transnational strategies
include common customer needs across many countries. Corporate customers
seek to standardized and simplified suppliers used in different countries – ad
agencies, Big 4 (Pricewaterhouse Cooper, Deloitte, Ernst&Young, KPMG).
+Government: Government can provide support drivers are favourable trade
policies, compatible technical standards, and common marketing regulations
+Competition: Competitors from overseas, the interdependence of countries, and
transactional policies of competitors are exercising powerful forces to service
industries.
+Technology: advances in information technology
+Cost: lower operating cost.
How Service Processes Affect International Market Entry
_ People processing services require direct contact with customers.
 Export service concept
 Importcustomer (Inviting customer from overseas to firm’s home country)
 Transport customers to new locations (Airport Passenger Transportation)
_ Possession procession involves services to customer’s physical possessions.
_Information – based service include mental processing services and information
processing services.
 Export the service to a local service factory (Netflix)
 Import customer
 Export the information via telecommunication and transform it locally
(Data can be downloaded online)
Barrier to International Trade in Services
_Passage of free-trade legistation is important facilitator of transnational
operations
_ Despite efforts of WTO and GATT, barriers still exist:
 Restrictions on international airline operating right
 Heavy taxation
 Legal restriction
 Lack of broadly agreedupon accounting standards
 Cultural issues