International Distribution Channels

Importance of International Distribution

International distribution is one of the most important aspects of operating a global company. Every global company must decide how they will physically get their product in the hands of the consumer. Considerations in this decision include how much control the company wants to have in the selling process, the difficulty of getting the product to the consumer, and the type of product the company sells.

Tesla sells directly to consumers through storefronts and online.

Types of Channels

  • Direct Sales – Direct sales are ideal for a company that wants full control over the selling and distribution process. Direct selling allows the company to deal more closely with its customers and ensure every part of the customer experience is decided by the company. An example of this is Tesla, which owns its own stores for consumers as well as an online store for customers to purchase their Tesla vehicle and have it delivered to their home. Tesla does this because founder Elon Musk did not want customers to have to deal with pesky car salesman like most other car brands require for purchase at dealerships. Direct selling becomes more difficult however for companies with customers all over the globe. It makes sense for higher ticket items such as those offered by Tesla, however is more difficult for cheaper goods.
  • Agent Intermediaries – Agent intermediaries are intermediaries who take care of the selling/distribution process for the company in return for a commission from the sale. The agent never takes ownership of the product, it simply facilitates the transaction. This is a popular distribution channel for insurance companies. The products are sold and distributed to new customers by the agent for commission, and the insurance company gains a new premium-paying customer without having to worry about making each individual sale. This can be very beneficial for distributing internationally because the agent often has the necessary contacts and skills to sell to customers in the specific market they specialize in.
  • Merchant Intermediaries – Merchant intermediaries purchase the goods from the company, and then resell the goods to customers for a profit. This allows the company to sell in wholesale to the merchant intermediary, allowing for larger sales and avoiding the issues involved with dealing with customers. An example of this is Coca Cola. You will never see a Coca Cola store, however almost anywhere you go you can find a Coke. Coca Cola utilizes merchant intermediaries such as retail stores all over the globe to sell their product to wholesale, then the retailers are responsible for selling Coca Cola products to consumers in that market.

Inclusivity is the New Pink

Cosmetics companies have started to become more culturally sensitive to the vast array of skin tones when formulating their foundation colors. Expanding from the former-norm of “Very Light,” “Light,” “Medium,” “Dark,” and “Very Dark” range, cosmetic companies are aiming for 40 different foundation shades; a standard set by Rhianna’s Fenty Beauty.

Fenty Beauty launched in September 2017 with an unprecedented 40 foundation shades in its lineup. Now offering 50 foundation shades, the brand is dedicated to inclusivity with a special focus on hard-to-match skin tones that were unrepresented in other mainstream cosmetic lines. Rhianna created Fenty Beauty “so that women everywhere would be included.”

It’s not a profound concept that people want to feel included and seen. However, this has been a challenge for a lot of industries, the cosmetics industry in particular. Perhaps the R&D expense just seemed too high to offer more shades than the standard five?

Fenty Beauty proved to all the other cosmetics companies that diverse and inclusive foundation shade ranges can be produced. The overwhelmingly positive response that Fenty Beauty received upon launch also proved that customers are now going to demand nothing less. Established cosmetic brands like CoverGirl, Maybelline, Dior, and others now carry at least 40 shades of foundation.

A person’s skin tone is a part of their identity. For Krystal Robertson, a 26-year old woman with albinism, finding a foundation match with Fenty made her feel “. . . that me finally being myself was worth it . . . It actually means the world that [Rihanna] not only made a diversity of shades for all women of color, but she brought us together.”

While MAC Cosmetics was technically first on the scene to offer 40+ shades of foundation, Fenty Beauty focused on the inclusivity of the brand in its marketing, which is why it has the reputation of setting the industry standard on offering a wide range of foundation shades.

However, it is not enough to simply claim your brand is inclusive, the makeup must reflect it. There is a huge difference between a truly inclusive brand and a brand with 40 shades of foundation with 35 of them being somewhere in the middle, leaving the other 5 with harsh contrast light or dark. Milk Makeup offers 16 shades of foundation and successfully evenly distributes the variation between light, medium, and dark.

As we move toward a global economy, it is crucial for brands to be inclusive. Sometimes, doing so takes shaking up an industry and setting new standards.

What are your thoughts on the cosmetics inclusivity revolution that Fenty Beauty sparked in 2017?

-Cassity Brown

The Trader Joe’s Hype and Culture Marketing

Culture marketing is a strategy used by companies that allows consumers to peak behind the curtain and to learn about the company’s core values and missions through its content, messaging, decor and even product offerings. Most companies have this information simply cited on their website, but the gist is in translating this information into something meaningful and real that will resonate with the consumer. This is relevant for current and potential customers, as well as current and prospective employees and potential investors/stakeholders.

Let’s take a look at Trader Joe’s:

The Trader Joe’s website offers customers and visitors insights to the Trader Joe’s story, and also provided a timeline, showing how the company grew and evolved over the years. Trader Joe’s used this timeline to share details about a community that flourished over time, and to show the company’s commitment to this important pillar. The Trader Joe’s experience is unique to other stores, and is due to several carefully thought out elements that turn Trader Joe’s customers into fanatics:

You’re always met with a friendly cashier who will most likely remember you the next time they see you, and who will engage in meaningful conversation with you. I once left the store with a great podcast suggestion!

Additionally, the handwritten flyers, signs and prices creates a “homey” feeling with a personal touch, which further supports the idea of family and community, versus a printed standardized poster that’s shipped out to all locations. That feels rather robotic, doesn’t it?

They also reach out to their community via Instagram, and constantly provide updates on new products, as well as share cool recipes and fun kitchen ideas. They even offered free printable coloring books for parents and their kids to unwind and de-stress during COVID-19 times. Although this post had nothing to do with the products they sell, Trader Joe’s took the extra step to show customers that they care about the emotional well being of the community.

https://www.instagram.com/p/B-SdZ_knzqP/?utm_source=ig_web_copy_link

Most importantly, Trader Joe’s culture marketing is also evident in product choices, advertising great quality at great prices, with unique offerings from all over the world, further affirming inclusion.

Paired with their versatile product lines and unique offerings, this culture marketing makes Trader Joe’s a go-to for many people and more often than not locks them in as fans and walking advertisements.

Are you a Trader Joe’s fan? Let us know why below!

-Maria Khalil

The 4 Challenges That Affect A Brand’s Global Reach

Growing population numbers all over the world and the increasing efficiency of technology have made globalization for companies more appealing than ever. The potential expansion of revenue streams is possibly the main reason why a company decides to take its brand global.

However, globalization has also brought upon challenges for brands as well. Globalization has made it almost impossible for companies to provide five-star customer service in all parts of the world. Global marketing campaigns have multiple areas of challenges that must be planned for much in advance.

Here are the four main challenges that marketers face when considering global customers:

Challenge 1: Breaking Down Cultural Barriers

It is no secret that brands must always consider all of their markets before moving forward with any new products, services, or campaigns but it is more than that. A global brand must fully understand all of its local markets as much as possible. For example, they must be aware of social norms or even religious holidays that would prevent the purchase of a particular product. One offer that the company issues can be insulting to some or exciting for others. For reasons like this, brands need reliable teams who only focus on understanding their markets before moving forward with any new idea. This also means more than looking at data, there should be actual observations of the local society and its norms.

Challenge 2: Technology

All countries are currently in different locations on the technology adaptation spectrum. Being aware of this is important when considering a campaign that may have a digital component that goes along with it. Customers in countries like the US might prefer an exclusive mobile app notification while customers in countries like the UK would prefer an email. Investing in personalization technology could help brands focus their attention on the right channels and make good offers based on an individual’s preferences and location.

Challenge 3: Diversified Teams

A disconnected team can make a new product launch or a company-wide campaign either a success or a complete failure. Coordinating across several regions requires careful planning and constant communication across all departments within a company. Instituting a new change across all regions at the same time reinforces a brand’s image. Also, managing these globally dispersed teams requires great internal communication and most importantly; the buy-in from each team member.

Challenge 4: Legal Barriers

It goes without saying that all brands should also take into account legal implications with everything that they decide to do within any region. Laws in certain regions can harm a company’s entry into a new market or delay a launch that holds significant costs. Understanding markets requires intensive knowledge of the political and legal landscape. This specific area should never be taken lightly for any brand for the fear of hurting the brand’s image.

Overlooking any of these challenges can certainly harm any brand. Developing solutions and tools to better handle or combat these challenges is key to improving a brand’s global reach.

Content Marketing

With the rise of COVID-19, content marketing is becoming prevalent in today’s world of advertisements. Gone are the days where companies market their products, instead, an increasing amount of companies are using content marketing.

What is content marketing?

The concept of content marketing revolves around the idea of not pitching your products and services. Instead, companies provide relevant and useful content to support their customers and help them solve issues. Turn on the TV, you will likely see a commercial like the one below

Budweiser is one of many companies actively engaging in a content marketing campaign. Instead of promoting their product, Budweiser promotes unity and showcases how charitable they are.

Why content marketing?

Experts believe they’re three key reasons that companies use content marketing. 

  • Increased sales
  • Cost savings
  • Customer loyalty

I’ll add a fourth:

  • Communication

Companies use content marketing in an attempt to differentiate themselves from their competitors. A content ad connects the audience to the brand with a certain message, usually a message that is relatable with the wide population. 

With COVID-19, the term “coronacontent” is being thrown around. A multitude of companies quickly adapted and made changes to their marketing strategy. As more companies respond to the crisis, others “feel compelled to respond”.

What are your thoughts on content marketing? Does doing so during a pandemic make a company seem more genuine? If you were the marketing director of a large corporation, how would you respond?

International Pricing

When selling products/services in foreign markets, it is crucial that those in charge of setting the prices of these products/services understand the numerous factors that go into setting these costs. For example, some of these factors include…

  1. Consumer perceptions, expectations and ability to pay.
  2. Need for the product in the market.
  3. Market structure.
  4. Market growth and whether or not the product is elastic or inelastic.
  5. Competition.
  6. Product adaptation or standardization.
  7. Shipping costs.
  8. Product lifecycle.

As one can see, there is a lot to think about when doing business in a foreign market. However, these decisions can be broken down and narrowed into four major strategies that will help those responsible for setting international prices make the right decisions.

Let’s use the Pricing Strategy Matrix to help explain the four different types of avenues a company can go down.

  1. Economy – Low Price, Low Quality – This type of pricing strategy is interesting in that it tends to work well only when a company has low overhead and other costs compared to competitors. This low cost will allow the company to set discounts on price and gain more market share. This strategy could be good in markets where the customers are not wealthy. However, it could be a bad move for companies who cannot meet the sales volume necessary to remain profitable.
  2. Penetration – Low Price, High Quality – This strategy will help companies penetrate the market quickly, as customers will be intrigued to buy a high quality product at a low cost. The theory is that once companies gain a large portion of the market share, they will start to increase prices and move towards a premium pricing strategy. Companies who use this strategy can increase their sales volumes fast enough to achieve economies of scale and lower their costs. There are, however, negatives to this strategy. Due to the price being set low, this may have a big impact on margins and if they are too low, then it could send the perception to customers that the brand is “low quality.”
  3. Price Skimming – Low Quality, High Price – This strategy aims to generate a high amount of revenue from the small amount of people who are willing to pay this price for a low quality product/service. This strategy is used in markets where a high number of new products are launched. An example would be the book market. A new book will be sold in hardback form for a high price and then for paperback later on down the road. This is a good move for those who are looking to ensure that their production costs are covered, but you may run the risk of losing customer loyalty and interest in the brand.
  4. Premium Pricing – High Quality, High Price – Use this strategy when you have high production costs, but a unique product/service that you can charge a premium on! This strategy can allow companies to achieve a high profit margin on their products and can enhance the identity of the brand with the high price tag, but there are some disadvantages to this strategy. First, your product/service will be under fire from other companies who want to undercut your prices. Second, it is crucial that the company forecasts sales and try to meet demand. If you overproduce, you risk the production costs negatively impacting profit margins.

Good luck on your international pricing venture!

https://www.mindtools.com/pages/article/pricing-strategy-matrix.htm

Global Marketing Channels & Global Retailing

Global Marketing Channels 

Marketing channels are crucial both on a global and domestic level, and ultimately create utility for the customers. The physical flow of goods or services through channels is how companies can distribute and market their brand. Channels are made up of a coordinated group of individuals or firms that perform functions that add utility to a product or service. This leads to the crucial question, what is utility to the consumer?

There are different types of utility, including place, time, form and information. The first is place utility which is availability of a product or service in a location that is convenient to a potential customer. Time utility is when a product or service is available when it is desired by a customer. For example, Amazon’s global distribution and supplier networks allow for their brand to reach consumers on a global level, by getting products to customers when they want it, in an extremely convenient fashion. 

The third form of utility is form utility. This represents the availability of the product processed, prepared, in proper condition or ready to use. Finally, information utility is the availability of answers to questions and general communication about useful product features and benefits. Utility is critical for successful global marketing channels to be in place, and there are many supporting activities to global marketing channels and to the company’s value chain. These include transportation/physical distribution, supply chain management, logistics management, order processing, warehousing and inventory management. 

Marketing Channel Choice

These channel decisions are extremely difficult to manage globally because of the variation in channel structures from country to county. It’s important to have a channel strategy that aligns with the firm’s core competencies if they hope to develop a competitive advantage in new markets. One channel innovation that has grown in popularity is piggyback marketing. This is when one manufacturer distributes products by utilizing another company’s distribution channel. This requires that the combined product lines be complementary and appeal to the same customers. This can be further broken down into B2C marketing and B2B marketing. Business-to-consumer marketing utilizes consumer channels and may be relatively direct, utilizing direct mail or selling, as well as manufacturer-owned stores. Where on the other hand business-to-Business Marketing employs industrial channels to deliver products to manufacturers or other types of organizations.  Finally, one that is extremely relevant to today is peer-to-peer marketing, where the internet serves as a great resource for a global marketing channel and is very accessible to everyone. 

Global Retailing 

One major global trend is the rise of many successful retailers who are increasingly expanding around the world, including department stores, specialty retailers, supermarkets, and many more (one of the biggest of them all being Amazon). Amazon achieved success on a global scale through e-commerce and reaching its customers via the Internet. However, with the acquisition of Whole Foods and launch of Amazon Go, Amazon marketing channels expanded even further through various methods of global retailing. There are many competencies that have to be used strategically to enter a new market such as selection price, store location, and customer service. Global retail expansion can be achieved through many marketing channels such as organic growth, franchising, acquisition and joint venture. Amazon was able to utilize its expansive marketing channels in order to stimulate massive growth domestically and globally. 

Considerations for your Global Social Media Strategy

So, you’ve decided to take your brand global—congratulations! Before you begin, consider the following question: Should you manage a global account or pursue a localization strategy?

The answer is likely a bit of both.

The Appeal of Global Branding

“As more and more companies come to view the entire world as their market, brand builders look with envy upon those that appear to have created global brands—brands whose positioning, advertising strategy, personality, look, and feel are in most respects the same from one country to another. It’s easy to understand why.”

David Aaker and Erich Joachimsthaler, Harvard Business Review

Global branding is desirable but difficult to achieve. With some logistical and emotional considerations in mind, you may be able to pull off a global strategy with little headache.

Keep a Consistent Heart

On the path to global success, the easiest thing you can do is commit to your values. Business practices are not inherently meaningful; you must assign meaning to your product/service and communicate it to your audience.

Let’s examine AirBnB. The company’s mission is to “help create a world where you can belong anywhere and where people can live in a place, instead of just traveling to it.”

Some consumers will find this more touching than others, but overall it’s an undeniably stronger sell than “online couch surfing.” Once you figure out how to evoke emotion through product storytelling, you can use local assistance to adjust the message and preserve its universal value.

Amplify Through Others

After you find your brand’s voice, recruit opinion leaders who matter in the global environments you want to pursue. Experimenting in a new culture without proper guidance can produce detrimental and costly results. To avoid this anxiety, introduce your brand through a well-known individual or channel. New consumers may embrace your offer with some encouragement from a voice they trust.

Simplify your Canvas

Consumers all over the world are inundated by their social media feeds. It is important to consider how your company can distinguish itself from the noise—and even provide some refuge. We recommend keeping your online presentation sleek, simple, and more visual than verbal.

What brands do you think excel at this today?