Marketing Channels Analyze Essay Example

and retailers are now offering their items online. Some online sales are made directly from the manufacturer to the end consumer. However, even in an online market, there is still a need for a distribution process. When customers purchase directly from a manufacturer's or reseller's website, it leads to channel disintermediation (Finch, 2012).

Although online shopping often results in cost savings for customers, it can also have a negative impact on customer service. Selling through a physical storefront and online both have their advantages and drawbacks. Online shopping is convenient for buyers, and both producers and customers benefit from cost savings and increased profits due to the elimination of middlemen. However, companies transitioning to internet sales must also consider the cost and implementation of technologies such as electronic funds transfer, online order processing, and inventory management software. These tools may ultimately replace intermediaries in the distribution chain, as their functions are increasingly shifted to producers and manufacturers (Finch, 2012).

During the transition to the global market, producers/manufacturers will need to take on other responsibilities, such as bearing the costs of shipping and stocking smaller quantities for customers, and experiencing less support and promotion from intermediaries. "Going Global" outlines five strategies for entering the global market - indirect exporting, direct exporting, licensing, joint venture, and foreign direct investment (Finch, 2012). Strengths and limitations of each strategy must be considered when implementing them. McDonald's has succeeded globally and many lessons from their success can be applied across industries.

According to a source from 2012, indirect exporting refers to the process where a company sells its product to a third party that will subsequently sell the product to customers in foreign

countries. This strategy boasts several strengths such as a reduced financial commitment, decreased financial risk due to the involvement of a third party, and decreased risk of the product or brand performing poorly in the new market. However, this entrance strategy also has limitations because companies must rely on the third party to obtain customers and negotiate sale prices. On the other hand, direct exporting involves the firm entering the market themselves and managing their own exports, as stated by the same source in 2012.

When it comes to export strategies, businesses have the option of managing their own exports. This approach can offer increased control, potential profits and returns, but also entails substantial risk and requires significant investment in both time and money (2012). On the other hand, licensing provides a relatively low-risk market entry alternative that doesn't require large capital investments. There is also potential flexibility for overcoming country restrictions and barriers as well as the opportunity to charge higher prices (2012).

Limitations may come with licensing, such as fees and royalties to the licensor, limited financial potential, potential damage to the brand due to poor product quality, and the possibility of license abuse. However, forming a joint venture with a local partner in a foreign country allows for gaining the trust of local consumers and insight into the local culture. Nevertheless, decisions can become difficult if there is friction between investors and the company. Another strategy is foreign direct investment (FDI), which involves building or buying facilities in the foreign country. FDI provides potential high rewards for the company, access to cheap labor and resources, improved relations with local people, and complete control over

policies.

According to the source from 2012, FDI carries significant risks with great potential for loss and high costs for companies. However, Toyota has succeeded by producing automobiles in both the United States and Canada. By operating two plants, they can increase production while reducing costs by importing and exporting specific parts that are less expensive to produce in each country. McDonald's provides an example of the importance of respecting a country's culture.

While alcohol sales are not typically found in American McDonald's, some locations abroad do offer this option. The appeal of affordable prices makes the restaurant accessible to customers of all income levels, contributing to its success in foreign markets. Additionally, McDonald's creates numerous job opportunities for locals when they expand into a new country, which further strengthens their reputation as a valuable contributor to the economy.