PROBLEMS IN ESTABLISHING AND MANAGING INTERNATIONAL MARKETING CHANNELS
1. The procedure used in selecting middlemen:-
Identification of a middleman to handle a company’s merchandise is a major problem in managing international marketing channels. To minimize on this problem the following procedures may be used.
•Productivity/volume the larger the volume he can hold the better.
•Financial strength of the channel, the stronger the channel in terms of finances the better because he can handle the products to the satisfaction of all parties involved in the transaction.
•Managerial stability and capability of the channel, this guarantees channel stability and continuity for long-term cooperations and operations.
•The nature and reputation of middlemen.
2. Problems with termination of relationships:-
These arise where a middleman fails to perform and the relationship is difficult to terminate due to legal protection in their countries of operation. For example in Norway a manufacturer must have evidence of negligence on part of the channel member and where its proved, they have to re-imbuse the channel member for establishing customer contacts.
3. Competitor’s activities:-
Manufacturers access to channel members in a foreign market may be blocked by the competitors with already established lines. This may happen in the following ways:-
•Trade associations, these can close certain channels from manufacturers.
•Conventional marketing partners, can prevent market acceptance of another middle man. •Other political restrictions like ban of certain products on the market.
4. Required motivation by channel members:-
motivating channel members requires a promotional program to be started to maintain a high-level interests in the manufacturers products. This may prove costly thus affecting the final prices of the products passing through such a channel. Such a high price may not be competitive in a given foreign market.
5. Loss of control over channel members:-
The control of middlemen is very difficult due to length of channels typically used in international distribution. This problem can be overcome in the following ways. Establishing manufacturers own distribution system under his control. Use of franchise that operates in a manufacturers names under his terms and conditions. Use of exclusive distribution (limiting on number of intermediate) so as to maintain control through the first stages of the channel.
By A. B. Kintu B. Comm Marketing (Hons/Makerere University) (2007)