MKTG2023 Chap.7 Distribution Channels and International Entry
Distribution Channels and International Entry
Where and when are part of what is sold
A service that is hard to reach has little value however good it is. Week 4 says service distribution delivers three flows: information and promotion, negotiation, and the product flow that delivers the core benefit. Services reach customers in three ways: the customer visits, the provider comes to the customer, or the transaction is remote.
The guiding question asks how the right customer gets the right service where, when and in the form they need it, and who holds control of that channel.
Choosing and sharing channels
Physical channels build trust and suit complex, high-contact services; electronic channels add reach, convenience, round-the-clock access and data. Most firms blend them.
Intermediaries and franchising extend reach at the cost of control, and franchising manages that trade-off through contracts, training and monitoring. Abroad, market, competitive, technology, cost and government drivers push services abroad.
Entry modes run from exporting a service remotely and importing customers, through licensing or franchising and alliances, to foreign direct investment with the most control and the most exposure.
What this chapter covers
- 01
Information, negotiation and product flows
- 02
Customer visits, provider visits or remote delivery
- 03
Decisions about place and time
- 04
Physical versus electronic channels
- 05
Intermediaries and franchising
- 06
Drivers of globalisation and the five entry modes
Worked example · free
Map the three flows for a veterinary clinic
- 1Information and promotion flow: the website, search listing and reviews tell owners what the clinic offers.
- 1Negotiation flow: phone and online booking settle the appointment, price and terms.
- 1Product flow: the consultation in the clinic, or the mobile vet visiting a farm.
- 1The product flow needs physical presence, either the animal visiting or the vet travelling; the other two flows can be digital.
Key terms
- Negotiation Flow
- Distribution flow that settles service features, configuration and terms and closes the sale through booking, contracting or subscribing.
- Product Flow
- Distribution flow that delivers the core service, often needing physical or electronic facilities and the customer’s presence.
- Franchising
- Arrangement in which a franchisor licenses a proven business format, brand and systems to owner-operators who supply capital and local commitment.
- Omnichannel Delivery
- Blend of physical and digital channels in which each distribution flow is matched to the channel that serves it best.
- Foreign Direct Investment
- Entry mode in which a firm owns or controls foreign operations through a branch, subsidiary or acquisition, giving the most control and exposure.
Distribution Channels and International Entry FAQ
What are the three ways services reach customers?
The customer can visit the service site, as with clinics and restaurants, where location and hours matter most. The provider can come to the customer, as with plumbing or home care, which costs more. Or the transaction can be remote, through mail, phone or mostly the internet, when nothing tangible needs to move.
Why do service firms use franchising?
Franchising lets a firm expand quickly using franchisees’ capital and local commitment while standardised processes protect consistency. The franchisees are motivated owner-operators rather than employees. The tensions are maintaining quality, balancing control and autonomy, protecting the brand, resolving conflict and adapting the format to local markets.
Which international entry mode suits an information-based service?
Exporting the service through remote delivery from a central location usually fits, as with online brokerage, software or digital travel information, because nothing physical has to cross the border. Regulation and localisation can still matter, which is why the workshop asks whether the service is regulated before settling on a mode.
Are physical or electronic channels better for services?
Neither in general. Physical channels support personal, high-touch encounters, tangible cues and complex services, but they are tied to geography and opening hours and cost more to run. Electronic channels add round-the-clock access, wide reach, low cost per extra customer and data, but trust has to be built without a face. Most firms combine them flow by flow.
Assessment move
For a service you use, draw three arrows for the information, negotiation and product flows and label the channel on each. Mark the hand-off most likely to fail. Then pick one overseas market and walk through the workshop prompts, remote or not, regulated or not, local knowledge needed or not, before naming an entry mode.
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