Question

What are the differences between consumer and industrial goods, and what are the implications for international marketing?

Question 6

Why hasn’t the United States been more helpful in setting universal standards for industrial equipment? Do you feel that the argument is economically sound? Discuss.

Question 16

England has almost completed the process of shifting from the inch-pound system to the metric system. What effect do you think this will have on the traditional U.S. reluctance to make such a change? Discuss the economic implications of such a move.

Question 3

Discuss the ways Japanese manufacturers control the distribution from manufacturer to retailer.

Question 15

One of the first things companies discover about international patterns of channels of distribution is that in most countries, it is nearly impossible to gain adequate market coverage through a simple channel-of-distribution plan. Discuss.

Answer 1

1.

The committee on definitions of the National Association of Marketing Teachers has broken down the differences between consumer and industrial goods by four areas. They are:

a. Nature of the market or buyer – this typically means that consumer goods are used by the end customer in a channel of distribution and are consumed by this customer in its finished stage. The industrial goods are typically those goods which are used for the further production of other goods and are not used for the personal benefit of the customer. There are, however, many overlapping categories within this description.

b. Organization or operational setup.

c. Characteristics of the product – as was mentioned, industrial goods are typically used for the production of other goods while consumer goods are consumed by the final customer.

d. Miscellaneous differences – including such points as the need for a sales force (highly skilled or not), speed and dependability of delivery, and the like.

e. We must of course add the volatility of derived demand, which if noticed, has huge implications for the marketing of industrial products.

These differences are the same in international marketing, and they are further complicated by the foreign environment.

6.

It seems that the main reason why the United States has not been more helpful in setting universal standards is that a rather large demand still exists for products or replacement parts which are based on the inch‑pound system of measurement. This demand exists in the United States and foreign countries as well. Another reason for the lack of help is that the expenses involved in such a change are considerable, and no one particular firm is willing to incur such an expense when none of its competitors or other companies are willing to either lead or follow the example. This argument may be economically sound when one considers a short-run period but not sound over a longer period of time. Over a short period of time, the domestic sales lost and the foreign sales gained would probably not be enough to offset each other nor adequate enough to cover the expenses incurred in such a change. However, when one considers the impact of such a change over a long-run period, the foreign sales gained would probably be substantial enough to cover both the domestic sales lost and the expenses incurred from such a change. What is presently being done is that companies are sitting back and waiting for the “other fellow” to make the first move and seeing what effect this has on the profitability of the company and its accompanying aspects.

16.

With England's recent indication of changing from the inch-pound system to the metric system, the American reluctance to such a change will probably be softened to a certain extent. That is, with pressures from competing countries and the search for new markets for U.S. products, the inch-pound system is slowly but surely being pushed out of competition with the metric system. England realized that the demands for products measured by the metric system in foreign countries is greater than demands for inch-pound measured products. America, to a large extent, is not following the basic marketing concept; we insist on making a product and then looking for the market instead of the reverse. Even though such a change is one of a large scale, American industry will probably have to make it eventually if it expects to grow by marketing industrial products to foreign countries, especially since England's move will leave the United States virtually alone with the inch-pound system. This should put added force behind those in the United States who have advocated that the United States shift to the metric system. If the decision is made to adopt a metric system, the period of changeover will be at least a decade, and the cost will be very high. In the long run, the United States cannot afford not to convert.

3.

Manufacturers depend on wholesalers for a multitude of services to other members of the distribution network. Financing, physical distribution, warehousing, inventory, promotion and payment collection are provided to other channel members by wholesalers. The system works because wholesalers and all other middlemen downstream are tied to manufacturers by a set of practices and incentives designed to ensure strong marketing support for their products and to exclude rival competitors from the channel. Wholesalers typically act as agent middlemen and extend the manufacturer's control through the channel to the retail level. Control is maintained by: 1) inventory financing, sales made on consignment with credits extending for several months; 2) cumulative rebates, rebates given annually for any number of reasons including quantity purchases, early payments, achieving sales targets, performing services, maintaining specific inventory levels, participating in sales promotions, loyalty to suppliers, maintaining manufacturer's price policies, cooperation, and contribution to overall success; 3) merchandise returns, all unsold merchandise may be returned to the manufacturer; and, 4) promotional support, intermediaries receive a host of displays, advertising layouts, management education programs, in-store demonstrations, and other dealer aids which strengthen the relationship among middlemen and the manufacturer.

15.

A single channel of distribution is often unavailable in foreign countries. One reason is that thechannels used may be very unfamiliar to the producer and only seem to be complicated. Morerealistic reasons may be true in financial arrangements or the unavailability of middlemen. In manycountries, middlemen may be specialists in either product or market area or both. If this is the case,several different middlemen are needed to distribute a single product in a country or to distributeseveral products within a single contiguous area.

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