Distribution Channel options in International marketing

Chandrika Flora, a Pune-based firm had so far been a major supplier of roses to hotels and other corporate in Mumbai. In view of its strong production capabilities, Chandrika flora has set up green house facilities and is e ploring the possibilit! of entering international markets. "he firm has no idea as to how to go about it. "herefore, Chandrika Flora engaged #r. $idhu, an international floriculture marketing consultant, to e plore various channels to enter international markets. "he e cerpts submitted b! #r. $idhu is as follows. "he global trade of cut flowers alone is estimated to be %&' ( billion and is dominated b! )urope, *apan and %&+. #ue to high cost of production in developed countries the trend is to outsource flowers from developing countries where the cost of production is low. India has an inherent advantage in floriculture production due to its favourable agro climatic conditions, cheap labour. India,s e ports of cut flowers have grown consistentl! over the last decade. -oses account for ./0 of total cut flower e ports besides lilies, carnations and orchids. 1etherland is the larges produces and e porters 2 /304 of flowers in the world followed b! Colombia, )cuador, Israel, 5en!a, &pain and Ital!. "he channels of international distribution for flowers involve auctions, agents, e porters, wholesalers, local wholesalers, purchase organi6ations, and retailers

Auctions:
"he auction s!stem is particularl! used in the 1etherlands and *apan. "he growers tr! to obtain the highest possible price for their products through the sales organi6ations and cooperatives.

The Mediating Agency:

Mediates on behalf of sales cooperatives in direct sales between the producers and wholesalers or retailers. "he mediating agenc! is an outlet which is used b! producers and traders to guarantee sales.

Wholesalers:
"he wholesalers perform the collection and the distribution functions. "he collection function consists of purchasing a wide range of cut flowers and plants, whereas the distributing function consists of catering to the needs of clients. "here are various t!pes of wholesalers vi6. breeder7wholesalers2 purchase, sell or auction flowers of other producers to widen his own product range4, #omestic wholesalers2 who sell onl! to the domestic wholesalers7 retail traders.4, Cash and carr! wholesalers2 purchase and sell cut flowers and plants in small numbers4, e porters2 suppl! wide range of flowers to foreign florists, wholesalers and super markets4, door to door wholesalers2 who deliver to order. #eliveries are made once or twice a da! or even throughout the week 4

Commission Agents/Importer:
&peciali6e in imported flowers, bou8uets, painted flowers and7or sale of flowers purchased at other auctions. "he wholesale trade is in touch with its customers on a dail! basis. "he personal relationship between the customers and the sellers is of great importance in the flower trade. &ales in the wholesale trade takes place b! telephone, fa , internet or personal visits. "he gross profit margins applied are 9:- 9/0 for commission agents and appro imatel! 9/0 for other wholesalers. #eviation in the margins depend on transport distances and customer needs. "he whole sale trade is generall! promoted b! means of trade fairs. +dvertisements and trade names are hardl! an issue in wholesale trade and among producers.

Processing:
+ wholesaler alwa!s bears it in mind that cut flowers and plants are perishable products must be sold on the same da! of purchase. "he freshness of cut flowers is preserved b! means of storage in water, cooling of the storage halls. Purchased flowers are preserved on the basis of market demand. "he flowers ordered are then packed according to customers; need and placed in bo es or in water. "he water bo es or buckets are sent to the customers as per their order via their own or a third-part! transport.

Transportation:
Cut flowers and plants are transported b! road, water, and air. "ransport b! air is used in intercontinental deliveries. "he importance of transport b! air has increased over the past !ears as a result of the increasing intercontinental trade in floriculture. + few airline companies offer door-door services or have a branch of their own at important wholesale markets or auction centers. International supplies ma! be hindered b! length! customs formalities, ph!tosanitar! inspections and hence fast clearance and inspection are re8uired. In order to limit the problem involved in *apanese market, 1etherlands and Columbia have set up a preinspection s!stem and inspections takes place in 1etherlands and Columbia before products are supplied to *apan.

Retail Trade:
It is a link between the wholesaler and the consumer. "he consumers can choose from four t!pes of retailers vi6. Florists, &upermarkets, &treet vendors, and <arden Centers for purchasing cut flowers and plants. "he market share which these four groups have in the flower retail trade is different in different countries. Florists are firml! established in *apan, Ital!, %&+ and 1orwa!. &uper markets sell to man! customers in &wit6erland and #enmark. In &pain, Ital! and 1etherlands sales via street vendors are substantial. "he importance of supermarkets in retail trade has been increasing, especiall! in )uropean markets, the %&+, and *apan. "he major supermarket chains dealing in cut flowers include the &wiss C=-=p. <erman +ldi, the #utch +lbert >e!n, the French Carrefour, the &wiss Migros, and ?ritish &ainbur!s and Marks @ &pencer. A

In )urope and *apan, the retail trade uses personal sales method. In the %&+, in the other hand, people are more familiar with the sales of cut flowers and plants b! telephone. In telemarketing a courier delivers the re8uested flowers to the desired address. "elemarketing is mainl! concerned with the gift segment.

Consumer segmentation:
Consumers can broadl! be divided not two t!pesB Individual7households and institutional. "he latter group includes government institutions, hotels, and other non-profit businesses. +fter making the presentation #r.$idhu left the decision to Chandrika Flora,s management. Action Plan Cour group represents different departments of Chandrika Flora 2#istribution, Marketing, ?usiness development and ) ports4 based on the information given b! #r. $idhu what suggestions would !ou put forward to the management and what plan ? if !our first recommendation is rejected b! the management