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Distribution Channels in International Business

This document discusses distribution channels in international business. It describes how manufacturers can transport products from production to consumers either directly or through intermediaries like agents, wholesalers, distributors, and retailers. It outlines different channel members in home and foreign markets, such as export management companies, agents, direct exporting, import intermediaries, local wholesalers, and retailers. Finally, it discusses factors that influence the selection of appropriate channel members, including costs, product characteristics, and the need for control and coverage.

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Amandeep
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45 views18 pages

Distribution Channels in International Business

This document discusses distribution channels in international business. It describes how manufacturers can transport products from production to consumers either directly or through intermediaries like agents, wholesalers, distributors, and retailers. It outlines different channel members in home and foreign markets, such as export management companies, agents, direct exporting, import intermediaries, local wholesalers, and retailers. Finally, it discusses factors that influence the selection of appropriate channel members, including costs, product characteristics, and the need for control and coverage.

Uploaded by

Amandeep
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Distribution channels in

international business
• Marketers who develop distribution strategies
must decide how to transport products from
manufacturing location to the consumer.
• Distribution can be handled completely by the
manufacturer, often products are moved
through intermediaries, like agents,
wholesalers, distributors and retailers.
Potential channel members
• Home-Market Channel • Foreign-Market Channel
Members Members
• Export Management • Import Intermediaries
Company • Local Wholesalers
• Export Agent • Retailer
• Direct Exporting
• Internet
Home Market Channel Members
Export Management Company
• Export Management Company (EMC) is a firm
that handles all aspects of export operations
under a contractual agreement.
• EMC normally takes responsibility for the
promotion of products, marketing research,
physical handling or logistics, patents and
licensing.
• Advantages: little or no invest is required
• No company personnel is required.
• Disadvantage: Direct Control of the international
sales and marketing.
Export Agents
• Export agents are individuals or firms that assist
manufacturers in exporting goods.
• They focus only one country or one part of the
world.
• They do not provide the marketing skills that an
EMC provides.
• Advantage: the manufacturer does not need to
have an export managers to handle all
documentation and shipping tasks.
• Disadvantage: Export agent’ limited market
coverage.
Direct Exporting
• A Firm can export its goods directly, through
in-house company personnel.
• A firm needs special train ring and experience
to handle all the documentation and shipping.
• The current and expected volume overseas
sales volume must be sufficient to support the
in- house staff.
Internet
• Many smaller companies have been
established their own web presence.
• This approach gives foreign clients easier
access to smaller firms.
• For web presence, the site needs to be
constructed in such a way that a foreign
buyer can easily access information, obtain
forms for ordering and deliver e-mail
questions.
Foreign-Market Channel Members

• Once products have left the home market,


there are variety of channels alternatives in
the global market place
Import intermediaries
• They identify consumer needs in their local
market and search the world to satisfy those
needs.
• They normally purchase goods in their own
names and act independently of
manufacturers.
• These channel members use their own
marketing strategies and keep in close contact
with the markets they serve.
Local Wholesalers
• They move manufacturers’ products to
retailers, to industrial firms, or in some cases
to other wholesalers.
• Local wholesalers are also called distributers
or dealers
• In some cases, a local wholesaler receives
exclusive distribution rights for a specific
geographic area or country.
Retailers
• Retailers, the final members of the consumers
distribution channel, purchase products for
resale to consumers.
• The size and accessibility of retail channels
vary greatly by country.
Factors influencing the selection of
channel members
• A marketer needs to identify and select
appropriate distribution partners in various
markets.
• It is extremely important because the partner
will take a portion of the marketing
responsibility.
• A poor decision can lead to disaster
• Changing a distribution partner can be
expensive.
• Factors
• Costs
• Product & Product line
• Control, Coverage & Synergy
Costs
• Initial costs: include locating and setting up
the channel, like executive time, travel to
locate and select channel members.
• Capital costs: includes cost of inventories,
goods in transit, accounts receivable.
• Maintenance Costs: includes costs of
company’s salesperson, sales managers and
travel expenses, profit margin given to
channel intermedieries.
Product and Product Line
• The nature of product ( perishable or short
shelf life), then manufacturer has to use
shorter channels.
• A technical product often requires direct sales
or highly skilled channel partner.
• The size of product line also affects the
selection of channel members. A distributor or
dealer is more likely to stock a broad product
line than a single item.
Control & Coverage
• With direct sales, a manufacturer can control
price, promotion, amount of effort.
• Longer channels, particularly with distributors
who take title to goods, often result in little or
no control.
• Coverage is reaching geographical area a
manufacturer wants to cover.
• Easy in Metropolitan areas, but difficult for
less populated area.
• To assess distributor’s coverage:
• 1. location of sales office
• 2. salespersons’ home base
• 3. previous years’ sales

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