INTERNATIONAL

DISTRIBUTION
CHANNEL

Submitted By
Vaibhav Deshmukh
62071
Prachi Parab 62095
Rajesh Chaudhari
62066
1 04/28/2020
 Distribution channel: system
of marketing institutions that
promotes the physical flow of
goods and services, along with
ownership title, from producers to
consumer or business user; also
called a Marketing channel.

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 The Role of Distribution Activities
in Marketing

Distribution
 Physically moving products and establishing
intermediary relationships to support such
movement.
Physical Distribution (Logistics)
 The activities of distribution involved in the physical
relocation of products.
Channel of Distribution
 The system of intermediaries (business
relationships) established to guide the movement of
a product.

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 Functions of Intermediaries

• Perform the marketing function better.

• Provide efficient distribution of the product.

• Breaking bulk – sell to customers in smaller
quantities.
• Assorting – bringing together similar lines
of goods.

• Shifting risks.
• Merchant middlemen - take title to the
goods distributed.
• Agents/brokers - distribute goods only.
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 Types of Distribution
Channels

 Direct channel
A distribution system without intermediaries

 Indirect channel
A distribution system with one or more
intermediaries.

 Dual distribution
A distribution system with more than one
channel.
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Alternati
ve
Channels
of
Distributi
on

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Dell

Dell
Computer:
A Direct Seller
of Computers

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 Global Perspective
Global Perspective: “500 Million Sticks of
Doublemint Today – Billions Tomorrow”

Most challenging aspect of selling the gum

for Doublemint is how to get the gum through
China’s distribution channels:
“Mastering the distribution system is the
single most important challenge of China’s
economic revolution”
Finding reliable distributors is a challenge
Many are state owned and have little
incentive to push one brand over another
Doublemint gum found a way to distribute
their products effectively thru China 04/28/2020
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Note: Doublemint has a 91% market
Selection of channel
The selection of distribution is affected by many of
factors, which play significant role while choosing the
channel for distribution. It may include the buying
pattern of consumer, type of the product is perishable,
or auto mobile, weight and bulk and it also depends
on the company's resources. 

The main affecting factors are

following:
Organization objectives
Mode of Transport
Type of product
Nature and extent of market
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Existing channel for comparable product
 Alternative Middlemen
Choices
 Classification of Middlemen
 Agent Middlemen
 Do not take title to the goods distributed
 Less risk (manufacturer assumes risk)
 Merchant Middlemen
 Take title of goods being distributed (manufactures have less
control)
 Motivated by profit, tend to be less loyal to one brand

 Alternative Types of Middlemen:

 1. Home-Country Middlemen

 2. Foreign-Country Middlemen

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 International Channel-of-
Distribution Alternatives
Home Country Foreign Country
The foreign marketer or
producer sells to or through
Foreign
Domestic producer consumer
or marketer sells to
or through

Open distribution via Foreign agent

Foreign
domestic wholesale Exporter Importer or merchant
retailer
middlemen wholesalers
s

Export management
company or company
sales force

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 Alternative Middlemen
Choices—Home Country
• They’re located in Firm’s own country.
• Provide marketing services from a domestic base.
• Employed by marketers with less international
sales volume and inexperienced with foreign
markets.
• Global Retailers
• Export Management Companies
• Manufacturers Export Agent
• Home-Country Brokers
• Export Merchants
• Piggy Back
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 HOME COUNTRY MIDDLEMEN
GLOBAL RETAILERS
WAL-MART, ROEBUCK are booming domestic middlemen for
international middlemen.
Companies adhering to the laid requirements gain access to
Overseas markets of Argentina, Brazil, canada, etc.

EXPORT MANAGEMENT COMPANIES

They work under name of manufacturers and function as a low
cost, independent marketing department.
For firms with relatively small international volume or which are
unwilling to involve personnel in international function.
A washington DC company marketing 10 US Orthopedics
manufacturer products worldwide.

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MANUFACTURER’S EXPORT AGENT

•An agent firm provides selling service for

manufacturers.
•Operates on a straight commission basis and covers
only one or two markets.
•Provides services similar to EMCs and does business in
their own name.

HOME COUNTRY BROKERS

•They perform low cost agent services.

•Perform function of bringing bringing buyers and
sellers together.
•They specialise in one or more particular commodity
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and for the same maintain contact with major
EXPORT MERCHANTS
• Intermediaries who take title to and possession of
the products they carry
• Responsible for shipping and marketing the
products in the target market
• Carry competing brands
Examples:
export jobber, who carries commodity goods, but
does not take physical possession of the goods.

PIGGYBACK MARKETING
• channel innovation that has grown in popularity
• One manufacturer distributes product by utilizing
another company’s distribution channel
• Requires that the combined product lines be
complementary and appeal to the same customer
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 Alternative Middlemen
Choices—Foreign Country

• Distributors
• Foreign Country
Brokers
• Managing Agents
• Dealers
• Wholesalers and
Retailers

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 • Distributor
Is a merchant middlemen with close cooperation
to the manufacturer
Functions are- control over prices, inventories,
servicing.
• Agent
Conducts business within a foreign nation under
contract arrangement with parent country.
Compensation is on the basis of cost plus a
specified % of profits of the managed company.
• Brokers
Foreign brokers are part of small brokerage firms
operating in a country.
Function in good continuing relationships with
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customers and speedy market coverage at low 04/28/2020
 • Dealers
Independent merchant middlemen with the supplier
company having equity in it. Ex- Massey fergusson
and caterpillar tractor company

• Wholesalers and Retailers

Engage in direct importing for their own outlets and
for redistribution to smaller middlemen.
Large retailers perform wholesaling to local shops
and dealers.

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 Factors that affect choice of
Channels
The “6 C’s” need to be considered:
1. Cost
 Investment cost of developing channel; and cost of
maintaining channel
2. Capital requirements
 How much capital is required
3. Control
 How much control is desired
 Example: company’s own sales force exerts most
control vs. using middlemen

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 Factors that affect choice of
Channels (Cont.)
The “6 C’s” need to be considered (cont):
4. Coverage
 Full market coverage, or targeted coverage to densely
populated areas…
5. Character
 Channel of the distributions system must meet the
“character of the company” seeking to do business
6. Continuity
 Will there be longevity issues
 How to build loyalty with middlemen is much more
difficult than a company’s own sales force

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 Locating, Selecting, Motivating
and Terminating Middlemen

Factors affecting locating middlemen:

Things to look for:
 Financial stability, managerial stability, productivity,
reputation, etc.
Sources to use:
 U.S. Dept. of Commerce, foreign consulates, commercially
published directories
Selecting Middlemen
Two steps
 1. Screening
 2. Developing the “Agreement”
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 Locating, Selecting,
Motivating and Terminating
Middlemen (Cont.)
Motivating Middlemen
Common methods used to motivate middlemen:
 Financial rewards, psychological rewards, communications,
company support and corporate rapport
Terminating Middlemen
Must consider things such as:
 Legal protection
 Control over middlemen
Controlling Middlemen
 Control over the system (distribution network)
 Control over the middlemen
 Volume of sales, market coverage, services offered, pricing,
advertisement, payment of bills and profitability.
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