INTERNATIONAL

DISTRIBUTION
STRATEGIES
DPM50133
 INTRODUCTION
• A distribution channel is a method of getting a product to its consumer.
• Distribution channels are set of interdependent organizations involved
in process of making a product or service available for use or
consumption.
• A major focus of channels of distribution is delivery.
• Intermediaries are distribution oriented distributions and agencies that
stand between production and consumption.
• A properly designed distribution channel will help a company to achieve
a sustainable competitive advantage.
 1 2
DIRECT INDIRECT
DISTRIBUTION DISTRIBUTION
CHANNEL CHANNEL
 DIRECT
DISTRIBUTION
CHANNEL
DIRECT DISTRIBUTION
CHANNEL
Direct distribution channel involves
exporting directly to the customer
interested in buying our product.
We are responsible for handling
the market research, foreign
distribution, logistics of shipment
and invoicing
 The Advantages & Disadvantages of
Direct Channel Distributions
Why the marketer choose and dont choose this type of distronution channel
1. The profits are greater because no intermediaries.
2. Greater degree of control over all aspects of
transactions.
3. Acquire greater flexibility to improve or redirect
our marketing efforts in foreign market.
4. We can provide faster and more direct feedback
on our product.
5. Better protection on our trademarks, patents and
copyright.
1. Requires more time, energy and money than we
may be able to afford.
2. Requires more "people power" to cultivate a
customer base
3. Servicing the business will demand more
responsibility from every level of our production.
4. We may not be able to respond to customer
communications as quickly as a local agent.
 INDIRECT
DISTRIBUTION
CHANNEL
INDIRECT
DISTRIBUTION
CHANNEL
Indirect distribution channel it
means selling to an intermediary,
who in turn sells your products
either directly to customers or to
importing wholesalers. The easiest
method of exporting.
 The Advantages & Disadvantages of
Indirect Channel Distributions
Why the marketer choose and dont choose this type of distribution channel
1. It is an almost risk-free way to begin with
2. It demands minimal involvement in the export
process.
3. It allows the manufacturer to concentrate in
domestic business.
4. We have limited liability for product marketing
problems.
5. We do not have to concern with shipment and
other logistics.
1. Profits are lower.
2. We lose control over foreign sales
3. We very rarely know who our customers are and
thus lose the opportunity to tailor our offerings to
their needs.
4. The intermediaries might also be offering
products similar to us, including directly
competitive products to the same customers
instead of providing exclusive representations.
 Types of Intermediaries
DIRECT CHANNEL
• Importer
• Foreign distributors
• Foreign retailers
• Government department /
state owned trading
companies
• End users in foreign market
INDIRECT CHANNEL
Domestic Agents Domestic Merchants
• Export management • Export merchant
companies • Export house
• Export broker • Trading companies
• Manufacturers export agent • Piggy backing
• Purchasing agent
• Country controlled buying
agents
• Resident buyer
 Mode of Entry
1 3
CONTRACT FRANCHISING
MANUFACTURING

2 4
MANAGEMENT
LICENSING CONTRACTING
 1. Contract Manufacturing
Contract manufacturing is when a foreign firm
hires a local manufacturer to produce their product
or a part of their product it is known as contract
manufacturing. This method utilizes the skills of a
local manufacturer and help in reducing cost of
production. The marketing and selling of the
product is the responsibility of the international
firm.
 2. Licensing
Under licensing agreement, the licensing firm
grants rights to another firm in the host country
to produce or to sell a product. The licensee pays
compensation to the licensing firm in return for
the rights to use technology or patent. Licensing
makes sense when a firm with technology know
how or a unique patented product has neither the
organization capability nor the funds to enter
foreign market.
 3. Franchising
Franchising is a specialized form of licensing
whereby two parties especially in different
countries involving transfer of rights and
resources. The franchisor enters into a contract
with a franchisee whereby the franchisor agrees
to transfer to the franchisee a package of rights
and resources such as production processes;
patents, trade marks and brand names; loans &
finances; product ingredients; and general
management assistance
4. Management Contracting
Managemet contracting is whereby a firm that
possesses technical skills or management know
how can expand overseas by providing its
managerial and technical expertise on contractual
basis. It has widespread acceptance in industries
and countries that lack indigenous expertise to
manage their own projects. Management
contracts are common in the hotel industry so as
to take advantage of economies of scale, brand
equity and global reservation system.