Distribution Channels

Global Marketing
Direct & Indirect Selling Channels
 INDIRECT SELLING CHANNELS
- selling through home-country intermediaries
- simple and inexpensive
- lack of marketing control
Direct & Indirect Selling Channels
 DIRECT SELLING CHANNELS
- direct contact with overseas intermediaries or
consumers
- requiring more time and cost
- better control
Agent vs. Merchant
 taking possession vs. taking title (ownership)
 Agents
 may or may not take possession
 never taking title
 compensation: commission
 more difficult to terminate relationships
 Merchant
 may or may not take possession
 always taking title
 compensation: profit/loss
 easier to terminate relationships
Types of Intermediaries: Direct Channel
 Foreign Distributor
 Foreign Retailer
 State-Controlled Trading Company
 End User
Types of Intermediaries: Indirect Channel
 Export Broker
 Manufacturer's Export Agent or Sales
Representative
 Export Management Company (EMC)
 Cooperative Exporter
 Purchasing/Buying Agent
 Country-Controlled Buying Agent
Types of Intermediaries: Indirect Channel
 Resident Buyer
 Export Merchant
 Export Drop Shipper
 Export Distributor
 Trading Company
Channel Development
 suitability of a particular channel depends greatly
upon the country in which it is used
 does not necessarily mean that each country requires
a unique channel.
 However, a company may find that a country
classification system is useful, a system that can be
used to determine how the distribution strategy
should be set up from one group of countries to
another

Factors Affecting Choice of Channels
 Identify specific target markets within and
across countries.
 Specify marketing goals in terms of volume,
market share, and profit margin requirements.
 Specify financial and personnel commitments
to the development of international
distribution.
 Identify control, length of channels, terms of
sale, and channel ownership.
Locating, Selecting, and Motivating Channel
Members
 Criteria for Location
(1) productivity or volume,
(2) financial strength,
(3) managerial stability and capability, and
(4) the nature and reputation of the business.
 Emphasis is usually placed on either the actual
or potential productivity of the middleman
Determinants of Channel Types
 Cost and Capital Requirements
 Control
 Coverage
 Continuity
 Legal Requirements
 Middlemen's Loyalty and Conflict
 Local Customs
 Power and Coercion
Gray Market
 Causes
 Legal Dimension
 Ethical Dimension
 Product Quality
 Manufacturers' Marketing Strategies