Professional Documents
Culture Documents
Chapter 5
Chapter 5
Direct
Exporting
Resources
Indirect
exporting
Indirect exporting is associated with poor control, inadequate feedback and shorter
time to market compared to direct exporting.
Direct exporting requires a higher level of investment in financial, technical and
other resources than indirect exporting
International Marketing objectives of the firm:
Objectives with regard to profits, sales, market share
etc.
Manufacturer’s resources and experience: Limited
- Export Cartels: Organizations of firms in the same industry for the sole
purpose of marketing their products overseas. They include the Webb
Pomerene Associations (WPAs) in the United States,. as well as certain
export cartels in Japan. There are WPAs in various areas such as pulp,
movies, sulphur, and not allowed for services (not suitable for
differentiated goods).
Advantages
Little or no investment or marketing experience
needed. Suitable for firms with limited resources
or experience.
Helps increase overall sales and cash flow.
Good way to test-market products, develop
goodwill, and allow clients to be familiar with
firm’s trade name or trademark before making
substantial commitment.
Disadvantages
Firm’s profit margin may be dwindled due to commissions and
other payments to foreign intermediaries.
Limited contact/feedback from end-users.
Loss of control over marketing and pricing. Firm totally
dependent on the marketing initiative and effort of foreign
intermediary. Product may be priced too high or too low.
Foreign intermediary may not provide product support or may
damage market potential.
Limited opportunity to learn international business know-how
and develop marketing contacts. Creates difficulty in taking
over the business after the relationship has ended.
Direct Channels
Direct marketing from home country: Catalog sales, traveling sales
representatives who are domestic employees of the exporting firm. Duty,
clearance problems with Internet sales.
some internal strength and experience. It will use indirect channels for
A firm may use both channels if it has different product lines with different
customer profiles. It can use direct channels for the product in which it has a
good network of resources and customers and use indirect channels such as
cooperative exporting for other product lines where certain advantages do not
exist.
Indirect channel options should not be ignored just because the firm has long-
term plans to go direct. Early indirect entry could facilitate the product’s
success (when it goes direct) if a good product image and customer support