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INTERNATIONAL DISTRIBUTION

CHANNEL

BY: beigh mubashir ali Student university of Kashmir

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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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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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DistributionPhysically 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.

THE ROLE OF DISTRIBUTION ACTIVITIESIN MARKETING

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Types of Distribution Channels

Direct channelA distribution system without intermediaries

Indirect channelA distribution system with one or more intermediaries.

Dual distributionA distribution system with more than one channel.

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Alternative Channels of Distribution

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Dell

Dell Computer: A Direct Sellerof Computers

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Distibution channels

• Home country channels /indirect selling • Foreign country channels /direct selling

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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 objectivesMode of TransportType of productNature and extent of marketExisting channel for comparable productBuying habit of customersChannel Availability

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Alternative Middlemen ChoicesClassification 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

Domestic producer or marketer sells to or through

Open distribution via domestic wholesale middlemen

Export management company or company sales force

Exporter ImporterForeign agent or merchant wholesalers

Foreign retailers

Foreign consumer

The foreign marketer or producer sells to or through

Foreign Country

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Alternative Middlemen Choices—Home Country

• Global Retailers• Export Management Companies• Manufacturers Export Agent• Home-Country Brokers• Export Merchants• Piggy Back

• 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.

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HOME COUNTRY MIDDLEMEN

GLOBAL RETAILERSWAL-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 COMPANIESThey 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 and for the same maintain contact with major producers and purchasers.

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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 middlemen

• 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 customers and speedy

market coverage at low costs

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• 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 channel2. Capital requirements

How much capital is required3. 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. ContinuityWill 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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THANK YOU !!!!