Distribution channels in

international business
• Marketers who develop distribution strategies
must decide how to transport products from
manufacturing location to the consumer.
• Distribution can be handled completely by the
manufacturer, often products are moved
through intermediaries, like agents,
wholesalers, distributors and retailers.
 Potential channel members
• Home-Market Channel • Foreign-Market Channel
Members Members
• Export Management • Import Intermediaries
Company • Local Wholesalers
• Export Agent • Retailer
• Direct Exporting
• Internet
Home Market Channel Members
 Export Management Company
• Export Management Company (EMC) is a firm
that handles all aspects of export operations
under a contractual agreement.
• EMC normally takes responsibility for the
promotion of products, marketing research,
physical handling or logistics, patents and
licensing.
• Advantages: little or no invest is required
• No company personnel is required.
• Disadvantage: Direct Control of the international
sales and marketing.
 Export Agents
• Export agents are individuals or firms that assist
manufacturers in exporting goods.
• They focus only one country or one part of the
world.
• They do not provide the marketing skills that an
EMC provides.
• Advantage: the manufacturer does not need to
have an export managers to handle all
documentation and shipping tasks.
• Disadvantage: Export agent’ limited market
coverage.
 Direct Exporting
• A Firm can export its goods directly, through
in-house company personnel.
• A firm needs special train ring and experience
to handle all the documentation and shipping.
• The current and expected volume overseas
sales volume must be sufficient to support the
in- house staff.
 Internet
• Many smaller companies have been
established their own web presence.
• This approach gives foreign clients easier
access to smaller firms.
• For web presence, the site needs to be
constructed in such a way that a foreign
buyer can easily access information, obtain
forms for ordering and deliver e-mail
questions.
Foreign-Market Channel Members

• Once products have left the home market,

there are variety of channels alternatives in
the global market place
 Import intermediaries
• They identify consumer needs in their local
market and search the world to satisfy those
needs.
• They normally purchase goods in their own
names and act independently of
manufacturers.
• These channel members use their own
marketing strategies and keep in close contact
with the markets they serve.
 Local Wholesalers
• They move manufacturers’ products to
retailers, to industrial firms, or in some cases
to other wholesalers.
• Local wholesalers are also called distributers
or dealers
• In some cases, a local wholesaler receives
exclusive distribution rights for a specific
geographic area or country.
 Retailers
• Retailers, the final members of the consumers
distribution channel, purchase products for
resale to consumers.
• The size and accessibility of retail channels
vary greatly by country.
 Factors influencing the selection of
channel members
• A marketer needs to identify and select
appropriate distribution partners in various
markets.
• It is extremely important because the partner
will take a portion of the marketing
responsibility.
• A poor decision can lead to disaster
• Changing a distribution partner can be
expensive.
• Factors
• Costs
• Product & Product line
• Control, Coverage & Synergy
 Costs
• Initial costs: include locating and setting up
the channel, like executive time, travel to
locate and select channel members.
• Capital costs: includes cost of inventories,
goods in transit, accounts receivable.
• Maintenance Costs: includes costs of
company’s salesperson, sales managers and
travel expenses, profit margin given to
channel intermedieries.
 Product and Product Line
• The nature of product ( perishable or short
shelf life), then manufacturer has to use
shorter channels.
• A technical product often requires direct sales
or highly skilled channel partner.
• The size of product line also affects the
selection of channel members. A distributor or
dealer is more likely to stock a broad product
line than a single item.
 Control & Coverage
• With direct sales, a manufacturer can control
price, promotion, amount of effort.
• Longer channels, particularly with distributors
who take title to goods, often result in little or
no control.
• Coverage is reaching geographical area a
manufacturer wants to cover.
• Easy in Metropolitan areas, but difficult for
less populated area.
• To assess distributor’s coverage:
• 1. location of sales office
• 2. salespersons’ home base
• 3. previous years’ sales