Presentation on international marketing distribution channel, their types and functions.

1. INTERNATIONAL
DISTRIBUTION
CHANNEL
B Y V I J Y A T A
A S S I S T A N T P R O F E S S O R
R A N C H I W O M E N ’ S C O L L E G E , R A N C H I U N I V E R S I T Y
J H A R K H A N D

2. DEFINITION
• Distribution channels are the link between producers
and customers.
• It is the path traced in the direct and indirect transfer
of title to a product as it moves from a producer to
the ultimate consumer or industrial distribution
channel.
• Distribution channels are the set of firms and
individuals that take tittle or assist in transferring title
to a particular good or service as it moves from the

3. CATEGORIES OF INTERMEDIARY
Channels of distribution consist of two categories of
intermediary or middlemen, namely
1. merchants who take title to the goods
2. agents who do not take title to the goods but assist
in the transferring of the title
In international marketing, two categories of channel
are involved, namely, channels between the nations
and channels within the foreign market.

4. FOREIGN MARKET
MIDDLEMEN
HOME MARKET
MIDDLEMEN

5. INTERNATIONAL CHANNEL SYSTEM
While talking about international distribution only EXPORT is
taken into account for which the distribution channel consists
of both domestic system and the foreign system.
There are two ways of exporting
EXPORT
DIRECT EXPORTING INDIRECT EXPORTING

6. INDIRECT EXPORTING
In indirect exports the manufacture utilizes the services
of various type independent market middlemen. When
a manufacturer exports indirectly. he transfers the
responsibility for the selling job to some other
organization.
The indirect method is more popular with firms, which
are beginners in export activities and with those whose
export business is not sizeable

7. DOMESTIC OVERSEAS
INTERMEDIARIES
• Manufacturer’s Export agents
• Purchasing Agent
• Country-controlled buying agents
• Export management companies (EMC)
• Export merchants
• Export Broker
• Piggybacking.

8. • Manufacturer’s Export
agents
These agents work on
commission focusing more
on sale and handling of
goods including
documentation and
tasks involved in exporting
process. But they have
limited expertise confined
a particular location, so
services of different MEA will
be needed to cover different
parts of the world.
• Purchasing Agent
The purchasing agent
represents the foreign buyer
. Operating as per the needs
of the overseas customer ,
the purchasing agent acts in
the interest of buyer seeking
the best possible terms for
which he is paid commission
by the buyer. They are also
called Commission agent or
buying agent

9. • EXPORT MERCHANT
• Export merchant buys
the manufacturer’s
product and sells it
abroad on his own.
Besides production and
customization , all other
international marketing
tasks are handled by
export merchants
• EXPORT BROKER
Export broker brings buyer
and seller together for a fee.
He negotiates the terms for
the seller , does not take
possession or title to the
goods. He has no financial
responsibility but can assist
in arrangement of credit. .
He has extensive knowledge
of the overseas markets and
foreign customers.

10. Country-controlled buying
agents
These are purchasing agents
controlled by foreign ’s
government agency or quasi
–government firm. These
agents have their offices
located in countries that are
major suppliers
Export management
companies (EMC)
EMC manage the entire
export activities of a
manufacturer under a
contract. EMC’s provide
extensive services to
manufacturers ranging from
promotion of products
overseas to shipping
arrangement and
documentation.

11. • Piggybacking
When a manufacturer/supplier does not find any channel
partner with sufficient interest to pioneer new products
piggybacking can be used. Piggybacking is an arrangement
with another company , which sells in the same customer-
segment , to take on the new product as if it were the
manufacturer.
In this the manufacturer retains control over a number of
marketing decision areas, particularly pricing, promotion and
positioning, while the other partner acts as rented sales force
only
Here, the products retains the name of the manufacturer and
both partners normally sign a multi-layer contract to provide
continuity.

12. DIRECT EXPORTING
Direct exporting refers to sale in the foreign market by the
manufacturer /producer himself. Since direct export requires the
manufacturer to handle all the complex trade regulation like
banking, financing, transportation etc by himself,, the exporter
should have sufficient volume for foreign trade and should have
experience and training of these tasks.
Direct exporting gives a higher degree or complete control over
the marketing and operations to the manufacturer as well as a
greater margin in profit by saving on commissions.
Direct exporting channels involve intermediaries based in foreign
market to undertake marketing operations.

13. FOREIGN
INTERMEDIARIES
•Foreign Sales Representatives
• Importer
• Foreign Stocking and Non-Stocking
Agents
•State Controlled Trading Companies.

14. • Foreign Sales
Representative
These are foreign
manufacturers who handle
related product line on
commission basis. They
knowledge of the local
market but since they sell a
number of product , push
marketing may be required
to increase the sale in
market.
• Importer
Importers identify the local
market requirement and
purchase goods in their own
names acting independently
of the manufacturer. They
use their own strategies to
satisfy the needs of the
market they serve.

15. • State –owned Trading
companies
Few of the Government
department and/or
government owned
companies buy large
quantities of certain goods
frequently on long-term
basis for mass consumption.
• Overseas/Foreign Agent
Overseas act as an contact
point or as office-type setup
in foreign market for an
exporter from where he can
operate all his selling and
marketing activity without
being physically present by
paying commission to the
agent. The agent does not
trade on their own but
secures orders in the name of
the exporter and gets
commission on the basis of

16. FACTORS AFFECTING CHOICE OF
CHANNEL
FACTORS INDIRECT DIRECT
The Market Dispersed
Small Potential sale
Consumer Market
Concentrated
Large potential Sales
Industrial Market
The Product Non- Technical Product
Consumer Goods
Technical Products
Industrial Goods
Marketing Skills of the
Company
Company lacks marketing skills
and experience
Company possess marketing
skill and experience
Degree of Control Company desires Little Control Company desires high degree
of control
Financial Condition of the
company
Weak Financial condition Strong Financial Condition

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