Mcom 2nd Year International Channel Of Distribution Study Material Notes

Mcom 2nd Year International Channel Of Distribution Study Material Notes Unit Wise Chapter Wise Study Material Notes Question Answer In Our Site a2znotes.com

Mcom 2nd Year International Channel Of Distribution Study Material Notes
Mcom 2nd Year International Channel Of Distribution Study Material Notes

INTERNATIONAL CHANNEL OF DISTRIBUTION

International marketing involves exporting, two categories of marketing channels are involved viz. channel between the nations (domestic system) and channel within the foreign market (The foreign system.)

The following diagram shows the different distribution channel in global aseang. International marketers have the option of distribution their products in foreign markets using indirect channels, i.e., intermediaries, or direct channels, or a combination of both.

The different type of domestic overseas intermediaries may be as follows:

  • Commission buying agents;
  • Country controlled buying agents;
  • Export management companies;
  • Export merchants;
  • Export agents;
  • Piggy-backing.

[B] Indirect Exporting to foreign Markets Source

The following Foreign intermediaries are also working in global market;

  • Foreign sales representative;
  • Foreign sales agents;
  • Foreign stocking and non-stocking agents;
  • State controlled trading companies.

Source: Brain Toyne and Peter G.P. Global marketing Mangement, Allyn and Bacon 1989, P.514.

INTERMEDIARIES IN GLOBAL DISTRIBUTION

DEFINITIONS, ADVANTAGES AND DISADVANTAGES

  • Domestic overseas Intermediaries
Type Definition Advantage Disadvantage
Commission Buying  Agents These are working in the US for a foreign company on salary, or commission basis in search of lowest prices and best deliveries. Same ease as domestic sales. No true international exposure gained.
Country controlled buying Agents Similar as above but controlled by foreign government. Same as above. Same as above.
Export management Companies (EMCs) Independent firm contracted by manufacturer to develop export sales, handling shipping and delivery, arrange for payment etc. Immediate experience and international contacts. Some losss of control lower gross profit.
Exporters Act as manufacturers international representative. Low overheads expense. Lack of control.
Export Merchants Purchase for own account to resell in the market. Same ease as domestic sale. Loss of market control.
Piggy-backing Selling to domestic com-pany with compatible pro- duct line already well pla-ced in the intermational market. Immediate access to experienced sales force in the same product areas. Partial loss of control and lower gross profits.
(b Foreign intermediaries
Type Definition Advantage Disadvantage
Foreign sales representatives Foreign manufactures who handles related product line on commission basis. Knowledge of the market and ability to cover vast areas. Sell no. of products of different companies, but may not push your company’s product
Foreign sales agents Same as above but with some degree of authority and commitment to your company. Same as above can make local decision. Same as above.
Distributor stocking or non-stocking Purchase your product for re-selling. Same as above and can Provide On –Site Service. Some lack of control and pricng.
End user Same as above though they do not use the product directly. Local control. Require export sales force.
State buying companies Your foreign customers. Often found in centrally controlled economies. Same as above.

FACTORS INFLUENCING CHANNEL SELECTION

The following are the important factors which influence the choir channel(s) :

1. Product Features. Product features such as unit value, but perishability, degree of standardisation, complexity and service requiremen etc. determine the way the product is to be distributed.

2. Market and Customer Features. Market and customer features la the size and location of the market, the number and geographical dispersal the customers, the frequency of purchase and the typical size of the buying customers’ purchasing habits and susceptibility to different selling method are important factors. These factors must be considered while selecting a channe of distribution.

3. Environmental Features. The design of channel of distribution is also affected by such environmental factors as the economic policies, economic situation, social and cultural factors, physical environment, government industrial and monetary policies and government regulation etc.

4. Middlemen Features. These agents differ in their ability and willingness to carry out promotional activities and to push the product in the market. The middlemen margin or commission is also another important matter The type of product dealt with by a particular intermediary should also be an important issue. Apart from that the marketer may be restricted in his choice of channel by the non-availability of particular middlemen.

5. Company Features and Aims. The selection choice of distribution channel is also influenced by those factor such as company’s nature, size, financial position, marketing policies, product mix, past channel experience, t channel aims and objective, etc.

6. Competitor’s Features. Like other marketing decision by the naturer of the competitors. Sometimes, it may be appropriate, to adopt a channel policy a similar to that of the competitor, but sometimes it may be more profitable to b design quite a different channel policy.

CHANNEL LEVELS

The ‘channel level means the number of intermediaries involved in the channel. We are giving hereunder the various channel levels :

1. Zero Level Channel. It is also called as the direct marketing channel, which is essentially characterised by the producer making a direct sale to ultimate buyer. The three important ways of direct selling are :

(i) Door to door, 

(ii) Manufacturer-owned stores/shops, and 

(iii) Mail order.

2. One-level Channel. It refers to one selling intermediary such as retas or the agent.

3. Two-level Channel. It includes two intermediaries, e.g., wholesale distributor and retailer.

4. Three-level Channel. It contains Three intermediaries such as ago wholesalers and retailers.

5. Higher Level Channels. There are also higher mal channels. Ditle channel levels are shown in the figure. More the one channel are use several companie student

And at the same time, he might use one-level (retailer) and two-level (distribution od retailer) channels. Likewise, Bombay Dyeing makes direct sales through their exclusive show room at the same time use other channels.

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