In International Distribution

In International Distribution

n     The firm sells to its customers:

n    directly through its own sales force.

n    indirectly through independent intermediaries.

n    indirectly through an outside distribution system with regional or global coverage.

Channel Configurations

Channel Design Considerations

Ø    Company objectives

n    Determined by company objectives for market share and profitability.

Ø    Customer characteristics

n    What do they need, why, when, and how?

Ø    Distribution culture

n    The structural linkages and functional characteristics of existing channels.

Ø    Competition

n    What channels does the competition use?

Channel Design Considerations

Ø    Character

n    The nature of the product impacts the design of the channel.

Ø    Capital

n    Describes the financial requirements for setting up a channel system.

Ø    Cost

n    is the expenditure incurred in maintaining a channel once it is established.

Channel Design Considerations

Ø   Coverage

n   The number of areas in which a product is represented and the quality of that representation.

n    Types of coverage

n   Intensive

n   Selective

n   Exclusive

Channel Design Considerations

Ø    Control

n    The use of intermediaries, product type, and the marketer’s use of power will determine the amount of market control.

Ø    Continuity

n    Responsibility of the marketer and is expressed through market commitment.

Ø    Communication

n    Provides the exchange of information that is essential to the functioning of the channel.

n    Social, cultural, technological, time and geographical distances  may cause problems.


n    Types of intermediary relationship

n   Distributorship

n   Agency

n    Type of exporting function

n   Indirect exporting

n   Direct exporting

n   Integrated distribution


n   Screening Intermediaries

n   Performance

n   Professionalism

Channel Management

n    Coordinating two independent entities with shared goals.

n    The relationship needs to be managed for the long term.

n    Factors complicating channel management

n    Ownership

n    Geographic, cultural, and economic distance

n    Different rules of law

Gray Markets
(Parallel Importation)

Arguments for:

n      The right to “free trade.”

n      Consumers benefit from lower prices.

n      Discount distributors have found a profitable market niche.

Arguments against:

n      Gray marketers take unfair advantage of trademark owner’s marketing and promotion.

n      Parallel imports deceive consumers by not meeting product standards or expectations of after-sale service.

The Solution to the Gray Market Problem?

n    A contractual relationship that ties businesses together.