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Methods of exporting and channels of distribution

 

There are two ways to introduce your company or products in a foreign market: indirect exporting and direct exporting.

INDIRECT EXPORTING.

The principal advantage of indirect exporting is that allows the companies introduce their products into foreign markets without any responsibility or risk. This way is perfect for small companies.

-Commission agents.

They find foreign firms that want to purchase our products. Commission agents work as an intermediary between sellers and buyers.

-Export management companies.

Independent firms that act like an export department. In conclusion, they manage the small companies exports.

-Export trading companies.

This companies could act like an export department for producers or export the product for its own account.

-Export agents.

Export agents buy the goods from the producers and then they sell this products in foreign markets where they assume all the risk.

-“Piggyback” marketing.

Piggyback marketing is an arrangement in which one firm distributes a second firm’s product or service. In this way, the company can introduce their products in other markets without incurring the marketing and distribution costs associated with exporting.

DIRECT EXPORTING

The advantages of direct exporting are: more control over the export process and a closer relationship with the customer in the foreign country.  This way to export is more expensive than indirecting exporting.

-Organizing for exporting.

In some cases, the company may create an international department to keep an eye on all the exports and imports. That means more control over your product.

-Sales representatives.

The sales representatives present the product to potential buyers behalf of the company. They work on a commission basis and assume no risk or responsibility.

-Agents.

They operate on your behalf by introducing you to foreign markets. The company can control the final prize and the brand image.

-Distributors.

Distributors purchase the product from a company, who want to export, and resell it at a profit. The distributors provide support and service for the product.

-Foreign retailers.

A company may sell directly to foreign retailers. These transactions are effective in countries that have large retail chains.

-Direct sales to end users.

A company may sell its products directly to end customers in foreign countries. The disadvantage is that the export company is responsible for shipping, payment collection and product servicing.

FACTORS TO CONSIDER WHEN CHOOSING A FOREIGN REPRESENTATIVE OR DISTRIBUTOR.

How many field sales personnel does the representative or distributor have?

What are its sales objectives for next year? How were they determined?

What territory does it now cover?

Would there be any conflict of interest?

What communication facilities does it have?

Which marketing policies?

What media does it use, if any, to promote sales?

How much of its budget is allocated to advertising?

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