INDIAN INSTI.

OF PLANNING & MANAGEMENT

AHMEDABAD. SATURDAY, 25 th OCTOBAR,2 0 0 8
IM-8 * International Channels of Distribution
INTERNATIONAL MARKETING
Dr. PRADIP DESAI
B.E. ,M.B.A. (I.I.F.T.), LL.B., Ph.D.(Management-U.S.A.),CMC
CERTIFIED MANAGEMENT CONSULTANT ( C.M.C.)
CHAIRMAN & C.E.O.
MOUN MARKETING CONSULTANTS
{ EXPORTS -MARKETING-IMPORTS -PROJECT-MGMT. CONSULTANTS}
804, ‘SHILP’ COMPLEX , TEL :0 7 9 -6 6 3 1 0 7 4 0 / 3 0 0 7 1 0 3 0
OPP.STATE BANK OF INDIA , MOBILE : 9 8 2 5 0 -1 1 2 0 0
NAVARANGPURA, C.G.ROAD, TELEFAX : 91- 7 9 - 2 6 4 6 7 1 7 1
AHMEDABAD -38 00 09 RES. : 66 3 1 0 730 /2646 3218
E-MAIL: info @ mouncorp. co.in * WEBSITE: www. mouncorp. co.in/mounconsult.com/
Moun Marketing Consultants 1
 Theory of CHANNELS OF
DISTRIBUTION
• Channels of distribution available in a country
depends upon its stage of Economic development.
In developed countries :
• Developed markets have more dist.channels
• The Influence of Foreign Import agent is reduced
• Mfr.-Wholesaler(WS)-Retailer becomes separated
• Financing functions of WS declines & markup
increases
• No.of small stores decline & size of super market
store increases
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 Flow chart of selected
Distri.channels
• Food mfr.:Primary Wholesaler(PWS)> Semi WS
(SWS)>Distributor>Dealers>Grocery stores/Mass
Merchandiser /Retailers/ Pop & Mom stores(PMS)
• Pharma.Mfr.:PWS>SWS>Distributor>Pharmacy/
drug store/consumer/direct mail order-onLine(btoc)
• Cosmetic Mfr.:Mfr.sales co/co.outlet-PWS>
SWS>Drug store/Retail chain/Mass Mercha./b to c
*FMCG:Mfr.saleco.>WS>Distributor>dealers>retail
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 A. Indirect channels of
Distribution
1. Export Management cos.(EMC)
2. Mfrs. Export Agents (MEA)-usually local
3. Web-Pomerene Associations (WPA) in USA
4. Commission Agent(CA)-usually appointed abroad
5. Foreign Freight Forwarder (FFF)
6. Country-controlled Buying Agents(CCBA)
7. Trading Houses/Export Houses( TH/EH)-
Japan was FIRST e.g.-Mitsubishi-Marubeni corp
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1.Export Management co.(EMC)
• It is an independent export organisation that serves
different allied but non-competing cos.It operates
under the clients name using client’s stationery &
catalogues & promotional materials.
• EMC is very good for SME sector who can not
afford high overhead costs of Exporting
• EMC knows specific products’ competition level,
foreign culture,politics,logistics,taxation & Legal
issues & are having experienced & skilled export
managers well versed in Export Documentation.
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 2.Mfrs.Export Agents(MEA)
• MEA provide services similar to EMC but
the difference is they cover limited export markets
& they operate in their own name.
• MEA get commisssion from mfrs.for the services
rendered for exports.
• EMC usually represent a large PRICIPAL
Mfrs.for many export markets but MEA represents
several cos.& usually for short duration or even on
specific order basis
• Large export oriented Mfrs.prefer EMC overMEA
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 3 .Webb-Pomerene
Association(WPA)
• USA : WPA is the Association of Competing Mfg. cos.
WPA in USA under the Webb-Pomerene Act,1918
allowing cos. To form cartel for export for common
price,combine Shipment,carry out JT.market research
or allocate bulk orders to members.
• They are exempt from Anti-trust law which does’nt
allow formation of cartels & price fixation for any
markets & encourages free competition among all
mfrs. & exporters.
• In India, co-operative societies are encouraged to form
Export co-operatives & CLUSTERS are formed for
specific products e.g.CERAMICS-Morbi,Dyes-A’BAD
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 4. Commission Agents(CA)
• Commission Agents are appointed in each
export markets by the Mfrs.
• They provide following services :
c) Market info. & market research
d) Competitor’s prices & market share
e) Books orders & sends payments
f) Generally looks after interests of their Principals
abroad fro a small % commisssion depanding
upon the product.
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 5. Foreign Freight Forwarder
(FFF)
• FFF specialize in handling Shipping
arrangements for export cargo
• They get their commission/fees from the
Shipping co. thro’ whom cargo is booked.
• They are called Freight Brokers(FB)in India
• May times they do re-packing at ports I
which case they are paid by Exporter
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 6. Country-controlled Buying Agent

• CCBA are the official Buying Agents of the

foreign govt. for specified goods
• Many developing countries maintain a `SUPPLY
Mission’at TheirEmbassy abroad
for procuring specific goods. * Many developing
commonwealth countries appoint U.K.firms as
their Buying Agents & developing countries’
buyers have their Confirming House who open
L/c. for them & receives export documents & in
turn bill to actual users in country of destination
port. Moun Marketing Consultants 10
 7. Trading Houses/Export
Houses(TH/EH)
• USA:AMERICAN TRADING CO.(ATC)
ATC is formed under Export Trading
co.Act,1982.* JAPAN: 1 st to develop large THs
• To increase exports by providing more efficient
export trade services to mfrs./ suppliers by
providing trade finance & removing disadvantage
of Anti-trust act
• In India-EXPORT HOUSE & STAR TRADING
HOUSE scheme provides special Incentives by
way of Duty-free Imports on total value of export.
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B.Direct Channels of Distribution
• SalesRepresentative(SR):Mfrs.Rep.workonCommission
& assume no risk/ responsibility for payments &
simply pass sales leads or orders to their Principals.
• PurchasingAgents(PA):They are also called Buyers for
exports or export confirming houses.They are active
for their Principals
• Export Broker(EP):Brings the foreign buyer/seller to
meet & gets small % commission from seller/exporter.
• Foreign Merchant Intermediaries:Export Distributor
/Foreign Retailer/Export Jobber for
unbrandedProduct
• Trading co.:East-India co. came to India & ruled later.
• Company owned Distribution channels/retail outlets
abroad. Moun Marketing Consultants 12
Adv./dis adv. Direct/Indirect
channels of Distribution
• Direct channel/ agent is
better since more mgmt
control is exercised.
• Indirect channel agent
may not give correct mkt.
Info./deal with
competitor’s products
also from same /group co.
* Direct is expensive
whereas Indirect is
cheaper method.
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