15 IM International Distribution

International Distribution

Instructor: Dr. IRFAN BUTT

International Marketing

Entering International Markets

ExportingExporting LicensingLicensing Management Contracting

Management Contracting

JointVenture

JointVenture

DirectInvestment

DirectInvestment

Generally increasing investment, risk, and control of marketing

International

DistributionLocal Distribution

What is a Distribution Channel? 

The chain of individuals and organizations involved in getting a product or service from the producer to the consumer.

Distribution channels are also known as marketing channels.

Common marketing channels for consumer goods and

services

What is the difference between Local and

International/Global Distribution?

To better understand the distribution system used in a foreign country, marketers must never assume it is

the same as what they practice domestically, For example,

In Italy, many small retailers specialize in different brands and product lines,

In Finland, most retailers do not specialize in products and services

Distribution Patterns 

Retail size has a direct impact on how to distribute. In some markets company’s may sell to

large, dominant retailers directly,

Whereas in other areas there are mainly small retailers

Distribution Patterns 

What is the

Middleman?

Located in the firm’s home country and provide marketing and distribution services from a domestic base. The companies delegate foreign-

market distribution to others such as: manufacturer global retailers trading companies export management companies

Home Country Middleman 

Functions of Export Management Company

Difference Between Export Management Company (EMC) &

Export Trading Companies (ETC)

Home-country middlemen are most helpful for companies with small international sales volumes, inexperienced in foreign markets, who do not want to get too involved

with the complexities of international marketing.

Home Country Middleman 

For greater control over the distribution process, foreign-country middlemen are hired. Can be: Manufacturer reps

Foreign distribution companies

Advantage create a shorter channel for the company

and have more market expertise.

Foreign Country Middleman 

Advertising in trade magazines with an international readership

Export trading company or an export agent

Local Government’s Export Development Authority

Online Search

How to Find an Overseas Distributor 

What is the Difference between

Agent & Distributor?

Agents usually represent a company in the local market.

Don’t take ownership of the goods. Are paid a sales commission,

salary, retainer, or a combination of all three.

Charge for the costs incurred by them.

Agent 

In most cases a distributor buys product from firms and sells to their customers, adding a margin or setting their own price.

They may import and hold stock of your product and may also help promote it and provide after sales

service for customers.

Distributors tend to concentrate on products that are the easiest to sell and/or have the

highest margins.

Distributor 

Export Management Company acts as an Agent or Distributor

Exporting and Logistics

Export and import documents Tariffs & quotas The rules and regulations that cover the

exportation and importation of goods and their payment

Other barriers to the free flow of goods between countries

What Should be Known 

The Exporting Process

Exporting Restrictions• Export regulations may be designed

• To conserve scarce goods for home consumption

• To control the flow of strategic goods to actual or potential enemies.

• To comply with various regulations,• the exporter may have to acquire export

licenses or permits from the home country

Import Restrictions• Import regulations may be imposed

• to protect health,

• conserve foreign exchange,

• serve as economic reprisals,

• protect home industry, or

• provide revenue in the form of tariffs

Import Restrictions• Canada

• Firearms and Weapons• Goods manufactured by prison labor• Used or second hand motor vehicles• Second hand mattress• Food, plant, animal

Import Restrictions• The most frequently encountered trade

restrictions include: Tariffs Exchange Permits Quotas Import Permits Standards Boycotts and Embargoes Voluntary Restrictions

Tariffs Taxes or Custom duties, which are levied

against goods imported from another country. They are based on value or quantity or a combination of both and are classified as follows: Ad valorem duties,

based on a percentage of the determined value of the imported goods

Specific duties, a stipulated amount per unit weight or some other measure

of quantity A compound duty,

combines both specific and ad valorem taxes on a particular item, that is, a tax per kG plus a percentage of value

Exchange Permits To conserve scarce foreign exchange

many countries impose restrictions on the amount of their currency they will

exchange for the currency of another country

Quotas Countries may also impose limitations

on the quantity of certain goods imported

during a specific period

Import Permits As a means of regulating the flow of

exchange and the quantity of a particular imported commodity, countries often require import licenses

Standards Standards that are necessary to protect

the consuming public and to comply with local laws Health standards Safety standards Product quality

Public Authority for Consumer Protection in Oman

Boycotts and Embargoes A boycott is an absolute restriction against

trade with a country, or trade of specific goods.

An embargo is a specific government order that imposes a ban on trade with another country. An embargo is more specifically related to

government actions compared to a boycott.

Voluntary Restrictions Countries may themselves impose

restrictions on firms exporting to specific countries

Terms of Sale

CIF (Cost, insurance, freight) Seller pays for cost, insurance, freight

to a named overseas port of import, including the costs of goods, insurance, and

all transportation and miscellaneous charges to the place of debarkation.

C&F (Cost & freight) Seller pays for cost and freight to a

named overseas port, including the cost of the goods and transportation costs to the

named destination. The cost of insurance is borne by the

buyer.

FAS (Free Alongside) Seller brings it to a named port of

export, and pays for cost of goods and charges for delivery of

the goods alongside the shipping vessel. The buyer is responsible for the cost of

loading onto the vessel, transportation, and insurance.

FOB (Free on Board) Seller brings it to a named port of

export, and pays for cost of goods and charges for delivery of

the goods alongside the shipping vessel, and cost of loading onto the vessel.

The buyer is transportation and insurance.

Terms of Sale

Thanks!