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institutions that promotes the physical flow of goods and services, along with ownership title, from producers to consumer or business user; also called a Marketing channel.
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Functions of Intermediaries
Perform the marketing function better.
Provide efficient distribution of the product. Breaking bulk sell to customers in smaller quantities. Assorting bringing together similar lines of goods. Shifting risks. Merchant middlemen - take title to the goods distributed. Agents/brokers - distribute goods only.
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relocation of products.
Channel of Distribution
The system of intermediaries (business relationships)
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Distibution channels
Home country channels /indirect selling Foreign country channels /direct selling
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Selection of channel
The selection of distribution is affected by many of factors, which play significant role while choosing the channel for distribution. It may include the buying pattern of consumer, type of the product is perishable, or auto mobile, weight and bulk and it also depends on the company's resources.
Merchant Middlemen
Take title of goods being distributed (manufactures have less control) Motivated by profit, tend to be less loyal to one brand
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Exporter
Importer
Foreign retailers
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MANUFACTURERS EXPORT AGENT An agent firm provides selling service for manufacturers. Operates on a straight commission basis and covers only one or two markets. Provides services similar to EMCs and does business in their own name.
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EXPORT MERCHANTS Intermediaries who take title to and possession of the products they carry Responsible for shipping and marketing the products in the target market Carry competing brands Examples: export jobber, who carries commodity goods, but does not take physical possession of the goods.
PIGGYBACK MARKETING channel innovation that has grown in popularity One manufacturer distributes product by utilizing another companys distribution channel Requires that the combined product lines be complementary and appeal to the same customer
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Distributor
Is a merchant middlemen with close cooperation to the manufacturer Functions are- control over prices, inventories, servicing.
Agent
Conducts business within a foreign nation under contract arrangement with parent country. Compensation is on the basis of cost plus a specified % of profits of the managed company.
Brokers
Foreign brokers are part of small brokerage firms operating in a country. Function in good continuing relationships with customers and speedy market coverage at low costs
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Dealers
Independent merchant middlemen with the supplier company having equity in it. Ex- Massey fergusson and caterpillar tractor company
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