Distribution via Overseas Organizations

Distribution via Overseas Organizations

Distribution via Overseas Organizations

Where the manufacturer considers it desirable to exercise greater control over the sale of his product in export markets, he will appoint local agents and remunerate them on a commission basis. The situation of a commission agent is not dissimilar to that of a company's representative in the home market except that he is not in the employ of the firm and one does not have the same degree of control over his activities. The agent will canvass for orders among the clientele of the country or countries in which he operates and will undertake all the necessary follow-up duties, including the investigation of any complaints or queries which may arise in respect to quality and service. He will receive a commission on all business which arises from his territory of between 5 and 10 per cent.

The Export Manager must be at pains to ensure that his overseas agents are fully motivated. One of the problems of using an agent is that he will usually represent a number of firms producing non-competing lines. Unless the level of business which he can create and maintain for one's particular product is really worth his while, there is the danger that he will tend to devote the bulk of his activities to the furtherance of his other interests. When an agent, who has established business for a product with a number of accounts, finds that he is not getting adequate support-deliveries are late, correspondence is dealt with tardily, consignments are received damaged-it is inevitable that he will lose interest and fail to develop additional business. The confidence of the agent must, therefore, be maintained by a constant attention to his needs and those of his customers. Regular visits of company personnel to discuss outstanding matters with local agents should also be interspersed with periodic invitations to the agent to visit the company's headquarters to meet the senior management and be kept informed of new product developments and any changes in ONLINE MARKETING policies.

A Commission Agent is one who provides a sales service for the exporter. A Distribution Agent, on the other hand, combines the services of a Commission Agent with the carrying of stocks of the product and arranging for their physical distribution to the customers in his territory. There are certain advantages to the product manufacturer in the use of a Distribution Agent. With stocks held locally, a good delivery service can be provided. This may be important where there is an indigenous supply of similar merchandise. A Distribution Agent who is handling several product lines imported from one's own country, is likely to operate a group shipping arrangement through a forwarding agent handling all the various types of merchandise with which he is concerned. Thus group shipment can be provided with a subsequent reduction in costs.

The main problem encountered in the use of Distribution Agents is that some of them become involved in too many types of products and, like the domestic wholesaler in a similar situation, are unable to do justice to any one of them. Before he appoints a Distribution Agent, the Export Manager should make careful enquiries about his standing in the market in which he operates. He should ensure that the firm concerned possesses sufficient salesmen of the right calibre to sell his product and has adequate facilities in the form of warehouses and transport to provide a satisfactory physical distribution service.

Generally speaking, Commission Agents provide a more suitable means of overseas representation for manufacturers of raw materials and industrial products where local stockholding

may not be a necessary factor. For consumer goods, however, where it may be necessary to execute a large number of rather small orders promptly, the Distribution Agent provides a vital service.

A third method of overseas representation is the use of a Franchise Agent. There are certain types of products, such as motor-cars, motor-cycles and various classes of electrical goods, where it may be desirable to ship in the form of components for assembly in the local overseas area. The Franchise Agent is one who is given a franchise by the manufacturer to undertake such assembly. In some instances he may be franchised to actually manufacture the product locally.


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