chapter  5
22 Pages

Export Channels of Distribution

Export firms can be involved in two principal channels of distribution when marketing abroad.

Indirect Channels

With indirect channels, the firm exports through an independent local middleman that assumes responsibility for moving the product overseas. Indirect exporting entails reliance on another firm to act as a sales interme­ diary and to assume responsibility for marketing and shipping the product overseas. The manufacturer incurs no start-up cost, and this method pro­ vides small firms with little experience in foreign trade access to overseas markets without their direct involvement. However, using indirect chan­ nels has certain disadvantages: (1) the manufacturer loses control over the marketing of its product overseas, and (2) the manufacturer’s success totally depends on the initiative and efforts of the chosen intermediary. The latter could give low priority to, or even discontinue, marketing the firm’s products in cases in which the competitor’s product provides a better sales or profit potential. A typical example of a firm involved in indirect exporting is International Trade and Marketing Corporation of Washington, DC. The company has exclusive agreements with ten U.S. suppliers of orthopedic equipment and supplies. It purchases 90 percent of the goods it handles for resale to overseas customers.