CHAPTER
11
EXPORT
DISTRIBUTION
CHANNELS
Topic Outline
1 Distribution 4 Common Distribution
Functions
2 Commercial and
Physical Distribution 5 Shipping the Goods
3 Channels of
Distribution 6 Type of Ocean Service
Distribution
involves all the activities concerned
with the transfer of goods from the
manufacturer to the consumers.
Purpose:
• ensure the availability of products to people
who want these items whenever and
wherever they want to acquire them.
International
Distribution Channels
“Every producer seeks to link together
the set of marketing intermediaries that
best fulfil the firm’s objectives. This set
of marketing intermediaries is called
the marketing channel.”- Philip Kotler
International
Distribution Channels
“Distribution channels are the systems
of economic institutions through which
a producer of goods delivers them into
the hands of their users.”-Richard
Buskirk
International
Distribution Channels
“A channel of distribution for a product
is the route taken by the title to the
goods as they move from the producer
to the ultimate consumers or industrial
user.”-William J. Stanton
International
Distribution Channels
“Any sequence of institutions from the
producer to the consumer, including
none or any number of middlemen is
called a channel of distribution.”-
McCarthy
International
Distribution Channels
“Any sequence of institutions from the
producer to the consumer, including
none or any number of middlemen is
called a channel of distribution.”-
McCarthy
Export Distribution
Channels
• The distribution process for international
marketing involves all those activities related
to time, place and ownership utilities for
industrial and end consumers.
• The selection, operation and motivation of
effective channels of distribution often turn
out to be important factor in firm’s differential
advantage in international markets.
Factors to consider:
• diverse cultural differences for formulation of
distribution strategies for any exporter
entering foreign markets.
• how environmental factors affect the
distribution policies
• economic development of the country
• available distribution system in a particular
country
Commercial Physical
Distribution Distribution
(marketing channel of distribution) deals with the problem of space and
deals with trade contracts and the time, specifically how to effect the
choice of wholesale or retail channels transport and storage of goods.
that involve finding good markets and It answers the question: “How should
demand stimulation. orders be handled?”
Channels of
Distribution
• Direct exporter sales
means developing a firm’s own
sales force, and offering products
directly to the retailers without
resorting to intermediaries.
Channels of
Distribution
2. Indirect export sales
through intermediaries
mean relying on importers and
commission agents both here
and abroad who, in turn,
distribute or serve major buyers
directly.
Common Distribution
Functions
Common Distribution
Functions
Common Distribution
Functions
Common Distribution
Functions
Shipping the Goods
The commercial distribution of goods may take effect
with the physical distribution or the actual shipping out
of goods from the country of origin to their destination.
Choices in transporting the goods:
• by sea
• by rail
• by air
Factors to consider:
• Cost of Transport: Costs vary based on the type and
amount of goods that need to be exported.
• rail transport- heavy or bulky products over a long
distance inland
• water transport- cheapest mode of transport for
heavy or bulky goods, exported over long distances
where time is not an important factor.
• Air transport- most efficient for perishable, light or
valuable goods
• land transport- (trucks) best suited for small amounts
of goods over short distances
Factors to consider:
2. Reliability and Regularity of Service
The decision on which mode of transport to use will be
influenced by the urgency and speed by which you would
like your goods to be delivered.
Land, ocean and air transport are usually affected by bad
weather such as heavy rains, snow, fog and storms
which may cause delays.
Factors to consider:
3. Safety:
• Land transport by truck may be preferred to railway
transport because your losses are generally less.
• Water transport exposes the goods to the perils of the
sea; hence from a safety point of view, sea transport
is the most risky.
• certain types of packaging are recommended
• may also require special facilities
Factors to consider:
4. Characteristics of goods
• size and weight of goods also play a role in deciding
which mode of transport to use.
• Land and air transport- for light and small shipment
• Rail- and sea transport- heavy shipments
• Air and land transport- usually the best option to use
for breakable products of high value.
Factors to consider:
5. More considerations:
• terms of the export sales contract
• location of the overseas buyer in relation to airports,
sea ports and railway stations
• facilities at the port of destination
Types of Ocean Service
CONFERENCE LINE VESSELS
NON-CONFERENCE VESSELS
TRAMP SHIPS
CHARTER SHIPS
Types of Ocean Service
CONFERENCE LINE
VESSELS
These ships belong to a line
which is a member of a
shipping conference.
CONFERENCES:
groups of shipping lines bound
together for the purpose of adopting
common rules and regulations.
Types of Ocean Service
NON-CONFERENCE
VESSELS
These ships are operated by
shipping companies that offer
scheduled services but quote
freight rates independently from
one another.
Types of Ocean Service
TRAMP SHIPS
These ships do not follow regular
routes but travel where cargoes
are available.
Types of Ocean Service
CHARTER SHIPS
These ships can be hired to
transport products for a particular
purpose or time.
Thank you for listening!
Don't hesitate to ask any questions!
