Page 204 - International Marketing

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206 International Marketing BRILLIANT'S

(II) Direct Distribution Channel
Direct channel is employed when a manufacturer develops an overseas
channel. This channel requires that the manufacturer deals directly with a
foreign party without going through an intermediary in the home country.
The manufacturer must set up the overseas channel to take care of the
business activities between the countries. The manufacturer is himself
responsible for shipping the product to foreign markets. The manufacturer
itself exports through its own internal export department or organization.
The options available to international marketer in organizing direct
distribution include sending missionary sales representatives abroad from
the headquarters, setting up of local sales/branch office in the foreign
country or for a region, establishing a subsidiary abroad, entering into a
joint venture or franchising agreement.
Following are some of the examples of direct distribution channel in
international marketing:
Direct distribution through agents:
 Sales representatives
 Purchasing agents
 Export brokers
Direct distribution through merchant intermediaries:

 Export distributor
 Foreign retailer
 Export jobber
 Trading company
One advantage of direct channel is active market exploitation, since
the manufacturer is more directly committed to its foreign markets. Another
advantage is greater control. The channel improves communication because
a transaction is completed. Thus, direct channel allows the company's
policy to be followed more uniformly.
On the other hand, direct channel is also not free from problems. It is
a difficult channel to manage if the manufacturer is unfamiliar with the
foreign market. The channel is time consuming and expensive without a
large volume of business, a manufacturer may find too costly to maintain
the channel. Exporters who do not undertake international marketing
research, have a tendency to sell directly to a foreign export agent. Since,
these exporters charge higher prices for exported products than for sales
in the domestic market, they also perform better financially.