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10.4 Marketing through foreign distribution channels

A company about to become involved overseas should pay attention to
the following issues:

• Should the firm extend its domestic distribution approach to foreign
markets or adapt its distribution strategy to each local market?

• Should the firm use direct or indirect channels in foreign markets?

• Should the firm use selective or widespread distribution?

• How can the firm manage the channels?

• How can the firm keep its distribution strategy up to date?

10.4.1 Standardisation or adaptation

Terpstra and Sarathy (2000) investigate these five questions. The first

option for the extension of the firm’s domestic distribution channels to the
foreign market, is not to have a standardised distribution channel in foreign

markets, but to see which distribution channel is more profitable and in
which market. However, some companies might prefer a standardised
approach (such as the use of distributors) because of economies of scale.

It can also be argued that a channel used in one market could be used in
another because it has been tested, although success in one market using

one method of distribution might not be an indicator for success in another.
Other controllers of the selection of a distribution channel are the
competitors, who might force an international company to follow exactly

the same methods of distribution because they have ‘trained’ the market
to specific channels. Also, the competitor might pre-empt that channel and

force the newcomer to find some other way to the market. The company’s
own different situation might suggest different channels from market to
market.

10.4.2 Direct or indirect channels of distribution

The second question is about direct versus indirect channels. International
companies may prefer direct channels, because they are more effective.
If the foreign market is small, many companies will accept indirect