Cost, control and coverage
The “pull” strategies entails getting channels to carry and sell a product while the “push” strategies entail requires motivation of the customers to ask for your brand name (Aswathappa, 531). The decision to go for either option is pegged on the producer’s need to control the pricing, make higher profits by varying the prices according to demand and market forces (Gorchels, Marien and West, 18). The quest to control the distribution process and coverage of the target market establishes the demand and consumer patterns thereby create needs that cause customers to ask for specific brand names.
Intensive distribution entails providing saturation coverage of the market using all the available outlets while exclusive distribution is whereby a specified retailer, or distributor covers a specific geographical area. The quest to lower the prices for the customers by selling in mass to make small profits from many people may compel a business to use intensive distribution (Aswathappa, 532). The issue may also be informed by the need for mass coverage for products that are applicable and usable to many people say household goods such as soap. Exclusive distribution may be best suited for sensitive goods such as farm chemicals since the coverage needs to be controlled while the costs need to be maximized for the distributor and the producer.
Direct channels are those where the product or service remains under the control of the company from the production to the customer. Indirect channels involve independent third parties paid by the producing company to distribute the product. Hybrid channels bear mix of the qualities of the direct and indirect channels. When a business wishes to cover the target market systematically and exhaustively, it is preferable for it to use hybrid channels whose synergies will ensure that there are checks and balances to ensure proper coverage (Gorchels, Marien and West, 20). However, when the business targets to make great profits and gain total control of the distribution process it needs to use direct channels. The sensitivity and nature of the products in question for instance medicines and drugs may compel the produce to increase control to ensure quality as they reach the customers.
What should a company look for in selecting international intermediaries?
The company should look out for local companies that have the skill-set and knowledge to handle the products and customers especially in the sale and servicing of high-tech products such as electronics. In addition, they ought to look for the past operations and products that potential intermediaries have engaged with in the past (Aswathappa). The quality of personnel also determines the potential success of the partnership. Moreover, if a product for which an intermediary is being sought has been targeted at some specific culture of community in a given country it is necessary to sego for the intermediary from that culture or one that knows the language and the culture of the target market well.
In all cases it is necessary to establish how well the potential distributor complies with the legal provisions of dealing in a given sector and their entire professional outlook that portends to gain public confidence (Institute of Logistics and Transport, 17). It is also critical to establish the geographical location of the potential intermediaries in order to select one that offers the best coverage of the target market or even to act as a central hub for expansion into the area. Other factors to consider in selecting an intermediary are the longevity or how long the intermediary has served the local people, and “street smartness” where the intermediary is in touch with the needs of the local people and can grind sales.
Works Cited
Aswathappa. International Business . Tata McGraw-Hill Education, 2010.
Gorchels, Linda, Edward Marien and Chuck West. The Manager's Guide to Distribution Channels. McGraw Hill Professional, 2004.
