Page 192 - DMGT547_INTERNATIONAL_MARKETING

Unit 10: International Logistics and Distribution Channels

When the Companies have to market abroad they use two principal distribution channels: Notes
direct selling and indirect selling.

Direct selling is employed when a manufacturer develops an overseas channel. Indirect
selling also known as the local or domestic channel is employed when a manufacturer in
a country markets its product through another firm that acts as the manufacturer’s sales
intermediary (middleman).
Distribution choices depend on several factors like nature of the product, cost and
development level of the nation.
To move a product both between the countries and within a country there are fundamentally
three modes of transportation: air, water (ocean and inland) and land (rail and truck).

Packaging has assumed an important function for the preservation of the goods as well as
for the reduction of cost of the products. An increasingly popular method of shipment is
containerization.
A container is a large box made of durable material such as steel, aluminium, plywood,
and glass reinforced plastics.

10.8 Keywords

Containerization: A shipping method in which a large amount of material (as merchandise) is
packaged into large standardized boxes.
Export Management Companies: They manage the entire export programme of a manufacturer
under contract.
Export Merchants: They seek out need in foreign markets and makes purchases from
manufacturers in its own country to fill those needs.
Intermediaries: Acting as a mediator or an agent between persons or things.
Logistics: It refers to the management of business operations, such as the acquisition, storage,
transportation and delivery of goods along the supply chain.
Value Chain Analysis: This analysis describes the activities that take place in a business and
relates them to an analysis of the competitive strength of the business.
10.9 Review Questions

1. Discuss the components of a logistics system.
2. “Distribution decisions are critical decisions”. Substantiate.
3. Compare direct and indirect selling channels. Discuss the types of direct and indirect
intermediaries in brief.
4. What factors influence the choice of distribution channels and mode of transportation?
5. What are the basic problems in international packaging? How has “containerization”
reduced those problems?

Answers: Self Assessment

1. False 2. True
3. True 4. True

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