International Marketing &

Export Promotion

Agents

V

Distributors

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Channel Definition

A marketing channel is a set of interdependent organisations involved in the process of making a product or

service available for use or consumption.

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Route to Market

Although there a number of different “Routes to Market” Deciding between an Agent or a Distributor is the most common decision facing most SMEs in export markets……so what’s the difference between an Agent and a Distributor………….

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Agents

• An Agent generates sales between a principal (supplier) and its customers and is rewarded by earning commission – usually tied to the value or volume of goods/services sold.

• Title, possession or risk in goods does not ordinarily pass to the agent at any stage. One reason why an agent receives less remuneration than a distributor.

• In an agency agreement the supplier has control over key areas such as marketing strategies, product price lists, and the customer base.

• The contract for sale of goods/services is between the supplier and its customer, with the agent acting only as a facilitator.

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Distributors

• Under a distributorship agreement, the supplier or manufacturer sells its goods/services to the distributor who then sells onto its own customers adding a margin to cover its own costs and profit.

• In purchasing and reselling the goods, the distributor contracts both with the supplier and with its own customer and title to the goods in question normally passes to the distributor.

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Common Forms of Distributorships

• Exclusive Distributorship – supplier agrees to sell his goods/service only to the distributor within a certain defined territory.

• Sole Distributorship – supplier appoints a distributor as his sole or only distributor within a territory, but reserves the right to supply the goods directly to customers in that territory.

• Non-Exclusive Distributorship – supplier has complete freedom both to sell directly and to appoint another distributor in that territory.

• Selective Distributorship – supplier agrees to appoint a distributor only if they meet certain criteria.

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Agent v Distributor

Factors for Consideration Agent Distributor

Control over price and other terms of sale Yes No

Ability to dictate choice of customer Yes No

Direct contact with customer Yes No

Close control over Marketing Yes No

Ability to offload risk of stock No Yes

Commission payable Yes No

Compensation payable for termination/expiry of agreement

Yes No

High risk of Competition law issues No Yes

Simpler tax position No Yes

Comparative characteristics of Agents and Distributors

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Source: Euroman Consulting

Critical Factors Agent v Distributor

Financial Factors Marketing (Customer Related) Factors

Facilitation of imports Channel Relationship

Purchases Customer Relationship

Payment After Sales Service

Pricing Distribution

Risk Burden Promotion

Bellevue Creative Solutions Ltd. , 5 Banta Na Bearu, Athy, Co.Kildare. Tel: 0872499833

Source: Euroman Consulting