1. International Marketing & Export Promotion Agents V Distributors

2. 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.

3. 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………….

4. 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.

5. 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.

6. 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.

7. Agent v Distributor Factors for ConsiderationAgentDistributor Control over price and other terms of saleYesNo Ability to dictate choice of customerYesNo Direct contact with customerYesNo Close control over MarketingYesNo Ability to offload risk of stockNoYes Commission payableYesNo Compensation payable for termination/expiry of agreement YesNo High risk of Competition law issuesNoYes Simpler tax positionNoYes Comparative characteristics of Agents and Distributors

8. Critical Factors Agent v Distributor Financial FactorsMarketing (Customer Related) Factors Facilitation of importsChannel Relationship PurchasesCustomer Relationship PaymentAfter Sales Service PricingDistribution Risk BurdenPromotion