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What are the most effective distribution channels for your product in a foreign market?

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Choosing the right distribution channels for your product in a foreign market is a crucial decision that can affect your sales, costs, and customer satisfaction. Distribution channels are the intermediaries that connect your product with the end users, such as wholesalers, retailers, agents, brokers, or online platforms. In this article, you will learn how to evaluate the most effective distribution channels for your product in a foreign market, based on four key factors: product characteristics, market characteristics, channel characteristics, and channel objectives.

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1 Product characteristics

The first factor to consider is the nature of your product and how it influences the distribution channel requirements. For example, if your product is perishable, fragile, bulky, or customized, you may need a shorter and more direct channel that can preserve the quality, reduce the damage, minimize the transportation costs, or meet the specific needs of the customers. On the other hand, if your product is standardized, durable, compact, or mass-produced, you may benefit from a longer and more indirect channel that can reach a wider market, increase the availability, leverage the economies of scale, or enhance the brand recognition.

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Kennedy Munyendo

General Manager - East Africa | Experienced Sales and Operations Manager | Construction Material Professional | Waterproofing, Flooring System & Affordable Housing Expart.
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In my experience, when distribution in foreign countries it is important to connect with business in that country in form of argents or dealers who can represent you in the country. It is important to select dealers who have experience in the product line, good distribution network and and the ability to drive the product in the market. This will save you a lot of overheads and logistics cost while you maximize on dealer network. With proper market research, you could do a direct distribution by setting up a branch of the holding company in the target country. This strategy my be costly costly in the in initial investment, However, if executed properly you gain full control of the market while maximizing on your profits.

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2 Market characteristics

The second factor to consider is the size, location, segmentation, and preferences of your target market and how they affect the distribution channel selection. For example, if your market is large, dispersed, heterogeneous, or price-sensitive, you may need a more extensive and intensive channel that can cover more geographic areas, serve more customer segments, offer more variety, or compete on lower prices. On the other hand, if your market is small, concentrated, homogeneous, or quality-oriented, you may need a more selective and exclusive channel that can focus on a specific area, cater to a niche segment, provide more value, or differentiate on higher quality.

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3 Channel characteristics

The third factor to consider is the availability, suitability, performance, and compatibility of the potential distribution channel partners and how they match your product and market needs. For example, if you want to enter a new or unfamiliar market, you may need a more experienced and established channel partner that can provide market knowledge, access, contacts, or support. On the other hand, if you want to maintain more control or flexibility over your product, you may need a more independent and adaptable channel partner that can follow your guidelines, policies, or changes. You should also evaluate the channel partners based on their costs, margins, services, reputation, and reliability.

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4 Channel objectives

The fourth factor to consider is the goals and expectations that you and your distribution channel partners have from each other and how they align with your overall marketing strategy. For example, if your objective is to increase your market share, you may need a more aggressive and cooperative channel partner that can promote your product, generate demand, or create loyalty. On the other hand, if your objective is to maximize your profit margin, you may need a more efficient and competitive channel partner that can reduce your costs, optimize your inventory, or increase your pricing power. You should also communicate your objectives clearly, monitor your channel performance regularly, and resolve any conflicts or issues promptly.

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5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Dr.-Ing. Joao Carlos Oliveira Lopes

? 22.000 Followers ?Deputy Head Sales at ZEISS Industrial Quality Solutions
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You need trustable local partners I never found a partner without a personal reference from third person. Means direct contact to local dealers don’t help to have a local dealer. In 20 years all dealers found was made by personal reference from friends or other existing partners

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What are the most effective distribution channels for your product in a foreign market?

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1 Product characteristics

2 Market characteristics

3 Channel characteristics

4 Channel objectives

5 Here’s what else to consider

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What are the most effective distribution channels for your product in a foreign market?

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1 Product characteristics

2 Market characteristics

3 Channel characteristics

4 Channel objectives

5 Here’s what else to consider

Import/Export Operations

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