International Marketing Practices

are mostly sold in small retail stores (60%), while in the U.S., small stores account for only 36% of food sales. In Argentina, there is one retailer per 94 people, while in South Africa, retail is highly concentrated, with one retailer serving 417 people [1]. The distribution process is not simply transferrable into foreign markets; large American companies, like Walmart, have faced difficulties when expanding into some markets [104]. Factors that should be considered when selecting a channel configuration in both domestic and foreign markets include [1, 94]: • Costs of developing and maintaining the channel. • The level of control a company maintains over its distribution channel. • The desired level of market reach and coverage or, in other words, how much of the target market the channel must cover. The longer the channel, the less control a company has over distribution. • Distribution channel alignment with overall company strategy. The channel chosen needs to be consistent with the desired service level as well as with product type and value. • Channel reliability and continuity. Relying on middlemen may be risky, especially when there is low brand loyalty downstream in the supply chain. Careful consideration of the factors listed above need to take place before a firm decides on a channel for export. Ideally, an exporter will have full control of the distribution process in the target market; however, this may not be cost-effective, especially for small to medium sized companies. In these cases, a company may explore the use of intermediaries. Trade Intermediaries rade intermediaries a e a vital aspect of international trade, particularly for small to medium sized firms that may not necessarily have the financial or human resources to invest in distribution infrastructure in foreign markets. Intermediaries are firms that facilitate export logistics in exchange for payment, often providing companies access to resources that would take them years to establish and grow [105]. Intermediaries take on the responsibility to find and maintain contact with buyers, negotiate on price and delivery, establish contracts and agreements, transfer titles, provide credit and/or collection, service the product, provide inventory and storage, provide bulk-breaking services, and arrange transportation [106]. There are a variety of intermediaries associated with exporting, including export agents and brokers, drop shippers, commission houses, resident buyers, export management companies, representatives, distributors, and global retailers. One major differentiation between various intermediaries is whether they take ownership of the product. A summary of the different types of trade intermediaries follows.

41