Keys to internationalisation

The next aspect of the marketing mix you have to analyse is distribution. International distribution is the structure formed by the producing company along with each one of their intermediaries though which the product passes until it reaches the end consumer.

What you should take into account:

• The type of product being distributed
• The target market sector
• The market quota
• The services being provided by those on the distribution chain, both suppliers and clients. That is, warehouse facilities, after sales service, etc.

First you must decide whether to distribute the products yourself or use an intermediary. Direct international sales implies extensive logistics capacity: warehouses, control systems, order processing etc. are required.

However, it is more usual to use intermediaries. The two main figures in the distribution chain are the wholesaler and the retailer.

What are their characteristics?

This depends very much on the market. In more developed economies, the wholesalers are medium-to-large companies, mostly specialists in specific areas and providing support services to clients.

Retailers also vary a lot from one market to another and depend on factors such as consumer habits, acquisition power, culture, political-legal framework, etc. The tendency is that less developed markets have a large number of retailers.

Their functions are to introduce the product into the export destination country and make it available to the end consumer. Depending on the intervention of more or fewer agents in the channel structure, there are two types of distribution:

• Long distribution chain: When there are many parties in the chain, that is, many intermediaries or when there is very little known about the market and your presence is not very consolidated, the tendency is to use a distribution channel of this type. In the initial phase of market introduction, this solution is more convenient for the exporter.
• Short distribution chain: When one of the intermediaries in the chain is eliminated and you get closer to the end client you have a short distribution chain. The advantages gained are a reduction in intermediary commercial margins. That is, you distribute directly to wholesalers or purchasing centres. However, be aware that this requires the capacity to get to all of them, the role played by the retailer.
• Direct distribution: If you get to know your market sufficiently well you can adopt direct distribution methods. Exporters dealing directly with the end client gives them absolute control over marketing. However, be aware  that this also implies a great deal more work. You need to be capable, with your own means, to supply the market.

The selection of the most appropriate distribution chain depends on the characteristics of the market, the product, the relationships with intermediaries and your capacity of being able to supply the product to the end client.

The distribution channel you choose must be as short as possible, avoiding unnecessary intermediaries making the product more expensive. You need to know the structure of the distribution channel of each market, as they can be different.

To get to understand it, reverse the direction of the distribution, that is, place yourself in the position of end consumer, think of the sales points where you can buy the product, then locate the retailer and then the importer.

• International marketing strategies
• The role of the environment
• Information systems in international markets
• Positioning in international markets
• International product
• Establishing prices
• Distribution channels
• International communication