Agents are the intermediaries who help to develop and maintain the channels of distribution. Agents arrange for sales between two parties and get paid usually in commission. An agent’s duty is to understand the marketer’s business model and market objectives so that they can help the marketer to find the suitable partners and routes to the market. They are expected to obtain the best possible deal for the marketer by negotiating with the distributor. The agent’s firm may provide different types of mediatory services as necessary for a particular business.
To make a product accessible to the foreign target market is a critical and challenging process for an international marketer. Each foreign market contains unique distribution networks with many channels. Sometimes it is difficult to penetrate the multilayered, complex, and inefficient distribution structure in a new market. The distribution process in any country consists of three main components: the physical handling and distribution of goods, the passage of ownership (title), and, most important from the standpoint of marketing strategy, the buying and selling negotiation between the producers and agents (or middlemen) and the agents and customers. In a distribution structure, the goods pass from producers to the users through the agents whose customary functions, activities, and services reflect existing competition, market characteristics, tradition, and economic development. Distribution structure varies from one country to another. For example, the distribution structure for Japan is very different from the United States or European countries in terms of the density of agents. In Japan, the commodities often pass through three or four intermediaries or agents before reaching customers.
Agents may have different names and functions in foreign countries. It is important for international marketers to thoroughly understand the titles and the type of services the agents provide. The same agent or firm may provide different types of services depending on the job requirement. For example, the functions of a variety of agents namely, a stockist, an exporter, or an importer are different in the markets of England.
The marketer has to be aware of the intent of the agent to maximize his own profit with the least amount of work. Hence, agents sometimes take orders from manufacturers whose products and brands are in demand to avoid any real selling effort to market a new product or a new manufacturer. Frequently, the manufacturer with a new product or a product with a limited market share is forced to bypass the agents until they establish a reasonable market share for their product. Often the manufacturers have to provide adequate inducement to agents to convince the disinterested agents to promote and sell their products.
The services provided by agents are critical to the success of the marketers. Hence the marketers should carefully research the target market in a foreign country while choosing an agent or an agent’s firm. The two most important qualities of a successful agent are his personal commitment to the marketer and his product and his superior performance. One way to achieve success in the international market is to work closely with the agent. The manufacturer or marketer has to terminate the agent’s contract promptly in case of poor performance, so performance and termination clauses should be clearly documented. Many international businesses have achieved success based on their willingness to terminate all underperforming agents. However, sometimes if unaware of local legalities, the companies may face legal consequences. Sometimes local corruption creates legal adversity. Hence, the agent and the marketer both should understand clearly the rights and the obligations under the agreement.
Agents help marketers eliminate the difficulties involving language, physical distribution, communications, and financing in a foreign country, and their cooperation is crucial to the success of an international marketer.
- Daniel C. Bello and Ritu Lohtia, “Export Channel Design: The Use of Foreign Distributors and Agents,” Journal of the Academy of Marketing Science (v.23/2, 1995);
- Philip R. Cateora and John L. Graham, International Marketing (McGraw-Hill Irwin, 2007);
- Warren J. Keegan, Global Marketing Management (Prentice Hall, 2006).
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