Routes to Market

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					Routes to Market

Robin Mackay LTI MIEx
What sales do you want from an agent,
distributor, selling direct or any other
distribution channel?

How much control of your market do you
       What sales? What return?
    You need to have the medium to long term
    potential from each market to cover the cost of
    developing the market:
•   Market development
•   Product development
•   Profit
•   Turnover
•   Marketing costs
•   Travel/visiting costs
•   Support costs
    The Role of the Agent and Distributor

What skills are required?
•   Good contact in the market
•   Market knowledge
•   Knowledge of competitors
•   Communicate in the local language
•   Knowledge of promoting the product
•   Good ambassador
•   Understand market trends
•   Problem solver
•   Industry knowledge
     The Role of an Agent and Distributor
     What is an Agent?
An agent is a person or an organisation
working in the home market or overseas
in a market or territory on the principals
behalf to find potential buyers for its

The agent acts as an intermediary
between the principal and the buyer.
The agent works on an agreed an agreed
commission rate of 5%-15%
            The Role of a Distributor
A Distributor
• Is situated in the required territory
• Will have been allocated distribution rights for the
   territory or country
• Is actively involved in the marketing and branding of
   related products
• Provides after sales and customer care
• Buys for his own account
• Gains income from the resale of its principals products
       What is a Distributor

•   Marketing related products/services
•   Brand development
•   Responsible for collecting own debts
•   Mark up
•   Payment 90 days
•   Price sensitive products?
•   Hold stock
 Summary - Agent or Distributor?
An agent will normally:
Represent up to 8 principals
Of which 4-6 maybe selling well
1 will be on trial and 1 will be about to be dropped.
An agent will want to have the potential of making a
minimum of £100,000 sales and £10,000 commission

A distributor will normally:
Represent 20-30 principals
selling 2-3000 products, some will be in stock
Maybe have up to 8 salesmen each selling £1-2million
Maybe £200,000-£400,000 per principle however this figure
will vary.
          Summary - Representative

• More control with an
• Distributor is a
Finding an Agent or Distributor

 3 Stages

 1. Desk research
 2. Detailed
 3. Visit the country
How to Find an Agent and Distributor
1-Desk Research
• Known contacts
• Competitors website
• Internet USA USA UK UK UK EU
• Exhibitions
• Maintain country files
   How to Find an Agent and Distributor

2- Detailed Research
• Consultant
• Trade Associations
• Chambers of Commerce
• Trade Missions
• Personal Recommendations
• Advertising
• Visit Country
       How to Find an Agent and Distributor
3-Visit the country
Two Screenings or interviews
• Determine whether your company’s products and services fit
   into their range
• Existing Principals, References
• Location, Impression of Office and/or Warehouse
• Financial Status, bankers name and address
• Establish Existing Performance
• Product Range, Competitor Knowledge
• Market Knowledge
• Forecast?
• Accomplished at Selling?
     How to Find an Agent and Distributor
Screening questions

•   Product Range/Complementary Products
•   Is the product commercially competitive?
•   Customer care skills, faulty goods
•   Communication, office and Home
•   How long has he been established?
•   Territory?
•   Technical Services
•   Training?
•   Product Development
        Contracting with an Agent
• Sales targets
• Market development
• Term contract i.e. 1 or 2 years with a review
  against target
• Compensation on termination?
How to Find an Agent and Distributor
•   Make an Informed Choice
•   Prepare for Meetings
•   Avoid Making Rash Decisions
•   Reflect before making a decision
•   Additional Questions
   Contracting with an Agent
• Candidate must be in agreement with
  the general terms of the agreement
• Willingness work together
• Both parties should be prepared to
• Legal advice


              • ESSENTIAL TO CONSULT
                AND EFTA

              • COMPENSATION
Contracting with an Agent

 Memorandum of Understanding
Contracting with an Agent
Thank You

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