Routes to Market

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Routes to Market

• Robin Mackay LTI MIEx

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Representative?

• What sales do you want from an agent,
  distributor, selling direct or any other
  distribution channel?
• How much control of your market do you need?

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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

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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

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Agent
Retailer
Consumer
Manufacturer
Customer
Wholesaler Distributer Importer
Customer
Retailer
Consumer
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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 products. 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
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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

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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

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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.

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Summary - Representative

• More control with an agent
• Distributor is a customer

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Finding an Agent or Distributor

• 3 Stages
• Desk research
• Detailed research
• Visit the country

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How to Find an Agent and Distributor

• 1-Desk Research
• Known contacts
• Competitors website
• Internet
• www.mra-reps.com USA
• www.mrerf.org USA
• www.agentsregister.com UK
• www.themaa.co.uk UK
• www.agentbase.co.uk UK
• www.iucab.nl/index.php EU
• Exhibitions
• Maintain country files

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How to Find an Agent and Distributor

• 2- Detailed Research
• Consultant
• UKTI-OMIS
• STI
• Trade Associations
• Chambers of Commerce
• Trade Missions
• Personal Recommendations
• Advertising
• Visit Country

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How to Find an Agent and Distributor

• 3-Visit the country
• Two Screenings or interviews
• Determine whether your companys 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?

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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

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Contracting with an Agent

• Sales targets
• Market development
• Term contract i.e. 1 or 2 years with a review
  against target
• Compensation on termination?

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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

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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 negotiate
• Legal advice

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AGREEMENTS - LEGAL PITFALLS

• FREQUENTLY ANYTHING BUT EQUAL
• ESSENTIAL TO CONSULT SPECIALIST LEGAL ADVICE FOR
  EU AND EFTA
• COMPENSATION

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Contracting with an Agent

• Memorandum of Understanding

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Contracting with an Agent
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• Thank You