Distinguish between direct and indirect selling channel?

Answer 1

Indirect selling is employed when a manufacturer in the United States, for example, markets its product through another U.S. firm that acts as the manufacturer's sales intermediary. There are several advantages to be gained by employing an indirect domestic channel. The channel is simple and inexpensive. The manufacturer incurs no start-up cost for the channel and is relieved of the responsibility of physically moving the goods overseas. Since the intermediary very likely represents several clients who can help share distribution costs, the costs for moving the goods are further reduced.

An indirect channel also has limitations. The manufacturer has to give up control over the marketing of its product to another firm. The channel may not be permanent because the intermediary can easily discontinue handling a manufacturer's product if there is no profit.

Direct selling is employed when a manufacturer develops an overseas channel so that it deals directly with a foreign party without going through an intermediary in the home country. One advantage gained in using the direct selling channel is active market exploitation. Another advantage is greater control. The channel also improves communication and consistency.

Direct selling, however, is a difficult channel to manage if the manufacturer is unfamiliar with the foreign market. It is time consuming and expensive.