Selection and Appointment of Foreign Sales Agents: A Comprehensive Guide
Learn about the process of selecting and appointing foreign sales agents in international marketing, including the meaning of agency, content of foreign sales agency contracts, reasons for appointing agents, factors influencing agent selection, as well as the advantages and disadvantages of working with foreign sales agents.
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International Marketing Topic- Selection and Appointment of foreign Sales Agents Ms. Meenakshi Assistant Professor Commerce Department Kanya Mahavidyalaya Kharkhoda
Meaning of Agency An agency is a contract by which one person accepts to represent another and uses his/her skills and labour to perform business related activities on behalf of other person. Agency contract is a legal contract Contractual relationship between the principal and the agent. In case of international marketing, principal and agent belong to separate countries.
Content of foreign sales agency contract Written agreement Language Duration of contract Products to be sold Sales territory Commission Reimbursement of selling expenses Travelling expenses of agent Price and terms of sale Termination of agreement Arbitration Duties and rights of both parties Indemnity Promotional Techniques
Need for appointing foreign Selling Agents Market expansion Market Related Information Local knowledge Legal Compulsion Logistics Facility Collection of credit Sales After Sales Services Benefit of Local/agent s goodwill No burden of Fixed Expenses Flexibility Better Market Control
Factors Affecting Selection of Foreign Selling Agents Financial Resources Wide Distribution Network Experience Technological Capacity Analysis of Current Clients of Agents Warehousing Capacity License Dynamic Personality Additional Services Sole agent vs. Multiple Agents Size of Export Business Calibre of Sales staff of agency
Foreign Advantages of foreign Selling Agents Benefit from Agent s market experience Full control on brands Commission of agent is known in advance ,hence incorporated in the final price. Hiring of agents make the principal to concentrate on manufacturing activities Principal-agent selling system is flexible. Easy market expansion with minimum investment. Agents have their own customer base which facilitates selling of exporter s goods.
Disadvantages of foreign Selling Agents Agents concentrate only on the business of such masters which are more profitable. Agents do not take much interest in providing after sales services . Wasteful selling expenses by agents. Risk of leakage of confidential information. More dependence on agent may result in domination by agent.
Sources of Foreign Selling Agents Advertisement in International Trade Journal Business Centres International United Commercial agents and brokers association International Trade fairs and Exhibitions International Merchant Banks Business Consultants
Procedure of selection/ appointment of foreign selling agents 1. Identifying Sources 2. Preliminary Investigation 3. Personal Contact/Meeting 4. Subsequent meeting for in-depth discussion 5. Drafting Agency Contract
Motivating Foreign Selling Agents Providing Commission at progressive rates Regular communication Necessary support Timely Reimbursement of selling Expenses Freedom in working Exclusive Agency rights Active Participation of agents in designing export marketing plan Competent leadership
Difference between Foreign Selling Agent and Foreign Distributor Foreign Selling Agent Agent is an authorized representative of exporter He sells goods in the name of exporter. He does not bear the risk of bad debts. He receives commission not profit. Agent has no control on resale price. Selling & distribution borne by principal. Agent can not appoint sub agent without the permission of principal. Agent does not take much interest in providing after sales services to customers in foreign market. Foreign Distributor Distributor exporter. He sells goods in his own name. He bears the risk of bad debts. He receives profit. Distributor has full control on final price. Selling & distribution expenses are borne by distributor himself. Distributor can appoint dealer, stockiest, retailer etc. Distributor is providing after sales services in foreign market. is a customer of expenses are responsible for
