Market Coverage, Persistence of Intermediaries - International Marketing

Market Coverage

One of the company's goals is to own a certain market share in order to achieve the optimal sales volume, or to ensure and maintain a market share, or to achieve a satisfactory penetration to the market.

The sphere of influence in the market is established by geographical or other market segments. Adequate market coverage may require changes in the distribution system, depending on the country or time.

The sphere of influence on the market is difficult to expand both in highly developed areas and in dense markets - in the first case because of competition, in the second case because of inappropriate distribution channels.

Many companies are not trying to fully cover the market, but are looking for ways to penetrate the markets of large population centers. In some countries, two or three cities make up most of the national purchasing power. For example, 60% of the population of Japan lives in the market area of ​​Tokyo - Nagoya - Osaka, which basically functions as one big city.

The concept of market coverage implies also the desire to present all types of manufactured products sold in this market. Sometimes intermediaries take on the most attractive part of the assortment and refuse to trade other goods that the manufacturer would like to pay attention to.

By using only a part of the range of its products, the manufacturer limits itself in the possibilities to establish a profitable sales system. Perhaps the company will prefer a more accurate system using only one sales channel, but it may turn out that for full coverage of the market it will be necessary to use all available channels: own forces in one country, agency services in another, wholesalers in the third. >

Persistence of intermediaries

Distribution channels often cause problems related to the persistence of intermediaries. Most agent brokerage firms are small companies. And if one employee leaves or leaves the business, it may turn out that the company will lose sales opportunities in this area.

Wholesalers, and especially retailers, do not differ in long-term stay in business. They deal with a certain brand of the product when it brings money, and quickly refuse this product after the end of the season or year, if they fail to get a certain profit during this period.

Distributors and dealers seem to be the most faithful intermediaries, but even they should be persuaded to be committed to a product, despite the temptations offered by other firms.

If the network operates consistently and continuously, companies can form their own sales systems under their control. One American firm in a highly competitive market of producers from Germany, England and Belgium lost mediators during the year, which accounted for about 50% of the volume of trade in Latin America. The cause of the loss was easier to determine than to eliminate. It turned out that two of its main competitors simultaneously used the survival techniques American firm from the market. One of them, selling a wide range of products, forced distributors to abandon American narrow-profile goods, if they wanted to remain distributors of a wider range of products. Another company acquired a 60% stake in several large distribution companies engaged in the sale of goods of an American firm. Further, this American firm discovered that it lost 1/4 of its foreign sales network.

Such maneuvers are not consistent with the laws of fair competition, but many countries do not have antitrust laws, so their activities are not illegal. Effective distribution channels must be protected to ensure the continuity of intermediaries.

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