The major advantages of having an overseas agent in the export market are:
- In some countries there are legal stipulations that all imports/ tenders are to be handled through a local agent, who is a resident and citizen of the country. In such cases, appointment of the agent becomes obligatory.
- The agent is a local man and is, therefore, expected to be more knowledgeable of the marketing conditions and prospects of specific products in that market than an outsider.
- He is likely to have good contacts with the decision makers at various levels, which is crucial for building up large sales.
- He will have offices in the major commercial centers of the country and, therefore, will be in a position to call personally on main buyers at regular intervals.
- Data and information relevant to the principal’s operations can be collected and disseminated by the local agent faster and cheaper.
- Since agent is paid on commission based on the value of the orders secured by him, he has incentive to get large business and besides no fixed or overhead cost is to be incurred by the parent firm.
- A well established firm generally has warehousing facilities, which are crucial in the export marketing of certain types of products.
- An agency firm also has specialized sales staff competent to handle sales of different types of items.
- An agent can also provide after sales service, which is crucial in promoting sales of durable consumer goods and capital equipment.
Identifying Foreign Agents:
The selection of agents in a target market is a critically important task. There are various ways to identify agents in the foreign markets.
To find a good foreign agent, a firm has to prepare a list of potential agents. A firm can begin with a list provided by embassies and high commissions in the concerned countries, International Merchant Banks, local Chamber of Commerce and various Commercial Associations. Another method of identifying agents is to visit fairs and exhibitions. Since a large number of agents also visit these fairs, it is possible to contact them personally. Advertisements in trade journals is another source for identifying potential agents.
The next step is to decide on the particular agent whom he would like to appoint. Careful specification of what is wanted from the distributor will help a firm choose the most suitable agent. Not all candidates will match a firm’s specifications equally well. There are essentially three qualities which an exporter should look for in an agent:
- Character: i.e., credit ability in the business he is engaged in.
- Capital: i.e., financial base for his business operations.
- Capacity: i.e., adequate marketing expertise to promote the products of the principal.
Now, the exporter should evaluate the distributor’s track record. Past performance is the best predictor of future behaviour. This can be determined in part by talking with other clients of the distributor. Finally, the firm should try to assure that its line will be a reasonably important share of the agent’s business. The more important it is to the agent, the better treatment its product will receive.