Describe various types of Domestic Merchants with examples.
The various types of domestic merchants are:
The domestic based export merchant buys the manufacturer’s product and sells it abroad on his own. When this type of middlemen is used in an international marketing channel, the marketing job of the manufacturer is reduced to essentially domestic marketing and except for certain modifications in the product mix which are sometimes required to suit the international market, all aspects of the international marketing task are handled by this merchant.
In India, there are a number of merchant exporters including export houses and different categories of trading houses who export products procured from many manufacturers. Some companies have established their own export marketing subsidiaries.
A very important intermediary in international trade is Trading Company. Unlike an export house which concentrates on exports, a trading company is active both in exports and imports. In Japan, the general trading companies are known as sogo shosba and include such well known MNCs as Mitsubishi, Mitsui and Itochu. The nine largest trading firms handle roughly half of Japan’s imports and exports.
Even large Japanese domestic companies buy through trading companies. International trading companies facilitate the trading activities at the global level by coordinating the exchange of goods and services between the importers and exporters of different countries.
These trading companies have a worldwide network of staff and communication units and carry out market research in order to identify the potential buyers of different products. Trading firms are able to absorb many of the risks inherent in international trade because of their strong resource vase.
Piggy backing is an arrangement with another company which sells to the same customer segment and takes the new products as if it were the manufacturer’s product. Under piggyback arrangement the manufacturer retains control over a number of marketing decision areas particularly pricing, positioning and promotion. The partner acts as a “rented” sales force only. For example, Colgate Pamolive company has been distributing Wilkinson blades in many international markets.