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Which one is better in achieving successful (new) market penetration strategy?
Hi Khatim,
The difference would be in product ownership in process and the way the sub-contractor (let's call it so) is paid. For example, distributor often works on exclusivity rights with the producer. That's to say , that if you sign an agreement to be a distributor, you are very likely to be prohibited from selling compatitor's products. At the same time, distributors don't normally own the product, instead they get paid once the product is sold and get their distributor margin. Agents as a rule are independent "distributors" and one should be very careful choosing it as an expansion mode because they are very difficult to control and can ruin your brand , if there is one. re-seller is practically a mid-agent, who fully buys your product by set price (unlike distributor) and then sells it as much as he can. Meaning that you are losing in margin but winning in reliability, because you product is sold and you've got your pay. Preference strongly depends on the kind of company you are talking about. For example is the product you are selling requires post-sale services, then distributor is a better option. If your margin is not that large and you operate on volume, then reseller is good. Agents work bests for personal products, which are targeted at the end user, not another business. A clear example is network or piramydal marketing, it entirely operates on agents.
there can be other options for service businesses as licenses, franchises , and etc
Dear Khatim,
Agent is a person(s) who
1. Markets a third party product for a fixed commission defined as a percentage of goods price value he sells. The product can be anything.
2. Typically, and generally, an agent will be authorized to sell for a defined area where no other party is authorized to sell that product legally.
Agent can be a source of buying product for retailers, factories for some kind of raw material product like food flavours, colors, etc used in making of some sweets, icecreams, etc.
3. Agent normally operates out of his own office in that area and may be provided reimbursement for his office rent depending on his agreement with principal.
4. Agent will have his own paid employees and workers to execute his operations.
Distributor is a person(s) who
1. Resells a third party product and owns the profit out of cost to prize difference. He may buy a product from principal at X value and sell it at Y price and make a profit.
He is regulated by MRP of the product beyond which he cannot sell.
2. Typically, Distributor will be authorized to sell for a defined area where no other party is authorized to sell that product legally.
Distributor will be a source of buying for retailers in that area, as he buys the product in bulk quantity.
3. Distributor normally operates out of his own office and generally not paid for his office rentals.
4. Distributor will pay on his own to workers and employees under him.
A reseller is a company or individual who
1. purchases goods or services with the intention of reselling them rather than consuming or using the.
2. Retails the product of a company directly from a retail outlet.
Regards,
Hany Sewilam AbdelHamid
Head of Business Development
Entrepreneurship Coach & Consultant
- http://www.sewilam.com
- facebook.com /Orkanza
- twitter.com /HanySewilam
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