Advantages of Direct Exporting
The various advantages of direct exporting may be discussed as follows,
1. Direct Exporting helps to have better knowledge of the Market
The great advantages of direct exporting are that the manufacturer has direct contact with the end users and retailers. So, he is in a position to acquire better knowledge of the requirements of overseas buyers. He can adapt his product to the changing needs of market.
2. Full control over the product
Direct exporting has the advantage of complete control over the product to be priced in the foreign market. The exporter can also determine the terms of sale according to the competitive trend prevailing in the foreign market.
3. Effective after sale service
Customers derive good satisfaction from the products only when effective after sale services are available in respect of the goods sold to them. By offering efficient after sale service, the market potential can be fully utilized to the advantage of the exporter in direct exporting.
4. Intensive market cultivation
The exporter can quickly expand the volume of export through intensive utilization of the market in direct exporting. When agents and distributor are appointed in the importing country, they penetrate the market through an effective distribution network.
5. Attractive returns on exports
Direct exporting is possible by establishing wholly owned subsidiaries in the importing country. The home company bears the entire financial burden of setting up the unit. The manufacturer enjoys full returns on the sale of his goods in foreign markets.
6. Short channel
One of the biggest advantages of direct exporting is only selective middlemen are appointed in the distribution of goods. Agents, distributors, wholesalers and retailers are involved in the channel. But in indirect exporting, export houses and buying organizations are involved additionally. A short channel always avoids the margin taken by unnecessary middlemen. It leads to a lower price for the ultimate consumers.
7. Good reputation
Through direct exporting, the exporter has an effective control over his product to be priced in the foreign market. Good quality products offered at comparatively lower prices enhance the reputation of the manufacturer in foreign markets.
8. Greater expertise in international marketing
The exporter follows many formalities in exporting his goods to foreign buyers. He studies the foreign market very carefully and gains a complete knowledge about customers. If his products are successful in foreign markets, he builds up a reputation for his brand name. He is assured of permanency in the business exports. Ultimately, he acquires an expertise in international marketing.