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ICT Channels of Distribution
This document seeks to
identify the numerous channels of distribution found in the
ICT industry.
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Agents -
(see distributors) The widely misunderstood term "agent"
means a representative who normally has authority,
perhaps even a power of attorney, to make commitments on
behalf of the firm he or she represents. Firms in the
United States and other developed countries have stopped
using the term and instead rely on the term
"representative," since agent can imply more than
intended. It is important that any contract state
whether the representative or agent does or does not
have legal authority to obligate the firm.
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Consultants
- Consultants are commonly companies working with end
users who are instrumental in the specification
process. Examples of consultants are:
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Business to Business (B2B) including
direct mail, telemarketing, catalog mail order -
This method can incorporate a variety of selling methods
- catalogs, direct mail, telemarketing. The volume can
be significant. Direct sales are often industry segment
tier specific. Here you'll find specific listings of
the following market segments:
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Airlines
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Banks
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Newspapers
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US
Subsidiaries
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Distributors
(known as 1st tier distribution) - The foreign
distributor is a merchant who purchases goods from a
U.S.
exporter (often at a substantial discount) and resells
it for a profit. The foreign distributor generally
provides support and service for the product, thus
relieving the U.S. company of these responsibilities.
The distributor usually carries an inventory of products
and a sufficient supply of spare parts and also
maintains adequate facilities and personnel for normal
servicing operations. Distributors typically handle a
range of non-conflicting but complementary products. End
users do not usually buy from a distributor; they buy
from retailers or dealers.
The terms and length of association between the U.S.
company and the foreign distributor are established by
contract. Some U.S. companies prefer to begin with a
relatively short trial period and then extend the
contract if the relationship proves satisfactory to both
parties.
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Purchase your product and take title to it;
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Resell the product to end users or retailers
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You have little control over to whom they sell, how
and for what price
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Stock-only distributors are stores for customers
(electronic components, medical supplies, computer
components, peripherals)
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Dealers are referred to distributors of retail
products
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Master distributors are large distributors selling
to smaller, local distributors
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E-Commerce (including ASP, ISP, Marketplaces and
direct sales from sites)
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Application
Service Providers - An application service
provider (ASP) is a company that offers individuals
or enterprises access over the Internet to
applications and related services that would
otherwise have to be located in their own personal
or enterprise computers. Sometimes referred to as
"apps-on-tap," ASP services are expected to become
an important alternative, not only for smaller
companies with low budgets for information
technology, but also for larger companies as a form
of outsourcing and for many services for individuals
as well. Early applications include:
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Remote access serving for the
users of an enterprise;
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An off-premises local area
network to which mobile users can be connected,
with a common file server
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Specialized applications that
would be expensive to install and maintain
within your own company or on your own computer
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Internet -
The Internet has become an increasingly important
part in the distribution of computer software,
updates and technical literature.
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Internet Service Providers - Internet Service
Providers may be valid distribution points for such
products as software, security products, browsers,
and modems
while at the same time being end users for items
such as accounting software, firewall, security
products and more.
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Educational Sales (encompassing all types of
schools) - These entities by their size and variety of
needs often purchase on
a direct basis for their own use and resale to students,
staff and faculty.
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Government - Governmental entities are major forces
in the procurement of ICT related products, especially
when they purchase on a direct basis.
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Leasing - Leasing is in essence the renting of
equipment. The leasing company retains ownership and is
usually responsible for maintenance, upgrades, warranty,
etc. Most of the US Big 3 EDP equipment is leased.
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OEM - Original Equipment
Manufacturers are suppliers of either systems or
componentry which uses your product as an integral part.
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Retailers - Retailers often have
the purchasing power which allows them to purchase on a
direct basis. Examples of retailers are:
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Used / Reconditioned - With
technology changing rapidly and many markets unable to
afford the latest and greatest, the market for used and
reconditioned equipment has grown steadily.
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