Chapter 5Structure Design and Evaluation

Factors of Design and Evaluation

Environment Market Product Manufacturer

Economy

Competition

Technology

Law

Social Culture

Geographic Location Purchase Amount

Interval time

Purchase Frequency

Purchase Involvement Competitors’ Channel

Identification

Weight& cubage Perishability

Value

Technology

Fashion

Life Cycle

Capital

Human Resource

Technology

Market Goal

Social Culture

Control Desire

Environment

Channel Structure Design

Length

Width

Long/Short

Wide/Narrow

1)Spacial Scope （ Geographic layou

t ）

2)Spacial Density （ Width structure ）

Optimizing criteria

market coverage rate/cost/avoided

conflict

3)Selection of Terminal Point of Sales

Optimizing criteria

customers convenience / image

building

Main dimensions to identify the width of the channel

Manufacturer factors

Exclusive Selective Intensive

Channel Length Short Short/Long Long

Strong Middle Weak

Strong Middle Weak

Sales Regional Restriction

Degree of Channel Control

Channel Analysis ModelLots Split Space

FacilityWaiting Time

Product Categories

Supply Level

Efficiency

Reasons of problems

Environment Management Restrictions

Expected Results

Gap narrowed TacticsExpected Channel Changes

Methods to Build Channels

Traditional Method

Reverse Construction Method

Case Study In 1985,Zhao Xin initiated South Medicine Manufacture

with a loan of 5000,000. In 1991,the Sanzhu Group was founded, which is affiliated to ? In 1998,it became the state owned company.

It was the first domestic company to produce the Chinese Traditional Medicine with a western medicines manfactured methods. As a pioneer, it was the first company to post its ad of light box on a taxi between 1988 and 1989,with a slogan—”Sanjiuweitai is the king medicine to cure the stomach flu” .In 1999,the famous movie star Limoran became the spokeman for Sanjiuweitai.In 1995,Sanjiu Group became the first Chinese company that made propagations in Times Square in NY.

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