Distribution Channel Strategy Case 1:
Philips Electronics is one of the world's largest electronics companies, with sales of 29 billion euros in 2003, and a world leader in medical diagnostic imaging and patient monitors, color TVs, electric shavers, lighting, and silicon system solutions. Philips employs 166,800 people in more than 60 countries and is active in three sectors: healthcare, lifestyle and core technologies. Philips entered the Chinese market as early as 1920. Since the establishment of the first joint venture in 1985, Philips has been adhering to the long-term commitment of rooting itself in China, and has brought all the five businesses of Lighting, Consumer Electronics, Household Appliances, Semiconductors and Medical Systems to China, synchronizing the world's leading technologies, products and services to the Chinese market. Currently, Philips has become one of the largest investment partners in China's electronics industry, with a cumulative investment totaling more than US$3.4 billion, 35 joint ventures and wholly owned enterprises in China, and more than 60 offices throughout the country, with more than 20,000 employees.*** In 2003, the company's turnover in China reached US$7.5 billion, and its international purchasing volume reached US$3.83 billion.
Philips channel model in China has experienced a long period of bouncing road. 1997 before, Philips in the South China market has been to take direct construction, control of mainstream channels, and then to the end of the way of paving the way to the end of the annual sales have always hovered around 7 million dollars. Out of the popularity and general success of the Philips agency system abroad, from the end of 1997, Philips decided to implement the regional general agency system in the South China market.
1997-1999, as Philips fully given the agency preferential agency policy, so that the Philips agency area sales rose sharply, and sales doubled over the years, reaching 230 million yuan in 1999, Philips? Two Guangzhou? Market share rose all the way to 10%. This stage of the total agency system for Philips has achieved fruitful results, should be said to be a win-win stage.
But with the intensification of competition in the domestic color TV market, the overall price plummeted, and Philips' profitability began to fall. 2001, Philips began to brew the channel recovery, product upgrading action, its purpose is to want to hold agents hostage to low-point gross profit, reduce channel costs, and enhance the competitiveness of retail prices.
In 2002, Philips replaced the agent, by both *** with the face to manage the market, however, as a foreign-funded enterprises, Philips staff costs and market management costs remain high, and still can not reverse the situation of micro-profits. In the end, Philips decided to entrust TCL as the regional channel agent in 7 provinces in South China. in August 2003, Philips Electronics and TCL Group announced that the two brand companies would cooperate in the sales channels of color TVs in the markets of 5 provinces and cities in China. This means that Philips color TVs will ride on TCL's sales network to further achieve the goal of covering the low-end secondary market.
At the beginning of 2004, Philips in Guangzhou, audio-visual products in South China office was formally dissolved, Philips South China 7 provinces color TV sales business completely transferred to the domestic color TV giant TCL company agent. Philips from the former manufacturers **** with the management of the channel into the TCL independent channel and sales management, the two sides more extensive and more in-depth channel cooperation is underway.
Has been Philips in South China channel management tracking study of Guangzhou Ultimate Marketing Consultants Limited Zhang Dehua in an interview with the "Financial Times" that: Philips fatal injury is the speed. Frequent replacement of the channel mechanism, the agent's replacement speed is too fast, making the channel factors triggered by the market turbulence; on the other hand, the brand, technology upgrades the implementation of the speed is too slow, the upgrade speed can not keep up with the channel and the market's natural rate of improvement, resulting in? Fierce cattle pulling a broken cart? The unfavorable consequences; ultimately, the short board of channel execution, so that Philips fell into the South China channel predicament. Philips and TCL this marriage is also widely concerned about the reason is that this is following Haier and Sanyo, TCL and Panasonic, Hisense and Sumitomo, domestic home appliance enterprises and multinational companies to reach another sales channel cooperation. For Philips, this is the channel it has experienced many troubles after the re-decision, as to whether the results can be long-lasting, it is still difficult to draw conclusions. After all, the two sides of their similar products are placed in this channel, TCL also has cooperation with other manufacturers, how to solve the homogenization of the same product on the same stage competition situation, I'm afraid that both sides of the test is also a difficult problem.
Liu Yongtorch, a famous figure in China's practical marketing planning, in an exclusive interview with a reporter from the Financial Times, believes that: multinational enterprises such as Philips in China, the emergence of the channel? Short board? The Chinese market competition environment is not suitable for its soil and water related. People are always very? Superstitious? Multinational companies, in fact, in the face of such a special environment in China's market, multinational companies are not very good? play? because what they are familiar with and good at is operating in an already mature market, and the Chinese market is not mature. From the 1990s until now, the Chinese market is still in a stage of satisfying demand, basically the demand is not to pull. This stage is characterized by the sales force is greater than the market force, that is, the role of the channel may be greater than the role of marketing. Meet market demand is mainly rely on the channel, therefore, the greater the demand, the greater the advantage of the channel. Although there may be saturation of certain types of goods in some major cities, demand is still strong in China's vast number of small and medium-sized cities and rural markets. In addition, China's wide and varied geography, regionalized culture, and the convergence of consumer demand styles pose a great challenge to multinationals.In 2003, Panasonic's chairman of the board of directors said something to the effect that when it rains, we need umbrellas, too. This shows that some multinational enterprises have realized that, according to the special environment of the Chinese market, we must do the corresponding marketing strategy change.
Liu Yongtorch also pointed out: standing in the market point of view, Philips? The pros and cons of borrowing TCL's channels can not be seen in the short term, it is difficult to say? Borrowed channels? Whether it is easier to achieve market success. In this market atmosphere, only focus on channel construction, while ignoring the other, will only maintain a short-lived market success. When the market matures further, consumer demand for branded and personalized products, the channel's advantage will be weakened. Therefore, the current state of the channel to gain the upper hand is only triggered by the inertia of the Chinese consumer market long-term strong demand, the future competition is not? Channel is king? , but also depends on changes in the market to decide. But too much reliance on the channel will lead to production enterprises in the future market competition in a passive. Home appliance market, for example, in just a few years, the channel has formed a strong independent force. In the further expansion of the channel enterprises to control the production enterprises, so that a channel enterprise to block a brand and other news often seen in the media. Normal marketing is undoubtedly the production enterprise assessment dealers, assessment channel, and in China's home appliance market, has become a member of the channel assessment of production enterprises. Home appliance enterprises in the reality of helplessness, but also in the fear that one day will be the channel to? Play? Death. In addition, the value of a commodity should be by the value of the product plus the brand value of the composition, and in the case of the channel to control the market, the brand value is set aside, the manufacturers are in the fight price. In the long run, production enterprises will lose the potential for future development. Therefore, there have been many domestic manufacturers began to build their own channels, such as Gree's joint distribution body. But if there is no strength of production enterprises and channel break, it means destruction, history, Changhong, Konka have been due to channel problems and pain.
Distribution channel strategy case 2:
Case: airline marketing channels to improve the strategy
Statistics show that the current air transportation sales market, the airline self-sales and agency sales ratio of nearly 2:8, to pay for the sales agency fees into the domestic airlines of the largest sales costs. If five years ago, the airlines vigorously develop sales agents is to expand the sales network of effective measures, now changes in the market situation, the reorganization of the airline group's own main business development pressure has to make us consider adjusting this pattern, improve the marketing channels. A better improvement strategy is to shrink the agency sales network and expand the scale of the company's direct sales at the same time. That is to say, each company of the aviation group establishes multiple ticketing offices in their respective base cities, so that the marketing channels of the airlines in the base cities are gradually adjusted to shift from relying on agents to self-sales and agency sales, and balanced development. By? to? to Collecting Expanding the agent network Direct sales The company's sales channel improvement strategy.
Case: Lowe's change
In 2002, Lowe's completely revamped the inherent sales channel, reorganized and withdrew its more than 30 branches and offices, and fully implemented the agency system. At the same time, Lowe's put forward more stringent requirements for agents: ? The company has also put forward more stringent requirements for its agents: they must be able to pay for the goods on the spot.
It is estimated that a color TV from the factory to the branch to the wholesaler and then to the retailer, at least need to go through four links, if each link to consume 3% of the profit, the channel has been consumed 12% of the profit, a huge sales force and multi-level sales channels, overdrawing the color TV industry's largest piece of profit space.
Lehua's approach hides a certain risk. Lehua's products are mainly low-end TVs, and its sales are mostly in the secondary and tertiary city markets. Leroy cut down the branches in one fell swoop, the wind and rain like change, as if living chopped down their own tentacles throughout the sales terminal. And,? Must be cash on delivery? This way is really difficult to be accepted by the merchants. A few months down the line, Lehua color TV not only sales revenue plummeted, but also triggered a series of chain reactions such as labor disputes, debt crisis.
Distribution channel strategy case 3:
1, case study: Procter & Gamble and Walmart from the manufacturer and retailer hostile relationship into a win-win partnership? What is the significance of this case for Chinese enterprises? (Start from the background environment, time and process, to how to start the cooperation, after the cooperation of the effect of the analysis, and finally summarize your own point of view.)
Procter & Gamble and Walmart: Rivals Become Allies
A strategic alliance agreement allowed Walmart and Procter & Gamble to become supply chain partners, ending a long period of hostility between the two.
P&G is a global leader in consumer products, and retail giant Walmart is one of its biggest customers. In the mid-1980s, the relationship between the two megacorporations became tense. P&G was heavily promotional, giving retailers big discounts. Walmart took advantage of the opportunity to eat and stock up on P&G products in large quantities with above-average purchases.
This caused a lot of trouble for P&G, which was producing too much and hurting cash flow. To improve cash flow, P&G then offered more promotional deals, and Walmart responded by buying more, and so the vicious cycle between the two companies continued.
Kemeny (JenniferM. Kemeny) and Yanowitz (JoelYanowitz) in the book "Reflections" (Reflections) describes this as follows: ?
Both companies responded by doing what they could to undermine the other's chances of success.
So P&G, determined to turn enemies into friends, offered Walmart the olive branch of a strategic alliance.
? The first challenge was how to form an operational team made up of executives from both sides,? Kemeny and Janowitz said: ? They held workshops over several days and, by using systems thinking tools, came to a **** understanding of what **** the same business activity would bring to both sides. Managers from P&G and Wal-Mart discovered that each other's initiatives could turn out to be rational, rather than self-interested behavior.?
After fully understanding each other's needs, the two companies began to work together on the basis of a win-win strategy, and P&G no longer had to offer discounts to Wal-Mart.? The implementation of this strategy was so successful that it was generalized? P&G even stopped almost all of its price-cutting promotions, which offended almost the entire retail industry. But as a result, P&G's profits climbed dramatically.
To make the collaboration work, the two companies linked their software systems together, and a lot of information was ****ed up. Now, when Wal-Mart's distribution centers are reportedly low on P&G's product inventory, their integrated information system automatically alerts P&G that it's time to restock.
The system also allows P&G to remotely monitor sales of P&G products in the P&G product section of each Walmart location via satellite and Web technology, and the Web reflects this information in real time to P&G's factories. These factories know whenever P&G products are scanned at the checkout counter. This real-time information allows P&G to more accurately schedule production, shipping, and product promotions for Wal-Mart. The inventory savings then allow P&G to offer Wal-Mart even lower priced products so Wal-Mart can continue its ? Everyday Low Prices? strategy.
Lessons for Chinese companies
In today's Chinese distribution sector, there is a fierce rivalry between manufacturers and retail chains in their cooperation. On the surface, this is mainly due to differences in product prices and marketing policies, but in reality it stems from the struggle for control of the channel, and the resulting seizure of product resources, marketing resources and human resources. Retail chain enterprises try to occupy the resources of manufacturers as much as possible by lowering the purchase price, paying the payment late and charging the entrance fee and festival promotion fee, and transferring the cost to the manufacturers. In order to avoid losing the initiative, manufacturers have to continue to maintain the original inefficient own channels, in order to maximize the maintenance of the price of products and goods towards the control, with a view to retail chain enterprises to carry out strategic checks and balances. In this way, both sides of the cost of natural high, profitability and growth are seriously constrained.
And? The P&G-Walmart model?
The P&G-Walmart model tells us that in order to change this status quo, manufacturers and retailers must abandon the "cold war mentality". The P&G-Walmart model tells us that in order to change this situation, manufacturers and retailers must abandon the cold war mentality.
The P&G-Walmart model tells us that to change this situation, manufacturers and retailers must abandon the "cold war mentality" and build a relationship of full trust to transfer the grabbing of channel resources to the re-engineering of the supply chain and value-added.
2, case study: find a case you think in China to do a better job of channel construction (can be a part of the channel in a link or part of the channel, such as Gree's channel construction of unique experience, Gome's successful experience, etc.), introduce the case process and summarize the success of the success of the case and your own viewpoints, opinions or feelings.
The emergence of Gome seems to have a certain inevitability, in the manufacturers gaming, change prompted by the authorities on both sides are seeking a more advantageous position and the right to speak. Gome's success lies in its transformation from the traditional pursuit of profitability to the pursuit of profitability, the word change is the overall strategy of the enterprise's sub-bold breakout.
Gome's success is also a channel cost leadership results.
Gome's channels allow manufacturers to save network construction costs
With the gradual growth of Gome-like enterprises, production-oriented enterprises find that relying on a standardized channel network than their own self-built network to save costs, because they spend a lot of effort to build a network of single product or series of products in the enterprise amortization of too high a cost, and Gome, such a platform to undertake a number of commodities with the same stage. For example, recently Gome extended from home appliances to it products, and now into the audio-visual products.
From this point of view, the rationality of the current existence and development of Gome is that its network and platform has a certain cost advantage, although the production-oriented enterprises are still reluctant, but they must face.
Gome's channels allow consumers to save procurement costs
Chen Huai pointed out? Now the market has changed again, neither the shortage era? Manufacturers say? The world, nor is it the stage of expanding domestic demand? Businesses to play the market in the palm of your hand? The time is now? Consumers have the final say? The time of the consumer. In fact, manufacturers are trying to persuade consumers, high-end manufacturers are responsible for persuasion, and the face of low-end consumers, mainly Gomez these businesses to do persuasive work, such as a variety of promotional activities.
The significance of Gome for manufacturers is that he is able to attract many consumers with strong purchasing power.
But what is Gome to attract consumers? Not bad! Is the price advantage, but not exactly. Gome consumers choose Gome actually have two reasons, one is cheap, and the other is Gome has a brand. That is to say that consumers want to find a balance between cheap and assured, Gome meet him, so he chose Gome.
Therefore, Gome for consumers, he helped consumers to save the process of inquiry than price, may start consumers will be skeptical, but with the comparisons and word of mouth, there are now many consumers are not hesitant to Gome for consumption. From this point of view, Gomez makes consumers save procurement costs.
Gome channel to save their own operating costs
Gome's success today is not a model, Gome's model has been rare in foreign countries. Gome can have such achievements today, is a success of continuous innovation, and this innovation is a very important melody is how to make the enterprise's own operating costs down to the minimum, down to other enterprises can not follow.
At the beginning of Gome's venture when the wind, Huang Guangyu had retired to the background; but when faced with a competitor's strike, Huang Guangyu once again to rectify the Gome, its sales network north-south partition, procurement and sales business completely separated, the company management down, the original Gome senior management team all decentralized from personnel to the organization's downward mobility, to cut down on Gome's institutional? False fat? At the same time and will focus on circling the Yangtze River Delta and the Pearl River Delta to start the secondary market, and further open branches in second-tier cities.
It should be said that Gome is changing, year after year, change makes Gome vibrant and competitive.
Cost leadership has not only become a core competitiveness of production-oriented enterprises, but it will also become a core competitiveness of the channel. Gome achieved this success, so I think of a more current marketing concept, that is to say, the various aspects of marketing to achieve very great results, it is necessary to consider how to? Let the customer profit? Let the customer profit?
It is to make his actual consumption lower than his expectations, so that he has the feeling of making money.
I think: whether production-oriented enterprises or circulation-oriented enterprises are social attributes, they may not be able to directly increase the public's income, but they can make the public hand money is more valuable, to provide more more quality and affordable products! This is a corporate value.