Chapter 12 Channel Situation & Performance Evaluation

Channel Performance Evaluation Defined The process that the manufacturers objectively examine and evaluate the efficiencies and effects of the marketing channel system by systematical methods.

Channel Performance Evaluation Procedure Identifying the total sale target Setting channel evaluation index Setting performance evaluation system Idenfitying the gap & making a channel behavior plan

Identifying the total sale target Identifying the operative goal of the enterprise in detail and decomposing them with a serise of sales goals,such as the corporate goal, the business unit goal and the sale goal.

CPE based on the perspective of Society Performance Evaluation Efficiency Effectiveness Equity Delivery Incentive Productivity Profitablity 3E Model by Louis. W. Stern

CPE based on the perspective of Corporate Based on the perspective of the corporate,the manufacturer could inspect the whole channel chain in four aspects that are the channel management organization ,the channel operating conditions ,the channel service quality and the channel economic effects. The first three are mainly the quality analysis and the last one the quantity analysis based on the fiance.

The channel management organization Inspection on the managers’qualities & abilities in the channel system Inspection on the managers’ qualities & abilities in the channel system In one distribution system, the ratio that the regional managers who have three years working experience with a education diploma accounts for is highly positive related with the qualities and abilities of the sale management of the channel oraganization. The manufacturers must know whether the branch agency has a self-controlled retailing terminal or not.If it does have,the manufacturere must identify the its sales ratio accounting for the locative market.

The Channel Operating Conditions Conflict Smoothness Coverage Flow capability & Utilization Interior Factors Effort Members Quantity Members Prestige Capital Strength Mkting Ability Exterior Factors Competition Pressure Policy & Legislation Consumer Features Needs Level Economical Condition Technology Development

The Channel Service Quality Evaluation Customer complaints handling Promotion Efficiency Physical Distribution Efficiency Information Communication

Financial Performance Evaluation The distribution management can evaluate the economic benefits with the five performance evaluation tools. Assets Management Analysis Sales Analysis Market Share Analysis Distribution Costs Analysis Profitability Analysis

Evaulation of Channel Members Factors Quantity of channel members Products Feature Importance of the channel members The extent that the manufacturers control the channel

Evaulation of Channel Members Standards Sales of the channel members Stocks the channel members are holding Selling capabilities of the salesperson Attitudes of the channel members Competition the channel members are facing General development Prospect of the channel members

Performance Audting Implementation After setting a series of evaluation standards,the distribution management will evaluate the channel members with them. General Methods Performance Audting Implementation Financial Performance Method of Performance Audting(Contribution Rate Method) Independent Performance Evaluation Method Factors considered Fixed Cost Variable Cost Direct Cost Indirect Cost Informal Combination of Multiple criteria evaluation method Formal Combination of Multiple criteria evaluation method

Channel Warning System Credit deterioration Bad relationship with the customers Many unoccupied distribution channels Sustainable gorwth of channel costs Inertia distributors Backward customer relationship management methods Weaken radiating abilities & controlling abilities Malicious changing products Warning Signals

Case Burr bottled mineral water entering into the USA market

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