Chapter 12 Channel Situation & Performance

Evaluation

Channel Performance Evaluation Defined

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

Identifying the total sale target

Setting channel evaluation index

Setting performance evaluation system

Idenfitying the gap & making a channel behavior plan

Channel Performance Evaluation Procedure

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.

Identifying the total sale target

CPE based on the perspective of Society

Effectiveness Efficiency

Incentive Productivity ProfitablityDelivery

Performance Evaluation

Equity

3E Model by Louis. W. Stern

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.

CPE based on the perspective of Corporate

The channel management organization

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.

Inspection on the managers’ qualities & abilities in the channel system

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.

Exterior Factors

Interior Factors

Operating Conditions

Consumer Features

Needs Level

Economical Condition

Technology Development

Competition Pressure

Policy & Legislation

Members Quantity

Members Prestige

Capital Strength

Mkting Ability

Effort

Smoothness Coverage Flow capability & Utilization

Conflict

The Channel Operating Conditions

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 membersStocks the channel members are holdingSelling capabilities of the salespersonAttitudes of the channel membersCompetition the channel members are facingGeneral 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

Independent Performance Evaluation Method

Informal Combination of Multiple criteria evaluation method

Formal Combination of Multiple criteria evaluation method

Financial Performance Method ofPerformance Audting(Contribution Rate Method)

Factors considered

Fixed Cost

Variable Cost

Direct Cost

Indirect Cost

Channel Warning System

Warning Signals Credit deterioration

Bad relationship with the customers

Many unoccupied distribution channels

Sustainable gorwth of channel costs

Inertia distributors

Backward customer relationshipmanagement methods

Weaken radiating abilities & controlling abilities

Malicious changing products

Case

Burr bottled mineral water entering

into the USA market

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