Distribution Channels for Philips

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Distribution Channels of Philips Domestic Appliances and
Personal Care Products in Chinese Economic Transition --
A Case Study
Don Y. Leea , Gangling Chaob and Weiling Yec
aHong Kong Polytechnic University, Hong Kong
b,cShanghai University of Finance and Economic, China
Address for Correspondence:
Don Y. Lee PhD
Associate Professor of Marketing
Department of Business Studie
Hong Kong Polytechnic University
Hung Hom, Kowloon
Hong Kong Special Administrative Region
Telephone: 852-2766-7119
Facsimile: 852-2765-0561
Email: budonlee@polyu.edu.hk
The first author acknowledges the support of a grant for this research from his institution, the Hong Kong Polytechnic University (grant number: G-S943). The authors would like to thank Professor Gerald Albaum and Professor David Wilson for their constructive comments on an earlier version of the case.

There is general agreement that the distribution channel is the key to any company's success in Chinese market. Nonetheless, distribution is always cited as one of the most serious problems for foreign companies (including joint ventures) that operate in China. One of the reasons contributing to the difficulties in managing channels in China is that they are so different from western channels, thus difficult to understand. This teaching case provides detailed information about distribution channels in China to business students, managers and scholars who are interested in marketing in China.

The case illustrates distribution channels management of an international joint venture company in China's transitional economy, using Philips domestic appliances and personal care products as examples. The case devoted considerable coverage of key channel management issues, distributor selection, contract and incentive designs, monitoring and socialization between the boundary personnel of the up-stream and down-stream. In addition, the case also shows the general management problems in the state-run...
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