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38-411: Shanghai Tobacco Group Co., Ltd. is a subsidiary of state-owned China Tobacco . The company produced Chunghwa , Double Happiness , Zhongnanhai and other brands. The company is also a minority shareholder of Bank of Communications , Orient Securities , Haitong Securities and China Pacific Insurance Company via Shanghai Haiyan Investment Management . This Chinese corporation or company article

76-476: A marketing channel , also known as a distribution channel. A marketing channel is the people, organizations, and activities necessary to transfer the ownership of goods from the point of production to the point of consumption. It is the way products get to the end-user, the consumer. This is mostly accomplished through merchant retailers or wholesalers or, in the international context, by importers. In certain specialist markets, agents or brokers may become involved in

114-413: A distribution channel is a strategic level decision. Strategically, there are three approaches to distribution: Summary of strategic approaches to distribution In consumer markets, another key strategic level decision is whether to use a push or pull strategy. In a push strategy , the marketer uses intensive advertising and incentives aimed at distributors, especially retailers and wholesalers, with

152-427: A distribution network, there are three broad approaches to distribution, namely mass, selective and exclusive distribution. The number and type of intermediaries selected largely depends on the strategic approach. The overall distribution channel should add value to the consumer. Distribution is fundamentally concerned with ensuring that products reach target customers in the most direct and cost-efficient manner. In

190-421: A distribution system, the supplier needs to determine what distribution channel to achieve in broad terms. The approach to distributing products or services depends on a number of factors including the type of product, especially perishability ; the market served; the geographic scope of operations and the firm's overall mission and vision. The process of setting out a broad statement of the aims and objectives of

228-717: A head office in Singapore which can be used by manufacturers outside the region to increase their regional market penetration and grow sales. Channel-switching (not to be confused with zapping or channel surfing on TV) is the action of consumers switching from one type of channel intermediary to a different type of intermediary for their purchases. Examples include switching from brick-and-mortar stores to online catalogues and e-commerce providers; switching from grocery stores to convenience stores or switching from top tier department stores to mass market discount outlets. A number of factors have led to an increase in channel switching behaviour;

266-546: A powerful channel member may coordinate the interests of the channel for personal gain. Territories are often seen as a source of conflict, sometimes because boundaries are only loosely defined. American building materials supplier Johns Manville noted in the years before the US entered World War II that distributors needed support in a range of practical areas if they were going to be successful in connecting with housing developers, and instituted "Housing Guilds" which brought together

304-457: A push strategy, the promotional mix would consist of trade advertising and sales calls while the advertising media would normally be weighted toward trade magazines, exhibitions, and trade shows while a pull strategy would make more extensive use of consumer advertising and sales promotions while the media mix would be weighted toward mass-market media such as newspapers, magazines, television, and radio. Distribution of products takes place through

342-428: A risk leading distributors to move their business to other supply lines. Channel conflict can arise when one intermediary's actions prevent another intermediary from achieving their objectives. Vertical channel conflict occurs between the levels within a channel, and horizontal channel conflict occurs between intermediaries at the same level within a channel. Channel conflict is a perennial problem. There are risks that

380-412: A single organization uses a variety of different channels to reach its markets, this is known as a multi-channel distribution network. In addition, online retailing or e-commerce is leading to disintermediation , the removal of intermediaries from a supply chain. Retailing via smartphone or m-commerce is also a growth area. The firm's marketing department needs to design the most suitable channels for

418-639: A sort of tax to China Tobacco, but keep much of their profit. In turn, retail distributors buy cigarettes from China Tobacco, and the profits realized from those sales is in turn taxed by the State Tobacco Monopoly Administration. China Tobacco is among the state entities which contribute to the China Integrated Circuit Industry Investment Fund , which was established in an effort to decrease China's reliance on foreign semiconductor companies. The fund

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456-591: A variety of brands. Foreign brands are to this day not unknown in China, since their introduction with the advent on China Tobacco and the STMA. Marlboro , 234 , Camel , Kool , Lucky Strike , 555 , and a variety of other brands can all be found throughout major cities in China. However, while these cigarette brands are marketed as premium brands outside of China, within China these cigarettes are made locally under license or joint venture. Foreign sales make up only 3 percent of

494-551: A weekly magazine to promote its ideas. After the final text of the treaty was agreed on in May 2003, the staff from China Tobacco watered down the Chinese translation, replacing many English words with weaker Chinese terms. At the same time, China Tobacco has consolidated its factory base; currently, there are 130 cigarette factories in China, compared with a 1997 number of 180. To further their goal of consolidation China Tobacco plans to reduce

532-454: Is a stub . You can help Misplaced Pages by expanding it . China Tobacco The State Tobacco Monopoly Administration ( 国家烟草专卖局 ) is a Chinese government agency responsible for national tobacco monopoly regulation. Under the policy of one institution with two names , the two agencies are co-located in the same office and share the same website. China Tobacco enjoys a legal monopoly in the country, accounting for 96% of cigarette sales in

570-471: Is an agency of the Ministry of Industry and Information Technology . The organization is responsible for enforcing the tobacco monopoly in China, and operates as the state-owned enterprise China Tobacco for marketing, production, distribution, and sales of tobacco products. Branch offices of the company are affiliated under provincial bureaus of tobacco monopoly. As of 2022 , China Tobacco controls 96% of

608-564: Is co-created by all the players within the distribution chain, including the value created by customers themselves. This emphasis on value-creation is contributing to a change in terminology surrounding distribution processes; "distribution networks" are often termed value-chains while "distribution centers" are often termed customer fulfillment centers . For example, the retail giant Amazon , which utilizes both direct online distribution alongside bricks and mortar stores, now calls its distribution centers "customer fulfillment centers". Although

646-406: Is one of the four elements of the marketing mix : the other three elements being product , pricing , and promotion . Decisions about distribution need to be taken in line with a company's overall strategic vision and mission . Developing a coherent distribution plan is a central component of strategic planning . At the strategic level, as well as deciding whether to distribute directly or via

684-586: Is printing outdoor advertisements in the name of another entity, the latter's name being clearly printed on the material. For example, the Hongtashan brand mentioned above has recently published their new climbing-themed advertisements through a Hongtashan Climbing Club . China Tobacco, like many other tobacco companies, produces a plethora of brands – over 900, the largest of which, Hongtashan (Red Pagoda Hill), accounts for only 4% of total sales. China tobacco also markets premium brands, notably Chunghwa . Despite

722-481: The Chinese market, yet accounts for 51 billion cigarettes every year. Distribution (marketing) Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain . Distribution can be done directly by the producer or service provider or by using indirect channels with distributors or intermediaries . Distribution (or place )

760-478: The STMA has been modernization . As recently as the 1980s, China's independent tobacco factories used outdated equipment to the extent that some processes were even carried out by hand. To accomplish their goal of modernization, the STMA allowed a small number of foreign companies into the country, in exchange for modern equipment. Though deals generally favored China, it allowed foreign companies to gain hard-to-come-by connections within China, and at high levels within

798-441: The case of services, distribution is principally concerned with access. Although distribution, as a concept, is relatively simple, in practice distribution management may involve a diverse range of activities and disciplines including detailed logistics , transportation , warehousing, storage, inventory management as well as channel management, including selection of channel members and rewarding distributors. Before designing

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836-429: The cigarette market is responsible for 46% of cigarette sales worldwide. In the same year, the company generated around $ 213 billion (¥1.44 trillion) in revenue. The organization of China Tobacco trickles down locally. China Tobacco contracts out orders to smaller, local factories. In turn these factories fill orders and deliver them for distribution to China Tobacco's distribution chain. The smaller local factories pay

874-523: The country, and is the world's largest manufacturer of tobacco products measured by revenues. It exports a small proportion of its production, mostly to Asian markets. In 1981, Chinese leader Deng Xiaoping established the China National Tobacco Corporation in order to modernize the previously chaotic tobacco market in China. In 1983, the State Tobacco Monopoly Administration was also established. A major objective of China Tobacco and

912-796: The distributor (as the materials supplier), design services, sub-contractors, local realtors and housing financiers. Laurence C. Hart refers to the extensive development of these guilds and the "Training Schools" which they operated, converting these into a radio-based program from 1942. Hart, who worked for the supplier, put this experience forward to the American Marketing Association as "an outstanding example of manufacturer-distributor collaboration on an industry-wide basis". Companies wishing to grow through sales to new markets may need to identify and develop relationships with local distributors, for example to support export to new markets. In southeast Asia , for example, many distributors have

950-472: The existence of such premium brands premium cigarettes are uncommon in rural areas. Trends in cigarette buying have not been lost of China either. In recent years several varieties of cigarettes targeted at women have been released (breaking a longstanding taboo ). Varieties common internationally are just as common in China: Unfiltered, Filters, Lights, Ultra Lights, 100's, and 120's are all available in

988-438: The expectation that they will stock the product or brand, and that consumers will purchase it when they see it in stores. In contrast, in a pull strategy , the marketer promotes the product directly to consumers hoping that they will pressure retailers to stock the product or brand, thereby pulling it through the distribution channel. The choice of a push or pull strategy has important implications for advertising and promotion. In

1026-402: The firm's products, then select appropriate channel members or intermediaries. An organization may need to train staff of intermediaries and motivate the intermediary to sell the firm's products. The firm should monitor the channel's performance over time and modify the channel to enhance performance. To motivate intermediaries the firm can use positive actions, such as offering higher margins to

1064-452: The growth of e-commerce, the globalization of markets, the advent of category killers (such as Officeworks and Kids 'R Us ) as well as changes in the legal or statutory environment. For instance, in Australia and New Zealand, following a relaxation of laws prohibiting supermarkets from selling therapeutic goods, consumers have gradually switched away from pharmacies and toward supermarkets for

1102-433: The intermediary, special deals, premiums and allowances for advertising or display. On the other hand, negative actions may be necessary, such as threatening to cut back on margin, or hold back delivery of product. Care must be exercised when considering negative actions as these may fall foul of regulations and can contribute to a public backlash and a public relations disaster. Manufacturer complacency has been highlighted as

1140-689: The marketing channel: for example in the insurance sector, the European Union has noted that "insurance and reinsurance intermediaries play a central role in the distribution of insurance and reinsurance products" . The EU introduced the Insurance Distribution Directive in 2016 to enhance a level of harmonisation in this market across EU member states. Typical intermediaries involved in distribution include: A firm can design any number of channels they require to reach customers efficiently and effectively. Channels can be distinguished by

1178-401: The need to reduce the time a product spends in transit or in storage. In other cases, distribution systems can become quite complex involving many levels and different types of intermediaries. In practice, many organizations use a mix of different channels; a direct sales force may call on larger customers. This may be complemented with other agents to cover smaller customers and prospects. When

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1216-458: The number of factories below 100 in the near future. This has led to increased efficiency within the industry, allowing for greater production and brand variety than were possible before. In fact, many brands made by only one or two small regional factories have been licensed to large factories, becoming nationwide successes. The China National Tobacco Corporation and the State Tobacco Monopoly Administration are one institution with two names . STMA

1254-583: The number of intermediaries between producer and consumer. If there are no intermediaries then this is known as a zero-level distribution system or direct marketing . A level one (sometimes called one-tier ) channel has a single intermediary. A level two (alternatively a two-tier ) channel has two intermediaries, and so on. This flow is typically represented as being manufacturer to retailer to consumer, but may involve other types of intermediaries. In practice, distribution systems for perishable goods tend to be shorter - direct or single intermediary, because of

1292-531: The product or service can be found at cheaper prices, when superior models become available, when a wider range is offered, or simply because it is more convenient to shop through a different channel (e.g. online or one-stop shopping). As a hedge against market share losses due to switching behaviour, some retailers engage in multi-channel retailing. The emergence of a service-dominant logic perspective has focused scholarly attention on how distribution networks serve to create customer value and to consider how value

1330-474: The purchase of minor analgesics, cough and cold preparations and complementary medicines such as vitamins and herbal remedies. For the consumer, channel switching offers a more diverse shopping experience, which may concern some sellers by its potential to erode market share. Evidence of channel switching can suggest that disruptive forces are at play, and that consumer behaviour is undergoing fundamental changes. A consumer may be prompted to switch channels when

1368-556: The term "customer fulfillment center" has been criticized on the grounds that it is a neologism , its use is becoming increasingly mainstream as it slowly makes its way into introductory marketing textbooks. Disintermediation occurs when manufacturers or service providers eliminate intermediaries from the distribution network and deal directly with purchasers. Disintermediation is found in industries where radically new types of channel intermediaries displace traditional distributors. The widespread public acceptance of online shopping has been

1406-694: The tobacco monopoly itself. The acceptance of foreign competition sparked a massive demand for tobacco production equipment in the 1990s, which has since slowed. However, major factories in China now count their production of cigarettes in tens of thousands per hour. China Tobacco played a key role in watering down the effects of the WHO Framework Convention on Tobacco Control in China. It established an internal team to advance alternative to draft language viewed as harmful to its business, which also hosted visits by key government officials to tobacco factories, sponsor talks, produce research papers and publish

1444-599: Was established in 2014. Advertising in print, radio, and television has been banned in China, and outdoor ads require prior approval provided they are not in one of nearly 100 local jurisdictions where outdoor tobacco ads are banned. These restrictions have forced China National into a strategy that harkens back to the 60's and 70's in the United States ; with " cigarette girls ", attractive women dressed in brand logos, handing out samples, lighters, and promotional material in front of clubs and bars. Another form of circumvention

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