1. Multi-Layer Regional Agent

Under this model, the market is divided into several major regions, with a sole agent established in each region. The agents can be divided into several classes, and the regional sole agent may develop its secondary agents or distributors. The biggest advantage of this traditional distribution model is that a sizeable sales network can be formed in a short time with relatively low costs. The sales network can also be expanded quickly building up the product brand.

Structure of the Multi-Layer Regional Agent Model

2. Regional Sole Distributor

Every region (usually a province) covered by an enterprise's sales office is divided into sub-regions. Except for major retailers in the first-tier market which source directly from the regional sales office, all small retailers in the region source their goods from the first-tier wholesaler, which is the sole distributor set up in that region. The first-tier wholesaler will appoint a second-tier wholesaler in each second-tier city to act as sole agent from which all the retailers in the second-tier city will make their purchases. There are no wholesalers in third-tier markets, and the retailers in these markets will buy from the second-tier wholesaler in second-tier cities.

Structure of the Regional Sole Distributor Model

3. Direct Sale by Manufacturers

Manufacturers establish their own branch offices in first-tier markets to deal directly with retailers. In second-tier markets, distribution arms may be established or sales representatives may be sent there to deal directly with retailers in second- and third-tier markets as well as specialty stores in third-tier markets. Distributors may also be appointed, but only as a supplement where the sales capability of the manufacturer is inadequate.

Structure of the Direct Sale by Manufacturers Model