Eu Yan Sang- Assignment Report of Principles of Marketing

March 11, 2018 | Author: Patrick Chau | Category: Traditional Chinese Medicine, Marketing, Business, Medicine, Wellness
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Table of Content Assessment 1

Introduction 

Present a brief history / background of the chosen company / brand and its nature of business. Its vision, mission and objectives.



2

4

Identify the target market of the brand / product or services.

The Marketing Mix Strategies 

Identify and discuss the FOUR (4) marketing mix strategies of the company.

3

Page Number

5-8

Market Opportunities 

Identify TWO (2) market opportunities that exist or may exist in the business or industry.



9-10

The prospective market growth of the market opportunities as mentioned above.

4

Recommendations 

Discuss THREE (3) ideas each the company can make use of the identified opportunities mentioned above to increase its profit.

5

11-12

Conclusion 

To sum up the assignment and explain what you have learned from the project.

13

6

Bibliography

14-18

7

References

19-57

UBTM1013 Principles of Marketing 1. Introduction The story of Eu Yan Sang starts from its founder, Eu Kong Pai. He left China and reached to a small mining town of Gopeng, Perak in 1870s. At that time, most people in Gopeng relied on opium to cure their illness. This inspired Eu Kong Pai to establish his maiden Traditional Chinese Medicine (TCM) shop named “Yan Sang” in 1879, for helping those ill people. In 1898, his son Eu Tong Sen took over his family business. With his effort and wit, Eu Yan Sang has developed into big Chinese medicine room, and expanded from Malaysia and Singapore to China and Hong Kong. In year 2000, the company renamed “Eu Yan Sang International” (EYSI) and was listed in the Singapore Stock Exchange. Eu Yan Sang conducts Chinese Herbal retail chain. It retails health foods and supplements, Chinese herbs and Chinese proprietary medicine. Mission statement of Eu Yan Sang is “to care for mankind by helping our consumer realise good life-long health”. Vision statement of Eu Yan Sang is “to be a trusted, global leading integrative healthcare and wellness company with a strong foundation in traditional Chinese medicine”. The objective of Eu Yan Sang is to help its customers enjoy a good, long and fulfilling life by providing the best natural healthcare products and services (Traditional Remedies Made Contemporary: Redesigning Eu Yan Sang, 2004). Eu Yan Sang targets on healthconscious consumers. Most products of Eu Yan Sang are to enhance immunity system and promote fitness.

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UBTM1013 Principles of Marketing 2. The Marketing Mix Strategies (a) Product The brand name “Eu Yan Sang” inherits from the Chinese words “Eu”, “Yan” and “Sang”. “Eu” is the surname of the founder, Eu Kong Pai. “Yan” brings the meaning of compassionate, whereas “Sang” signifies life. “Eu Yan Sang” is categorized as family brand because it identifies its product lines. Examples of their products are Eu Yan Sang Bak Foong Pills, Eu Yan Sang Bo Ying Compound, and Eu Yan Sang Bottled Bird’s Nest. Attractive design in packaging captures customers’ attention. During Chinese New Year, Eu Yan Sang markets “Bucket of Gold”, which is an 8-sided, red bucket which contains 8 oranges, and can attract the customers’ interest as it means auspiciousness and prosperity for Chinese. Packaging also means to enhance the convenience for buyers. Eu Yan Sang offers ginseng sachet and packaged herbal soups as fast moving consumer goods (FMCG) is prevalent now. Labelling provides information of the products, such as the ingredients, the expired date and the functions of the product. Since Eu Yan Sang offers many types of Chinese herbs, it is imperative to state the functions of herbs in labelling for ease of differentiation. We choose Eu Yan Sang Menoease Pill to explain new product development. During idea generation, there are several methods can be done to generate ideas, like meeting and collection data from suppliers. There is decision made to invent a new product which acts similar like Bak Foong Pills to suit most elderly woman. Then, it is followed by screening. The company have to ensure that it can attract many customers, and gain profits, as well as follow company’s objectives. Under business analysis, Eu Yan Sang should investigate potential market and competitive strength. The product, Menoease Pill, is specially designed for elderly females. Eu Yan Sang has competitive advantage since its main competitors like Brand’s and Hai-O do not have such product yet. As for product development, Eu Yan Sang has co-operated with Chinese University of Hong Kong to develop their ideas into realistic product. The university has done their research for three years before launching the product. On test marketing, they would let their proposed target market to have sample of Menoease Pills. Marketers must gather response from target market (elder women) so as to determine the success of the product 5

UBTM1013 Principles of Marketing in market later. Finally in commercialization, Eu Yan Sang offers its Menoease Pills to the market. There are products which can be described under Product Life Cycle. Nestum 3in-1 cereal drinks with American Ginseng and Chinese Angelica (Dang Gui), a product under collaboration of Eu Yan Sang and Nestle Malaysia, is in introductory stage since it is offered in market on 2nd October 2012. Since it is new to market, informative promotion is needed to make customers aware its existence. Products like Eu Yan Sang Bak Foong Pill and Eu Yan Sang Bird Nest’s Series are in maturity stage, whereby these products are commonplace among customers. Diversification of brand or models should be done to defend mature products. Eu Yan Sang focuses on quality as it is one of its core values. Their two Good Manufacturing Practice (GMP) plants received quality assurance, ISO 9001: Eu Yan Sang Centre (located in Hong Kong) received ISO 9001: 2008 from Hong Kong Quality Assurance Agency, whereas Weng Li Sdn. Bhd. (located in Malaysia) was granted ISO 9001 international accreditation.

(b) Pricing Quality is one of the core values of Eu Yan Sang. Therefore, Eu Yan Sang set prestige objective as their pricing objective which focuses on product quality. Pricing strategy that Eu Yan Sang practice in this context is market skimming. For example, Eu Yan Sang has products which have high image and high quality, like Pure Pearl Powder. There are only few competitors in Traditional Chinese Medicine offering pearl powder in market. Price policy that Eu Yan Sang implements is psychological pricing. This is because most consumers would think of “high price, high quality”. Next, Eu Yan Sang targets on sales maximization. In 2011, Eu Yan Sang expanded 26 new TCM store and 4 new clinics to meet the volume objectives. The penetration pricing strategy is taken by the Eu Yan Sang to meet the competitors. Its main competitor, Brands uses the lower price to compete with Eu Yan Sang Essence of Chicken. Brands’ Essence of Chicken is about RM48.80, but thanks to adoption of economics of scales, price of Eu Yan Sang Essence of Chicken is only about RM36.80.

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UBTM1013 Principles of Marketing Based on the annual report of 2011, the sales of Essence of Chicken have increased almost 6% to S$9.2 million. Lastly, Eu Yan Sang encounters with another main competitor, which is Hai-o Group. To meet the competitive objective, Eu Yan Sang implements competitive pricing strategy and become the winner of the market. During Chinese New Year, sales of Hai-o hamper increases dramatically. To defend its market share, Eu Yan Sang matches with Hai-o price reduction and introduce the “Bucket of gold” promotion. This promotion helps Eu Yan Sang to achieve its new sales records, where it grows by by 9% to S$266.3 million to become the winner of the year in TCM industries.

(c) Distribution Eu Yan Sang has a wide distribution: Malaysia, Singapore, Hong Kong, China, and Macau. Eu Yan Sang distributes their products through indirect channel, where they have wholesalers and retailers acting as marketing intermediaries before selling products to final customers. According to DMG Research from OSK, wholesales of Eu Yan Sang majorly stems from Hong Kong (FY12 Results Review: Eu Yan Sang, 2012). Based on the Standard & Poor’s Report in 2010, Mannings and Watson’s are two examples of large chain stores which Eu Yan Sang has chosen for selling their products with distribution arrangement. In China, a major distributor has helped Eu Yan Sang to distribute products like Bo Ying Compound and Bak Foong Pills to hospitals and pharmacies. As for retailing, there are approximately 200 retail outlets of Eu Yan Sang in Malaysia, Singapore, Hong Kong, China and Macau. In addition, there is Eu Yan Sang Restaurant in Mid Valley Megamall, Kuala Lumpur. Eu Yan Sang has also acquired most of the business and assets of Healthy Life Group Pty Ltd of Australia on 16 February 2012, according to The Edge Singapore. The organization has become the subsidiary of Eu Yan Sang International Ltd, and directly, Eu Yan Sang has control over 125 stores and a distribution centre for expanding its business to Australia. Eu Yan Sang has used several types of transportation for distributing products. Since Eu Yan Sang has its outlets majorly in five countries, air freight can help in delivering the products of Eu Yan Sang to different countries fast. Motor carrier is another option for Eu Yan Sang to deliver the products to retail outlets locally. There are 7

UBTM1013 Principles of Marketing trucks under name of Eu Yan Sang which play important role in distribution of products of Eu Yan Sang.

(d) Promotion Eu Yan Sang adopts sales promotion. The latest special promotion by Eu Yan Sang is “Mom’s Club Healthy Fun Fest”. By getting 1 beautiful “Bo Ying Cares Thermos Flask Bowl” with every purchase of 8 boxes of “Eu Yan Sang Bo Ying Compound”, it grants consumers saving up to 15% on nutritional supplements for health care. It is a short-term promotional activity organized by Eu Yan Sang to attract and stimulate consumers to buy the company products. In addition, attach with bringing their child for height and weight measurement to understand their nutritional needs for those who possess Eu Yan Sang membership only. By using short-term incentives such as discounts coupons, complimentary gift and membership entitled consumers to enjoy many advantages and privileges. Eu Yan Sang has launched much kind of advertisements in order to give information to and persuade the members of the audience, such as media and paper. Eu Yan Sang has created the Facebook page. Besides, Eu Yan Sang has also advertised through television commercial, Astro. A blog named Malaysia Food Promotion has advertised Eu Yan Sang during Chinese New Year. Besides, through celebrity testimonials, Eu Yan Sang has invited Thomas Jack and two Malaysian singers to promote their product, Essence of Chicken with Ginkgo Biloba Extract. With any single purchase on the product, Eu Yan Sang will give Thomas Jack cups with three different attractive designs. In addition, public relation is another promotion of Eu Yan Sang. For example, Eu Yan Sang have been organizing “One Year One School Charity Campaign” annually since year 2005. The main purpose is to extent the support range in whole Malaysia that let society participates in an education fundraising program. In order to support this fundraising program, consumers only need to buy 3 boxes of “Eu Yan Sang Essence of Chicken with Ginkgo Biloba” and the company will automatically allocate RM5 ringgit into the “One Year One School” fund. Although it serves broader objectives, it will indirectly establish a noble corporate image to promote the company products. 8

UBTM1013 Principles of Marketing 3. Market Opportunities We have found two types of market opportunities for Eu Yan Sang: technology and socio-cultural. Technology can help Eu Yan Sang to grow in Traditional Chinese Medicine (TCM) market. One of the scientific technologies endorsed by Eu Yan Sang is “Individual Chromatographic Fingerprinting Technology”. It allows the precise quantification of constituents and their attributes used in preparation of the ingredients like herbs and other properties of Chinese Medicine. Fingerprinting Capabilities possess a monograph library of more than 500 herbs that purpose is for ensure the herb extraction and concentration database will continuously stay at stability and consistency of quantity as well as their quality. Ying Liu et al. (2010) states that many enterprise of TCM fails to manage the resources efficiently and effectively due to lack of technology. Virtual stores have become essential part in market nowadays. Through Internet and smart phones, customers can just have their purchase in virtual stores which provide myriad of products and fountain of information (Chen, I.Y.L, 2010). After doing careful research, Tesco has done their own virtual stores in South Korea since most South Koreans possess smart phones. Customers would only need to scan the QR-code from “poster” in order to find information of products, before having online purchase (Lee, Chung, Bang, & Lee, 2011). Both Fingerprinting technologies and virtual stores stand to give good prospect in future. Since many people now has become health-conscious, and it is important for preventing resources wastage which can incur costs, Fingerprinting technologies stand to be useful for every enterprise to manage resources efficiently, and produce high-quality products. Virtual stores will become profitable in future since trend of using smart phone expands, and number of people expose to Internet has gradually grown. For socio-cultural context, we have seen that there is demand on TCM from other regions, such as Europe (Yang & Das, 2011). Moreover, the phenomenon where there will be more and more countries to give TCM a legal status within the countries, as well as marketplace globalization, grants TCM chance to gain more customers from regions outside Asia (World Federation of Chinese Medicine Societies, 2012). After observing that most of TCM is actually safe for consumption (“The Conversation”, 2012), there are relieves among most people from countries of other regions who actually had fear on 9

UBTM1013 Principles of Marketing consuming TCM. From the dissertation of Sharon W. Bertrand (2009), seventeen nurses, who had used modern treatment previously, had their illness recovered after using treatment of TCM. This proves that TCM has its usefulness. Besides that, there are integrations of TCM and Western Medicine (WM) in reality. According to Zhang Rongxun (1982), some psychiatric disorder, like adhesive obstructive arachnoiditis, can be treated with combination of TCM and WM. Added by James Lake (2004), both TCM and WM can be skillfully integrated, and each can benefit other. In short, TCM will gain its own legal status worldwide, as well as recognition through harmonization between TCM and WM in future, and therefore, a privilege for TCM.

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UBTM1013 Principles of Marketing 4. Recommendation With using available Chromatographic Fingerprinting Technology, Eu Yan Sang can produce more new products with high quality. We suggest that Eu Yan Sang should identify unmet needs among customers. There should be always analysis on market before making any products. Identification of unmet needs can be done through approaching to customers, recognizing their problems, and understanding their business or operation and its workflow (Cooper, R.G., Edgett, S. & Kleinschmidt, E.J., 2002). Then, Eu Yan Sang should find those needs in which they can serve profitably. For example, Eu Yan Sang Menoease Pill is invented due to high needs among elder woman. Successful market planning and implementation helps a company to gain more profits eventually. We recommend that Eu Yan Sang can market its products through virtual stores. With virtual stores, Eu Yan Sang can save much cost as the setup cost and maintenance cost for the store is low. The right kinds of products offered by a virtual store can create cost advantages and attract customers (Chen & Tan, 2004, cited by Chen, I.Y.L., 2010). Setting “virtual stores posters” can save the customer’s time and can approach to customers more closely, as “the store itself reaches to people”. According to the research from Euromonitor International (2012), as well as Mohd Azam Osman et al. (2012), the trends of using smart phones are increasing from years to years. However, Eu Yan Sang needs to determine regions which have its mass smart-phone-users customers before establishing the “virtual stores posters”. Eu Yan Sang can also set up seasonal virtual stores, in which the “virtual stores posters” are only available during certain period of time like pre-Chinese New Year. It is important for marketers to offer right products, at right place and time. In short, with the upward trend of smart phone use, as well as more people will get exposure of Internet, virtual stores play important part to give promise Eu Yan Sang to gain more customers, indirectly, more profits As there is demand from non-Asia countries on Traditional Chinese Medicine (TCM), and TCM will gain its more-legal status in many countries in future, therefore we suggest that Eu Yan Sang should expand its market to other region which perhaps has demand on TCM highly. Eu Yan Sang would need to understand the available law on TCM in every country before marketing their products in other regions. Many western 11

UBTM1013 Principles of Marketing countries such as United States, Canada, Britain and other developed countries have endorsed regulations and policies for Acupuncture and Traditional Chinese Medicine, from the research of the Wu Bing Jiang (2012) and Yang Jingzhong& Devapriyo Das (n.d.). We suggest that Eu Yan Sang can collaborate with Western Medicine (WM) enterprises to establish Chinese and Western clinic and hospital. With current treatment offered like acupuncture, massage, Tui Na and herbal medication, clinics of Eu Yan Sang can harmonize the TCM treatment with modern treatment. According to Professor Xuemei You, integrated TCM and WM therapy is safe and effective in treating disease like arteriosclerosis obliterans (ASO). This helps to portray globalization of TCM, as well as reflect trend of combining TCM with WM in reality. Internalization of TCM nowadays can help Eu Yan Sang to gain more profits.

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UBTM1013 Principles of Marketing 5. Conclusion Eu Yan Sang has become an established company in the TCM industry due to few reasons: the greater quality of the products and services, affordable price for all income levels of people, a whoop and a holler promotion and well-planned distribution strategy around its target market. With identifying marketing opportunities aroused from external environment, Eu Yan Sang should utilize the opportunities in order to gain more profit. We have learned numerous experiences upon completing this project. Rome wasn’t built in a day. A company cannot become successful in a short time; instead it has to go through stages by stages for doing well. Planning and analysis on market environment should be done before implementing any strategies. Company should also know to have marketing controlling to reduce defects. Besides that, we have actually gained knowledge on Traditional Chinese Medicine (TCM) after accomplishing this project. Since Eu Yan Sang involves in TCM industries, we have to do research on products related to TCM. Indirectly, we have learnt the usefulness of alternative medicine. As the final sentence, we would like to thank those who have helped us in this assignment, directly or indirectly.

(2958 words)

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UBTM1013 Principles of Marketing Bibliography 1 Year 1 School Charity Campaign. (n.d.). Retrieved October 29, 2012, from Eu Yan Sang: http://www.euyansang.com.my/Articles/frmNewsEventDetails.aspx?intDocumentID=10 6 Asia, M. (2007). Eu Yan Sang Targets Trendy Youngsters. Media Asia, 1. Astro (Director). TV Commercial Eu Yan Sang 'Gift'1 [Motion Picture]. Bertrand, S.W. (2009). Inroads to an integrative medicine: Case studies of registered nurses' personal views on Traditional Chinese Medicine (Dissertation, University of St. Thomas, 2009). ProQuest Dissertations and Theses, 1-221. Bunce, M., & Haile, J. (2012, April 3). Are traditional Chinese medicines safe and legal? Retrieved October 29, 2012, from The Conversation: http://theconversation.edu.au/aretraditional-chinese-medicines-safe-and-legal-6373 Business Monitor International Ltd. (2011). Singapore Pharmaceuticals & Healthcare Report. London: Business Monitor International Ltd. Bux, S. R., & Tun Ibrahim, N. (2012). An Insight on Eu Yan Sang (Malaysia). Petaling Jaya: Malaysia Productibity Corporation. Chan, E., Tan, M., Xin, J., & Sucha Sudarsanam & Johnson, D. (2010). Interactions between traditional Chinese medicines and Western therapeutics. New York: Thomson Reuteurs. Chen, I. (2010). Understanding Retailers’ Acceptance of Virtual Stores. Knowledge Management & E-Learning: An International Journal, 2(3), 328-336. Egan, J. P. (2012, June 27). Demand for Traditional Chinese medicine abroad fuels industry growth.

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UBTM1013 Principles of Marketing Eu Yan Sang. (2012, October 2). 3in1 herbal cereal drinks, another new product from a unique collaboration between Eu Yan Sang and NestléMalaysia. Retrieved October 29, 2012, from Eu Yan Sang: http://www.euyansang.com/index.php/newsroom/3in1-herbal-cerealdrinks-another-new-product-from-a-unique-collaboration-between-eu-yan-sang-andnestle-malaysia-/89-highlights/994-3in1-herbal-cereal-drinks-another-new-product-froma-unique-collaboration-betw Eu Yan Sang. (n.d.). Fingerprinting Technology. Retrieved October 30, 2012, from Eu Yan Sang: http://www.euyansang.com/index.php/eu-yan-sang/initiatives/fingerprinting-technology Eu Yan Sang. (n.d.). Manufacturing. Retrieved October 30, 2012, from Eu Yan Sang: http://www.euyansang.com/index.php/eu-yan-sang/manufacturing Eu Yan Sang. (n.d.). Products. Retrieved October 30, 2012, from Eu Yan Sang: http://www.euyansang.com/index.php/product Eu

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UBTM1013 Principles of Marketing Lake, J. (2004). The Integration of Chinese Medicine and Western Medicine: Focus on Mental Illness. Integrative Medicine, 3(4), CB-CJ. Lam, C. (2012). Unaudited Financial Statements And Dividend Announcement. Lee, J., Chung, Y., Bang, Y., & Lee, Y. (Directors). (2011). Tesco: Homeplus Subway Virtual Store (Movie) [Motion Picture]. Lim, X. (2009, November 26). Eu Yan Sang Unlocks The Power of TCM. Retrieved October 20, 2012, from Share investment: http://www.sharesinv.com/articles/2009/11/26/eu-yansang/ Liu, Y., Zhang, Y., & Xu, C. (2010). Analysis of the International Competitiveness of Chinese Medicine Industry Based on the Diamond Model. Journal of International Business Research, 3(3), 165-170. Lok, E. H. (2007). The Cash Register Rings Non-stop : The Amazing Transformation of Eu Yan Sang. Shah Alam: Marshall Cavendish. Mom's Club Healthy Fun Fest. (n.d.). Retrieved October 29, 2012, from Eu Yan Sang. Nanyang Polytechnic. (2009, August 6). Nanyang Poly and Eu Yan Sang Set Up Singapore’s First Collaborative Laboratory to Boost Local TCM Research. Retrieved October 30, 2012, from Nanyang Polytechnic: http://www.nyp.edu.sg/about-nyp/media-centre/enews/news-archives/2009/jul-sep/nanyang-poly-and-eu-yan-sang-set-up-singapore-sfirst-collaborative-laboratory-to-boost-local-tcm-research One Year One School. (n.d.). Retrieved October 29, 2012, from Eu Yan Sang: http://www.euyansang.com.my/Articles/frmNewsEventDetails.aspx?intDocumentID=35 OSK& DMG. (2012). FY12 Results Review: Eu Yan Sang. Singapore: DMG & Partners Securities Pte Ltd. Osman, M. A., Talib, A. Z., Sanusi, Z. A., Tan, S., & Alwi, A. S. (2012). A Study of the Trend of Smartphone and its Usage Behavior in Malaysia. International Journal on New Computer Architectures and Their Applications, 2(1), 274-285.

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UBTM1013 Principles of Marketing Pacific Bridge Medical. (2002, August 2). Traditional Chinese Medicine: Demand Growing, Product Quality Improving Both East and West. Retrieved October 29, 2012, from Pacific Bridge Medical: http://www.pacificbridgemedical.com/news/traditional-chinesemedicine-demand-growing-product-quality-improving-both-east-and-west/ Robert G. Cooper, S. E. (2002). Optimizing the Stage-Gate® Process: What Best Practice Companies Are Doing - Part One. Research Technology Management. Share investment. (2008, December 17). Eu Yan Sang : Higher food safety standard world-first

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