---
title: "2022 Budget Planning: How Should FMCG Companies Design Their Offline Channels?"
description: "Recently, I communicated with two companies with annual sales of around 2 billion yuan about channel coverage for the coming year, as they are about to start their 2022 budget planning. The channel coverage model has not been fully thought through; according to budget planning, the first version of the channel coverage budget must be ready by September, company-wide promotion and implementation plans for branch offices by October, and execution by November—time is tight and the task is heavy. Today, I will share the general framework of a channel coverage plan I just developed for a company, hoping the team can better understand and execute it."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-09-18"
language: "en"
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# 2022 Budget Planning: How Should FMCG Companies Design Their Offline Channels?

> Recently, I communicated with two companies with annual sales of around 2 billion yuan about channel coverage for the coming year, as they are about to start their 2022 budget planning. The channel coverage model has not been fully thought through; according to budget planning, the first version of the channel coverage budget must be ready by September, company-wide promotion and implementation plans for branch offices by October, and execution by November—time is tight and the task is heavy. Today, I will share the general framework of a channel coverage plan I just developed for a company, hoping the team can better understand and execute it.

Recently, I communicated with two companies with annual sales of around 2 billion yuan about channel coverage for the coming year, as they are about to start their 2022 budget planning.
The channel coverage model has not been fully thought through; according to budget planning, the first version of the channel coverage budget must be ready by September, company-wide promotion and implementation plans for branch offices by October, and execution by November—time is tight and the task is heavy.
Today, I will share the general framework of a channel coverage plan I just developed for a company, hoping the team can better understand and execute it.
**Understanding the Domestic Market Size and Planning Principles**
The above is the definition of the structure of our market, not including per capita disposable income, population, GDP income, and north-south consumption habits in each region. It can be said that no two leaves are the same, and no two markets are the same.
For a company with a national layout, channel coverage is the top priority. "Match the rice to the size of the pot" is a phrase I tell every company.
**The principles of channel coverage planning include the following:**
**1. How does channel coverage bear the pressure of market management and brand promotion?**
**2. Channel coverage must be an orderly interaction of every link in the entire marketing channel and the determination of mutual responsibilities, strengthening the company's ability to maintain market order.**
**3. The pros and cons of channel coverage are reflected not only in the guidance and control of channel resources but also in the maintenance of terminals.**
**4. The advancement of channel coverage should focus on rhythm and stage-specific priorities. At the same time, establish a marketing network and management model that matches the market development stage.**
**5. The advancement of the coverage model should be based on the objective needs of market development, but also on internal management capabilities and market control capabilities.**
**In short, the channel coverage model must be stable, accurate, and orderly; haste makes waste.**
**Analysis and Understanding of the Company's Current Business Situation**
Due to differences in product positioning and market development, all companies' markets are in the following four stages: 1. Mature (sales contribution market) 2. Growth (sales growth market) 3. Introduction (sales accumulation market) 4. Blank (sales potential market)
Therefore, before channel coverage, one must deeply self-reflect and position different regional markets. Growth markets focus on distribution rate, while mature markets focus on resource possession.
**1. Mature period (sales contribution type, think about which provinces?)**
Moderate growth in mature markets is the primary condition for achieving sales targets; this law is irreversible. Expand the brand's contact surface with consumers, while maintaining existing consumers, continuously expand new consumer groups, and maintain brand pull.
**The main work of channel coverage is:**
Improve the quantity and quality of targeted outlets, standardize outlet service work, build a large number of image stores and standardized terminal displays, high-quality consumer promotions, improve cargo flow management quality, strengthen the stability, control, and distribution power of high-quality outlet cooperation, etc.
**2. Growth period (sales growth type, think about which provinces?)**
Fully mobilize regional network resources to achieve intensive penetration of terminal supply, focusing on rapidly increasing distribution rate, while considering effective brand communication at the terminal, achieving balanced development of main channels and opportunity channels.
**The main work of channel coverage is:**
Focus on maintaining brand image stores and sales contribution stores, pay attention to the maintenance of flagship stores and standard stores in opportunity channels, and promote the improvement of effective distribution rate.
Increase investment in markets with development potential in the region, by targeting target groups and strengthening channel construction, drive local market improvement, and achieve breakthroughs in the shortest possible time.
**3. Introduction period (sales accumulation type, think about which provinces?)**
Concentrate resources, invest moderately, tap sales opportunities in economically hot markets, and achieve partial breakthroughs in hot sales areas.
Focus on key terminals, key areas, and brand display, while considering the timely improvement of effective distribution rate, and pay attention to auxiliary channel brand communication and cultivation of consumption habits.
**The main work of channel coverage is:**
Assist distributors in expanding the number of targeted outlets, ensure the accuracy and effectiveness of market investment, guarantee basic product visibility, implement tiered management of existing customers, and promote product penetration in various terminals through reasonable use of sales policies.
Maintain the penetration of the entire regional market channel network, establish a price system suitable for the primary market, and meet the normal flow of goods in various types of markets.
**4. Blank market (sales potential type):**
The key work is to attract investment. There is a sequence for attracting investment in blank areas; in principle, it is easy first, then difficult. Factors such as the competitive landscape of the target market and the influence of one's own products on the surrounding areas should be fully considered. For example, the recommended development order for the following 9 regional markets.
**Summary: The first step in a company's channel planning model is self-awareness. Combined with the actual situation of our market, first have a clear picture of your own market, understand the current progress, and plan the next steps for channel coverage.**
**Although we cannot define every market privately, we have more than enough ability to classify and categorize markets.**
**Reference to Other Advanced Models**
The above is the understanding of one's own market form. Next, we need to sort out our coverage model. Of course, when it comes to channel coverage models, many companies use a one-size-fits-all approach, which can be said to be uniform and least efficient. Markets differ, so coverage must differ. Let me briefly describe the coverage models currently in the market:
**1. Nongfu Spring's exclusive model:**
Core principle: hand the market to distributors (contracting model, the contractor is the distributor), act as logistics support and technical consultant, fully leverage the distributor's initiative, and play an active role in cost reduction and efficiency improvement.
**2. Jinmailang's four-in-one model:**
Core principle: hand the market to regional contracted small bosses (contracting model, the contractor is the small boss), act as head coach and referee, logistics support, and technical consultant, fully leverage the initiative of grassroots operators, and play an active role in squeeze growth in the existing market.
**3. Kangshifu and other companies' business district model:**
High-quality business districts (1-2 level) are directly operated, with distributors as pure delivery providers; non-high-quality business districts have distributors as the main operators, with the company acting as logistics support and technical consultant.
**4. Tsingtao Beer's block-based fixed-grid model:**
Tsingtao Beer does not directly serve terminals; there are no direct-operated business divisions in the region. It covers the market through a two-level distribution system, mainly using first-level distributors' capital and warehousing and second-level distributors' channel network for delivery, effectively covering and operating the market.
Under the intensive distribution strategy, the fixed-grid management model ensures high standards and high efficiency in market execution. The company acts as head coach and referee.
**5. General model for small and medium-sized enterprises:**
For key sales markets: manager + supervisor + distribution staff with base salary; for non-key sales markets: manager + supervisor.
**Summary: Every company has its own channel coverage model, but for small and medium-sized enterprises, it is more hoped that they do not use one model to conquer the world; flexibility is the key to victory (by the way, due to space limitations, the company model cannot be described in detail; welcome to add WeChat for detailed discussion).**
**Market Segmentation Methods and Matching Coverage Strategies**
After detailed description of different market stages, we must give clear definitions for segmentation; otherwise, it cannot be implemented. Generally, companies divide the market into four modules based on two dimensions: population and per capita consumption indicators. Here are some examples:
**Common characteristics of mature markets:**
1. High brand maturity, high consumer recognition locally, and still potential for market growth; these are key profit sources for the company.
2. Products are overly mature, affected by cross-regional dumping or lack of professional management of distributors and agreement constraints, causing price system chaos and price collapse, low channel profits for distributors, and dampened sales enthusiasm.
3. Some areas have blind spots due to distributor strength limitations.
**Common characteristics of growth markets:**
1. Low brand maturity, average consumer brand recognition.
2. Large population, insufficient investment in dedicated personnel and vehicles by distributors, poor channel control, average terminal service or strong in some regional channels but overall average, extremely unbalanced regional development.
3. Some areas are affected by external environment and product life cycle, average product profits, lack of motivation for distributors, and lack of more flexible support during peak seasons.
4. Some areas have blind spots and unbalanced development, but they are the regional markets with the greatest growth potential for the company in recent years.
**Recommended channel coverage model:** In strong areas, implement regional contracting model; in weak areas, implement the "free ride" operation model; the combination model is more efficient.
Due to profit space constraints, this model can be promoted in blank areas or areas where existing distributors cannot serve well. Seek key second-tier customers in the region with good business and strong willingness to cooperate, and give them outlet control rights, but must clarify service scope based on the second-tier distributor's delivery capacity to prevent cross-regional dumping.
**Common characteristics of blank markets:**
1. Population is small but relatively concentrated, brand maturity is average, brand building is relatively easy, and it is currently an easy-to-break market.
2. Existing distributors have weak influence, or the industry has relatively high brand concentration, and they do not pay attention to this product; dedicated personnel and vehicles are insufficient, and terminal control is weak; if personnel and vehicles are in place, they can directly control terminals and easily increase volume.
3. There are blind spots in the jurisdiction.
**Recommended channel coverage model:** Distributor operation model, with distributors as the main body, daily business guidance and management completed by direct supervisors, and focus on assisting distributors in establishing a "contracted second-tier" distribution system.
**Final Thoughts:**
As of today, many companies have already started the first version of their 2022 channel coverage model budget planning. Many people habitually take out previous plans and make minor adjustments, while others want to abandon traditional concepts and focus on achieving disruptive development through new models. This is extremely irresponsible.
In recent years, the FMCG industry has lacked a traditional marketing foundation. Many companies are like pigs on the wind: they rise fast, fall fast, and die miserably (except for speculative practitioners who focus on short-term gains, quick money, and quit while ahead, similar to internet-famous products).
The post-pandemic FMCG landscape has undergone earth-shaking changes, intensifying the deep penetration of digital transformation, the continuous high squeeze of the existing market, the barbaric development of online channels represented by community group buying, and the acceleration of channel fragmentation, all of which have made an already difficult business even worse.
Therefore, for the better survival and development of the company in the coming year, please treat this seriously in all marketing departments and units.
**Are you "watching" me?**


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Contact: zhaobo258@gmail.com · +86 158 5481 7671