Growth Laws
1. The main obstacle to a distributor's development is the 'founder trap.' In the early stages of entrepreneurship, the founder's courage and determination are the primal forces that sustain the fledgling enterprise in harsh conditions. At this point, the company's growth hinges on the boss's whim; 'I' (the boss) is greater than 'we' (the company and its people), and 'we' is determined by 'I'. The boss's consciousness, style, and charisma decide everything, and the company's development relies on the boss seizing opportunities on the front lines, which in a sense is 'playing speculation' and 'playing tricks.' When a distributor reaches a certain scale, they fall into the 'founder trap,' where the spiritual strength that once supported the company's development may become an obstacle to continued growth. This is because as the company expands, the relationship between 'I' and 'we' undergoes subtle changes. Previously, the boss was the absolute pillar of the company; without the boss, nothing could function. Now, the boss's role has greatly diminished; many things are done without the boss's knowledge. Previously, the boss made decisions alone, and there was no one suitable to consult. Now, a proper decision-making team must be formed, and the boss must promote democratic processes. Previously, the boss's core team consisted of a few loyal 'henchmen' who had started the business together. They were often scolded harshly by the boss but still felt proud—because in the 'gangster-style management' system, being scolded was a form of 'favor' from the boss. Now, professionals and professional managers have become the backbone of the company. They can accept criticism but not 'scolding.' A boss of a large enterprise once said: 'I can scold those who started the business with me, but I never scold those who wear glasses.' His meaning: intellectuals with glasses have thin skin and cannot be scolded. Previously, the boss managed everything directly, with all policies, systems, plans, profits, and losses stored in the boss's mind. Now, management levels have increased from one to two or three levels; management requires systems, actions require plans, and profits and losses require accounting. Previously, the boss's words were the company's rules. Now, the boss must lead by example in following the systems he establishes; otherwise, the systems become a dead letter. The process of company development is also a process of the boss's importance continuously decreasing. If the boss still indulges in the 'imperial' feeling of the small enterprise era, the boss will become an obstacle to the company's continued growth. To avoid the founder trap, the boss must demonstrate a determination when the company reaches a certain scale: the individual is willing to submit to the company. Only when 'we' is greater than 'I' can the company truly grow and thrive. In the early stages, the boss is almost the sole driving force for growth. After entrepreneurial success, the boss is likely to become an obstacle to further growth. In the early stages, the main resource for growth is not capital but the boss's determination. At this time, the boss is the company, and the company is the boss.
2. Under a big tree, grass does not grow. 'Hero bosses' often fail to create 'hero companies.' Zhang Yue, the boss of Changsha Broad, once said: 'When I first started, I found I could do the work of ten or a hundred people. But eventually, I realized I couldn't do the work of a thousand or ten thousand.' Hero companies must find something that can do the work of ten thousand. Comparing the 'small bosses' of small businesses with the 'big bosses' of large distributors, we find many differences in ability and attitude towards talent. 'Small bosses' are often shrewd and capable, all-around, and indispensable; 'big bosses' seem 'dispensable' because they don't do specific tasks. 'Small bosses' often do not forgive subordinates' mistakes; 'big bosses' often turn a blind eye to subordinates' minor errors. As the saying goes: 'Water too clear has no fish; people too observant have no followers.' Writer Wu Jiaxiang said: 'As a superior, you cannot fail to see subordinates' shortcomings, but you also cannot constantly stare at them. If you don't see them, you may misemploy people; if you always stare, you'll have no one to employ.' 'Small bosses' often like to show off their abilities, using 'display' to prevent others from underestimating them and to bolster their courage. 'Big bosses' often keep their abilities hidden, giving subordinates the chance to shine, and let the company itself testify to their abilities. When 'small bosses' encounter subordinates with insufficient ability, they often say, 'It's better if I do it myself,' so subordinates' abilities may never improve. 'Big bosses' either train subordinates to be competent or replace them with competent people. When 'small bosses' find subordinates' work unsatisfactory, they often criticize or even scold them. When 'big bosses' find the same problem, they criticize only if it's a responsibility issue; if it's an ability issue, they guide and help the subordinate. Under a big tree, grass does not grow. The excessive capability of 'small bosses' is often the reason subordinates are incapable. Those bosses who can 'do the work of ten or a hundred' will eventually find they cannot 'do the work of a thousand.' Therefore, cultivating subordinates and building a team is more important than leveraging the boss's personal talents. 'Hero bosses' can only achieve small enterprises; only 'hero teams' can achieve large enterprises.
3. If you don't get personally involved, you can't do well as a distributor; if you do everything yourself, you can't grow big. Distributors rely on feel for the market; without personally working the market, you lose that feel. But if you're in the market every day, you experience feel fatigue, and you also lose feel for the market—this is the so-called 'aesthetic fatigue.' Distributors often make two extreme mistakes: either they do everything themselves, spending all day in the market, becoming just another salesperson; or they stay away from the market for long periods, only going to the front lines when problems arise. To grow big, distributors must rely on subordinates to handle the market; the boss alone cannot cover much ground. But relying on subordinates doesn't mean letting them cross the river by feeling the stones; subordinates need the boss's guidance. To direct subordinates, the boss must spend 2-3 days each month personally experiencing the market, not just skimming over it.
4. For small distributors, standardized management increases costs; for large distributors, non-standardized management increases risks. People with formal training often can't do small businesses because they always apply the models of large enterprises to small ones: not large in scale but many departments, not many tasks but many rules. In contrast, those without professional training often have fewer rules and processes, handling things flexibly and operating well. But once the scale grows, distributors find that their old tricks no longer work, and they realize the importance of rules and processes. Small distributors focus on opportunities because with little capital, they must seize opportunities to succeed. Large distributors must first avoid risks, then consider seizing opportunities. Opportunities are found in chaos; risks are avoided through processes and systems.
5. The number of people a distributor can manage determines the size of the business they can do. From the start, distributors typically go through several stages: Stage 1: Mom-and-pop shop. At this point, sales cannot be large; too many customers overwhelm them. Stage 2: Couple plus helpers. Helpers are mainly relatives, doing odd jobs, with little effect on market development. Stage 3: Boss plus salespeople. Sales may expand, but they dare not hire very capable salespeople. Stage 4: Boss plus sales supervisor plus sales team plus service staff plus accountant. The market can expand indefinitely, with corporate-style management and specialized division of labor. This is a process of increasing personnel, or rather, because personnel increase, business gradually expands. Many distributors fail to grow because they are afraid to hire: first, they fear sales are too small to support employees; second, they fear unreliability, so they only use relatives, afraid that excellent salespeople might become competitors; third, they fear poor ability, so they are useless; fourth, they fear they don't know how to manage and don't know how to use people. In reality: first, it's not that 'sales are too small to support employees,' but that 'daring not to hire makes sales small.' Initially, sales may not support employees, but if you don't dare to hire, sales will never increase. Second, many distributors' idea of a 'capable person' is their own 'shadow,' which is why the following phenomena occur: if ability is too poor, they are useless; if ability is too strong, they are afraid to use them.
6. Small distributors rely on intuition, medium-sized ones on professionalism, and large ones on management. Small distributors rely on intuition, instinct, and insight, which come from front-line experience. We often see small distributors with many little ideas and tricks. Medium-sized distributors need professional judgment; without it, they can't keep up with industry changes. Large distributors have accumulated sufficient resources, so they don't do things themselves but rely on others. Lacking long-term front-line experience, they have less intuition and insight. But with sufficient management ability, they can mobilize many employees and fully utilize their intuition and insight.
7. Entrepreneurial distributors must either become professional managers themselves or hire professional managers; otherwise, it's hard to transition from a startup to a normally operating enterprise. Liu Bei was an entrepreneurial boss, and Zhuge Liang was a professional manager. Liu Bei never transformed from an entrepreneurial boss to a professional manager, but he hired Zhuge Liang as a professional manager, which led to the tripartite division of the world. Some enterprises are always in the startup stage, managing a scaled enterprise with startup management methods; they certainly won't grow big. Such enterprises are always seizing opportunities but not accumulating resources to maximize those opportunities. They are always adjusting and trial-and-erroring, but never scaling up what has been proven correct. Enterprises always in startup mode are always in the excitement of entrepreneurship, while normally operating enterprises may be plain, even boring. If a boss is addicted to entrepreneurship and cannot successfully transform into a professional manager, it might be better to hand over the daily management position to a professional manager and focus on entrepreneurship themselves. Because entrepreneurial success needs the boss, while normal operations need professional managers.
8. Only when a product has room for appreciation does a distributor have room to operate. Brand-name products sell well but don't make money; non-brand products make money but don't sell well. Almost every distributor is caught in this dilemma. The solution is to 'distribute products with appreciation potential.' When the Hope Group split among four brothers, Chen Yuxin, the boss of HuaXi Hope, did not use the Hope brand but created his own 'Wanqian' feed brand. At that time, distributors faced the choice of continuing with 'Hope' or switching to 'Wanqian.' Most chose 'Hope,' but a few with foresight chose 'Wanqian.' Since 'Hope' and 'Wanqian' came from the same origin, the quality was similar, but the price of Wanqian was lower, so the appreciation potential was much greater. Some distributors sold the low-priced Wanqian feed at Hope's price, earning excess profits. Choosing a product is like choosing a stock: you don't choose high-priced or low-priced stocks, but potential stocks—those with low current prices that will rise in the future. Only when a product has appreciation potential does a distributor have room to operate and profit.
Transformation Laws
9. Distributors who never grow big have a 'standard face.' If the main business is all handled by the boss, such an enterprise is hard to grow. If customers only recognize the boss, not the employees, such an enterprise is hard to grow. If a few sales champions account for the vast majority of sales, such an enterprise is hard to grow. Because an enterprise full of marketing heroes is doomed. If the employees are mainly relatives, friends, or children, such an enterprise is hard to grow. If the wife and sister-in-law personally manage finances, such an enterprise is hard to grow. Distributors who can't grow often scold their subordinates for being stupid, but they don't think about why they are stupid.
10. Business-type distributors have a limit to their scale; entrepreneur-type distributors have no limit. If a distributor doesn't transform after reaching a certain scale, they will hit a 'ceiling.' Business-type distributors can achieve 'from nothing to something,' but only entrepreneur-type distributors can achieve 'from small to large.' Business-type distributors can become millionaires or tens of millions, but only entrepreneur-type distributors can become billionaires. Business-type distributors may manage a team of dozens, but only entrepreneur-type distributors can manage thousands. Most distributors start as business-type, but those who survive in the end are usually entrepreneur-type. If a distributor doesn't transform, they will inevitably encounter the 'ceiling' of growth. The difference between a businessperson and an entrepreneur is not in shrewdness, scale, capital, or profit, but in marketing model, organizational system, management system, boss's mindset, and management philosophy.
11. Business-type distributors focus on results; entrepreneur-type distributors focus on process. Businesspeople often say: 'No matter how you do it, as long as the result is good'—whether white cat or black cat, if it catches mice, it's a good cat. Entrepreneurs often say: 'The quality of the result is important, but more important is whether the good result can be repeated; only results that can be repeated are good results.' That is, a cat that catches mice is not necessarily a good cat; a cat that can summarize the rules of catching mice is a good cat.
12. Business-type distributors want 'capable people' but fear them; entrepreneur-type distributors can use both 'capable people' and ordinary people. Many distributors have had the experience of 'raising a tiger from a cub, only to be hurt by it when it grows up,' and have a contradictory attitude of craving and fearing 'capable people.' 'Craving capable people' is because they feel their own abilities are insufficient; 'fearing capable people' is because they are afraid the capable person will set up their own business and become uncontrollable. Why do business-type distributors fear capable people? Because the capable people they fancy are 'their own shadows'—people as capable as themselves. Such people are strong in individual combat, so they easily set up their own businesses. Why don't entrepreneur-type distributors fear capable people? Because they recruit professional capable people, each excelling in a specific field, and they only function through the boss's combination. Even if they leave, it won't be a fatal blow.
13. Businesspeople often 'reward according to merit,' while entrepreneurs usually 'do not use positions as a reward for meritorious officials.' How to reward meritorious officials? One way is material rewards, called 'compensation'; another is positional rewards, promoting them to leadership, called 'delegation.' Using positions as rewards may result in 'losing a doer and gaining a non-manager.' Business-type distributors often have meritorious officials holding 'court.' In entrepreneur-type distributor teams, positions are given only to those with ability, not to meritorious officials. Even if someone was once an opponent, if they have sufficient management ability, they may be given an appropriate position.
14. Business-type distributors trust loyal and reliable people; entrepreneur-type distributors trust the power of systems. 'Use people without doubt; doubt people without using them.' This is a typical characteristic of business-type distributors. Because they do this, they can develop rapidly even with imperfect systems and processes. But to do this, it also determines that the founding team comes mainly from their past small circle—only those who know each other well can be used without doubt. After expansion, people from the past small circle can no longer meet the needs of development, so they need to recruit from a wider range. When people come from all over, if you require 'no doubt, no use,' you may have 'no one to use.' To achieve 'use people with doubt,' you need to establish systems and norms, using supervision, avoidance, and processes to 'make it impossible for bad people to find opportunities to do bad things,' thus making them good people in practice.
15. Business-type distributors love to stir things up, finding a path through constant 'trial and error'; entrepreneur-type distributors often adhere to the belief: 'Be cautious before choosing, persist after choosing.' Business-type distributors love to stir things up and have many ideas, often resulting in 'not dying but not growing big.' Because they love to stir, they can always find a way to survive; because they can't persist, they can't take one thing to the extreme. Entrepreneur-type distributors are very cautious before choosing a path, but once they choose the right path, they will go all out and persist.
Manufacturer-Distributor Relationship Laws
16. The source of cooperation is common interests; the foundation of cooperation is common philosophy. Distributors naturally want to make money by representing manufacturers' products, but the profits promised by manufacturers are just 'drawing a cake' that can't really 'satisfy hunger.' Some manufacturers dare to promise anything the distributor asks for, but in the end, the distributor gets nothing. What can truly be fulfilled is the cooperation philosophy. Only when the manufacturer and distributor have similar business philosophies can they cooperate smoothly. With a common philosophy, although there may be quarrels, there won't be principled differences.
17. Without manufacturer support, distributors find it hard to succeed; if they don't succeed, manufacturers support even less. Excellent manufacturers can drive a group of excellent distributors to rise, but excellent distributors cannot save a failing manufacturer. In local markets, distributors may play a decisive role, but in the overall market, manufacturers are decisive. Distributors often feel that when they haven't succeeded, manufacturers don't support them, and when they have succeeded, they don't need support. So what is the key to manufacturer support? It's the 'momentum of market development.' Only when manufacturers see hope for success will they support. 'Momentum of market development' gives manufacturers hope, so they won't be afraid of wasting money.
18. The distributors manufacturers are most interested in are not the big ones, but those with the most potential. 'My territory (market scope) is large,' 'I have many customers,' 'My sales are high,' 'I distribute many product lines'... These 'boasts' may intimidate small manufacturers without ideas, but truly strong and thoughtful manufacturers will question: 'Is the territory large but the market finely developed?' 'Are the customers many but of high quality?' 'Are sales high, but is it due to channel crossing or intensive cultivation?' 'Are the product lines many, but is the structure reasonable?'... Manufacturers often look not at the present but at the future when seeking distributors. Because the present is the result of distributing other manufacturers' products; the future is what could be the result of distributing their own products—the existing volume is someone else's, the increment is their own. Only if a distributor has potential can they build up the manufacturer's products; otherwise, even a big distributor is useless. Therefore, when communicating with manufacturers, distributors should talk less about the present and more about the future. The future is the weight that attracts excellent manufacturers.
Manufacturer-Distributor Laws
19. Big enterprises look for small distributors; small enterprises look for big distributors. They don't require distributors to have particularly original ideas, but they must implement the manufacturer's policies without fail. Truly thoughtful distributors always have a bit of 'disobedience.' The main requirement for distributors from big manufacturers is distribution capability, because this is something the manufacturer cannot do personally; other tasks like new product promotion, market control, and advertising can be handled by the manufacturer itself. For example, P&G's main requirements for distributors are three: provide downstream customers, manage downstream customers, and deliver to downstream customers. Small manufacturers, on the other hand, hope to find big distributors because their market operation ability is poor; they want to hand over products and policies to the distributor and then do nothing else, leaving all other work to the distributor.
20. Whenever a manufacturer visits a distributor, the distributor should instinctively think: if you can't become a comrade-in-arms with the manufacturer, you will inevitably become an opponent. If you represent the manufacturer's products, you and the manufacturer are comrades-in-arms. If other distributors represent the manufacturer's products, the manufacturer is your opponent. Every distributor doesn't want a strong manufacturer to become an opponent, because the success of a strong manufacturer means your operating space is compressed. Therefore, whenever a manufacturer's salesperson visits, the distributor should learn in detail about the manufacturer's strength and operational thinking. If you think the manufacturer will definitely succeed, you must try to bring it under your wing. If for various reasons you cannot cooperate, you must find a way to prevent it from cooperating with excellent local distributors; otherwise, you will have no peace.
21. Dealing with excellent manufacturers is the hardest; dealing with poor enterprises is the easiest. Distributors often face the following confusion: they look down on small enterprises but can't stand big ones. They hope manufacturers will agree to their conditions readily, but if they agree too readily, they feel afraid. Ordinary manufacturers, because they lack bargaining power, are easy to compromise with; excellent manufacturers compare distributors against standards, so dealing with them is hard. Ordinary manufacturers dare to promise anything, getting the money first; excellent enterprises may not give many promises. Ordinary manufacturers give any policy, not fearing market chaos; excellent enterprises have many rules and regulations, and policies must follow processes. Ordinary manufacturers have high gross margins, but can they last? Excellent enterprises focus on the long term, with low gross margins but stability. Ordinary enterprises sell on credit if they can't sell; excellent enterprises rarely do credit sales. Excellent enterprises have their own moral bottom line, being responsible not only to themselves but also to distributors. Excellent enterprises will not harm consumer interests for short-term gains (like reducing quality or price), because cheating may earn a small profit but cannot make you big.
22. Excellent manufacturers are 'mentors' for distributors. By distributing excellent enterprises' products, you can become an excellent distributor. Manufacturers are the most important resource for distributors. Changsha Broad always chooses the best suppliers when purchasing raw materials, because the best way to learn from excellent enterprises is to 'become their customer.' Excellent manufacturers are not just selling products; they provide 'market solutions' and profit models. Excellent manufacturers not only use distributors' customer networks but also help expand them. Excellent manufacturers not only rely on distributors' abilities but also focus on improving them. Excellent manufacturers not only assist distributors in sales but also in management. Excellent manufacturers not only provide sales method support but also export marketing thoughts and concepts.
23. To truly gain long-term support from manufacturers, you must establish a 'good citizen' image. Using abnormal means may gain short-term support, but only 'good citizens' can gain long-term support. The most important support from manufacturers is not policies but sending people who can obtain policies from high levels. Therefore, distributors must persuade manufacturers to send their best employees to the local market. Because excellent salespeople are more likely to get high-level support than ordinary ones. Distributors who often 'go over the head' may get some support under pressure from high levels, but given the principle that 'the county official is not as good as the county manager,' the truly decisive supporter may not be the high level. In fact, gaining manufacturer support is relatively easy if you meet two conditions: first, don't withhold policies; use them truly for market development, not as your own profit. Second, if the manufacturer gives 'input,' you must give a certain 'output.' Because manufacturers are not afraid of spending money, but of spending money without effect, falling into the distributor's 'policy trap.'
24. As long as the distributor dares to spend 20% of the money to activate the market, the manufacturer dares to spend 80%. Policy investment is often not a matter of how much money, but of confidence. Manufacturer high-levels always want to invest in markets with hope. If distributors invest their own money in market development, manufacturers will think the distributor has confidence and be willing to provide matching investment. Therefore, as long as the distributor dares to invest 20%, the manufacturer dares to match with 80%.
Family Laws
25. Family enterprises are not scary; what's scary is family management. The history of a distributor's rise is basically the history of a family's rise. Family entrepreneurship has the following benefits: first, family members can work without regard for cost, even without salary, as long as they have food; outsiders cannot do this. Second, family members trust each other, so no supervision or restraint is needed, saving management costs. Third, in the early stages when funds are scarce, human resources replace capital to complete primitive accumulation. If the family tendency at the start is 'unavoidable,' when the distributor reaches a certain scale, the family flavor may become a 'growth obstacle.' Family enterprise refers to equity issues; family management refers to internal management system issues. Equity issues may be hard to solve, but management issues are relatively easy. If it's family management, family members usually have 'exclusivity' and distrust outsiders. Outsiders often lament that they can never break into the family circle, and 'even if they bare their hearts, they won't get trust.' Family members often operate outside the system, such as 'appealing over the head' if dissatisfied with external hires. The appellant may whisper in the pillow, or hint during family dinners or leisure time, making it impossible for outsiders to guard against.
26. Relatives may be the most reliable people, but lack of ability is the most terrifying thing. Distributors like to use relatives mainly because they are reliable. But what annoys the boss is that these reliable relatives often do terrible things. If they lack ability, what use is reliability? To grow big, you must start by learning to use unreliable capable people. Precisely because they are 'unreliable,' you need to establish management systems, supervision, and restraint. Those who only dare to use reliable relatives will find it hard to establish a truly effective internal management system. Without the support of an internal management system, you cannot truly grow big.
27. Distributors may find it hard to establish a truly modern enterprise system, but it is entirely possible to build a 'family enterprise with a modern flavor.' It may be very difficult for distributors to completely transform from a family enterprise to a modern enterprise. The transformation process is not only painful but may also cause internal turmoil. Therefore, building a family enterprise with a modern flavor might be a better transition, that is, attracting family members to participate in management, but with 'institutional restrictions' on their participation: First, family members should be evaluated and appointed on the same merit-based system as others; Second, family members must be required to function within the system, prohibiting operations outside the system, especially paying attention to the family discipline of 'don't talk business in private settings.'
28. A distributor's transformation usually begins with firing the wife and sister-in-law. This is the personal experience of many large distributors. Although this is a metaphorical statement, many distributors have indeed done this. As long as the wife and sister-in-law are in the enterprise, the management system is easily undermined.
Fate Laws
29. The growth process of a manufacturer is a process of continuously eliminating 'meritorious distributors.' The elimination of 'meritorious distributors' is a heavy topic, but when a manufacturer doesn't eliminate them and risks being eliminated by the market, the manufacturer has no choice but to take drastic action. A meritorious official in one period may be a sinner in another. Aren't those 'meritorious managers' and 'meritorious salespeople' who made great contributions to the enterprise's development also continuously eliminated? This may seem unfeeling, but it conforms to the laws of market development. A food enterprise I have closely followed has replaced three batches of distributors in 10 years, almost eliminating a batch every 3-4 years. In fact, this is also the cycle for eliminating 'meritorious distributors' in other industries. Mengniu has a famous 'three-stage rocket' theory: after the first stage rocket boosts the satellite into orbit, it is discarded, and the second stage continues. After entering space, the second stage is discarded, and the third stage pushes. Although Mengniu's argument is not as blunt as 'eliminating meritorious officials,' the essence is the same. Before 1997, the FMCG industry was basically dominated by provincial-level distributors. After 2000, 'provincial agents' nearly disappeared. Now, it's basically 'county-level agents.' If manufacturers don't sink their market focus, they will disappear. To avoid disappearing, manufacturers will definitely eliminate 'provincial agents' and 'city agents.' And when 'county agents' grow up, 'provincial agents' and 'city agents' are hollowed out, and their previous sales of tens of millions or hundreds of millions suddenly vanish.
**30. After twenty years of hard work, you're back to square one overnight. The elimination and mortality rates of distributors are very high. How many distributors from 20 years ago still survive today? The wealth accumulated often 'comes from somewhere and goes somewhere else.' Is this the fate of distributors? Every commercial revolution first revolutionizes distributors. Every time manufacturers sink their market focus, it means a large number of distributors are eliminated or restricted in their distribution scope. Is this an unavoidable 'calamity' for distributors? The industrial concentration in every industry not only eliminates many manufacturers but also causes many distributors to die out. Is this also an unavoidable fate for distributors? Some distributors say they are in a 'five-year cycle.' Indeed, from the reform and opening up to now, there have been about five generations of distributors. At a manufacturer's distributor conference, a distributor said: 'We top distributors had not entered this industry five years ago; the top distributors from five years ago are either nowhere to be found or not qualified to stand on the podium now.'
31. The growth process of a distributor is a process of continuously 'crossing thresholds.' Every 3-4 years, distributors must cross a threshold. Those who succeed will have smooth sailing for the next 3-4 years; those who fail disappear. Chinese marketing has a marketing change cycle of about 3-4 years. The market environment undergoes a qualitative change every 3-4 years, forcing manufacturers to comprehensively adjust their marketing systems. During the adjustment, marketing directors, regional managers, and salespeople are successively adjusted. Based on the principle of 'one dynasty, one court,' distributors also experience a 3-4 year adjustment cycle.
32. As individuals, distributors may be able to control their own fate; as a whole, the fate of distributors is determined by the times. Although distributor associations are being formed across the country, compared with strong manufacturers and strong terminals, distributors as a whole are still a 'vulnerable group.' Distributors lack their own spokespersons, their own research experts, and their own voice in the media. In the process of the rise of strong manufacturers and strong terminals, distributors always survive in the cracks. Although the absolute scale of the distributor group is increasing, the decline in relative scale is an irreversible trend. Before a truly national distributor appears, no matter how large the distributor's scale in local markets, in the eyes of manufacturers, it's just a problem to be solved at a lower level.
33. The core value of channel distributors lies in their distribution capability; as long as distributors lack distribution capability, they will eventually exit the commercial stage. The 'uselessness of distributors' theory appeared in the United States in the 1920s, in Japan in the 1960s, and is constantly reprinted in China. The 'terminal sales' and 'direct sales' trends in China are manifestations of this theory. Manufacturers need distributors because distributors have the following values: familiarity with local markets, downstream customers, financing (cash purchases), political-business relations, and product distribution. The most important and irreplaceable capability is low-cost distribution. In the information age, many things can be achieved through remote control. As long as it can be remotely controlled, it can be replaced by manufacturers, but distribution cannot transcend time and space; it must be executed by distributors. This is why manufacturers' 'terminal sales' made a lot of noise but ultimately had to rely on distributors. Therefore, to survive the manufacturer's elimination of 'meritorious distributors,' the most important capability for distributors to strengthen is distribution capability.
34. Direction determines the future; model determines success or failure. Marketing is not always a one-way street. Today's successful experience may be exactly tomorrow's lesson of failure. Therefore, distributors need to adjust their direction periodically. Only by turning direction into methods and methods into models can you find a shortcut to success. A marketing model is the popularization of marketing methods, standardizing and proceduralizing them. Its function is to enable ordinary people to achieve extraordinary results, not to let salespeople cross the river by feeling the stones. Models always have prerequisites. When the marketing direction changes, the once-effective model is no longer effective. Therefore, once a new marketing direction is determined, the old model should be abolished and a new one sought.
Source: South China FMCG Manager Group
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