A Basic Marketing Course for the FMCG Industry (Part 1)

Tip: Click the "↑" above to follow "FMCG Distributor Professional Consulting" for more marketing and distributor internal management content. Note: This basic course is written by a veteran in the FMCG industry. I have compiled the marketing sections for investors researching FMCG companies. Since we're talking about sales basics, let's start from the very beginning. First, what is a consumer? What is a customer? Don't say I'm boring for covering such basic knowledge that everyone knows. Because ultimately, we sell products to consumers through customers, so we must start with the basics. Customer: A person who buys our products from the factory or other customers for resale is called a customer. Consumer: A person who buys our products for direct consumption is called a consumer. Everyone might say, "Who doesn't know that? You're making it sound profound." I'm sure you all know, but as salespeople, we must think about some questions:

Who do we primarily deal with in our daily work?
Who ultimately buys our products?
Is the company's promotion "buy 100 get 5 free" targeted at whom? What about "buy one get one free"? And "more quantity for the same price"? If you can answer these questions, you'll further think about what customers and consumers need. When the company gives you a promotion plan, how should you communicate it? Why do we need to push on customers and pull on consumers? Now that we understand what customers are and that we primarily deal with them daily, some experienced predecessors have classified these customers into categories, grouping those with similar sales characteristics into "channels" to facilitate targeted research and strategies. In FMCG, we generally divide channels into three categories:
Traditional channels
Modern channels
Special channels Each major category is further subdivided into many sub-channels, which are further subdivided into sub-sub-channels, and so on. This is because today's market is increasingly segmented and division of labor is clearer. Knowing there are so many channels, sub-channels, and sub-sub-channels, and that our products need to pass through customers in these channels to reach consumers, shouldn't we as salespeople think about how to cover and serve these channels in the most effective and economical way? Let's do a simulation: Suppose Huiyuan is a newly launched product today. The company has limited production capacity, average brand awareness and reputation, and is produced in a small county in Shandong. But the boss is very optimistic about the industry and hopes the product can reach a broader market. At this time, a customer from Hunan comes to you, asking to distribute Huiyuan products in the Hunan region. If you were the boss, what would you do? The boss is optimistic about the industry and eager to develop, so he would definitely take this business. Would we immediately set a target volume for this customer, then establish a provincial-level region in Hunan with multiple city and county offices, and deploy salespeople to cover the Hunan market? The answer is definitely no. Why? Because the risk is too high. What is the rational approach? We might assess the customer's capabilities, communicate with them to set a performance target, and let them operate the Hunan market on their own. The company might have a sales manager to serve this customer, but that manager's main effort would be to develop Hubei, Sichuan, Anhui, Jiangsu, etc., to find similar customers and develop them as regional distributors. At this point, would the company require the distributor to sell each product at a specific price? Generally not. An exclusive agent for a new product would seek higher gross margins, though the company would provide suggested retail prices. After a year of effort, the company has basically developed distributors in all provincial regions across the country. Through a year of hard work, sales in many provinces have begun to take shape, and consumers are gradually recognizing the product. Some county and city-level customers have approached the company, willing to distribute Huiyuan products in their small areas, but each shipment volume is still small. If we do business with them, the company's sales would increase, but operating costs would also be high. As the boss, what would you do? Would we immediately cancel the provincial agency of the customer from last year? Sign new distribution contracts with these customers right away? Ship directly to them despite high costs for sales growth? Establish sales offices in these county-level areas to help them better cover and serve the market? Obviously, under normal circumstances, we wouldn't do this—it would upset the old customer, put pressure on new customers, and increase company risk and costs. So, would we let the old distributor continue to monopolize the provincial agency, making high profits from these downstream customers and constraining the company's sales growth? Of course not. The rational approach is to communicate with the provincial distributor: we help them develop second-tier distributors in cities and counties within their region, but they must supply these second-tier distributors and other customers at prices agreed with the company. We would explain that although their gross margin decreases, sales volume will increase significantly, so their profits will not decrease but increase; their market position will improve, etc. At this point, we would no longer assign just one regional manager to serve several provinces; instead, we would deploy one or more wholesale development staff in the region to develop city and county second-tier distributors. Another year passes. With the hard work of our team, the network of provincial, city, county, and second-tier distributors is basically complete nationwide. Even many city and county second-tier distributors now have the ability to ship directly from the factory in full truckloads. They hope to sign distribution contracts directly with the factory and receive support from the company with personnel to help maintain and develop the market. By now, Huiyuan is no longer the industry newcomer it was two years ago. With rapid sales growth, the boss has more ideas. He moves the company from a small mountain village in Shandong to a big mountain village in Beijing. Over the past two years, watching the rapid development of modern retail enterprises, the boss also wants to put his products into hypermarkets, following their expansion to sell products to a broader market. What to do? At this stage of market development, it's time to say goodbye to the provincial general agents from the past. The classic example in the industry is when the boss of Jinmailang, Mr. Fan, summoned a group of major customers to an annual meeting. To split their regions, he wept at the meeting and relieved them of their power with a toast: "Brothers, it's your support that brought Jinmailang to where it is today. Without you, there would be no Jinmailang today. But if you continue to operate as you do now, Jinmailang will have no tomorrow." No more words. Cancel provincial agencies and directly sign city and county-level agency contracts. At the same time, based on market size, development prospects, and competitive needs, deploy sales personnel in these cities and counties to help the company better control the market, assist customers in development and maintenance, and manage performance, market, and prices. As for those attractive hypermarkets, there are two ways: either the company does it directly or gives it to capable distributors. Sales are booming. The boss slaps his thigh and puts ads on CCTV. Huiyuan's sales enter a truly rapid growth phase. Seeing Huiyuan's momentum, VCs rush to add icing on the cake. The boss picks up a big brush, dips it in Shandong sauce, and dots dozens of points on the big chicken map in his office, expanding territory and building factories at these points. Time flies. Another year passes. At the year-end meeting, most markets deliver high scores. The boss is in high spirits, and the team is ambitious, ready to do even better next year. But this isn't a matter of slapping your head, chest, or butt. Everyone makes plans to further deepen and refine the market. The team starts large-scale recruitment, and various war zones, regions, marketing areas, direct-operated companies, and offices come on stage. I've been rambling on, and the listeners are confused, not knowing what I'm trying to say. Actually, I'm simply describing the gradual development process of a company and product in the market. At first, the distributor sells on their own; once there's a certain sales base, the company controls the distributor's channels and prices; as sales grow further, the company assigns personnel to help customers with distribution and expansion; as sales staff increase, grassroots sales organizations like offices are established; in some special regions, due to competitive needs, distributors can no longer meet the company's development requirements, so the company establishes direct-operated companies to serve the market. These development stages are what we often call "models." Different market development stages have corresponding models that match them, and there are certain development patterns. Of course, "model" is a broad concept. Every company has its own sales model, and the same company may have different models in different markets. This is due to competitive needs, development needs, cost considerations, service needs, etc. Since models vary widely and have no fixed rules, it's hard to discuss them. But that's not entirely true; our predecessors have summarized some patterns. At this point, we must introduce a grand concept—the "sales system." A sales system is the way business covers, serves channels, and points of sale. Because from a sales perspective, our job is essentially to serve customers and points of sale. For example, if we have only one customer in a province and let them sell on their own, we call this sales system "traditional wholesale." Generally, the company has no excessive requirements for such customers. But as sales grow, the company must control these customers' channels and prices. We call this sales system "controlled wholesale," meaning we control the scope and price of their shipments. When the market develops further, we assign sales personnel to some regional distributors to help them expand, maintain, and distribute. Of course, we usually require such customers not to simultaneously operate competing products. We call this sales system "exclusive distribution." Exclusive distribution is currently the most commonly used and most effective sales system. When there are many small retail outlets in a city that order small quantities but frequently, we find a wholesaler nearby to handle delivery to these small outlets. We call this sales system "wholesale cooperation." There are also customers like Carrefour who insist on working directly with the company. The company directly handles business, delivery, and settlement with them. We call this sales system "direct sales and direct delivery." Of course, we could also have the business done by the company, with accounts settled by the company, but we ask local distributors to deliver on our behalf, paying them a delivery fee to serve these customers. We call this sales system "we sell, they deliver." Above, we've basically explained the six conventional sales systems:
Traditional wholesale—let the wholesaler sell on their own.
Controlled wholesale—control the wholesaler's shipping channels and prices.
Exclusive distribution—assign personnel to help distributors maintain and expand the market.
Wholesale cooperation—company salespeople take orders, and wholesalers deliver according to orders to C/D-class retail outlets.
We sell, they deliver—company sales obtain orders, and a third party is commissioned for delivery, but the company handles reconciliation and settlement, paying the distributor a delivery fee.
Direct sales and direct delivery—the company takes orders, does delivery, and settles accounts itself. These six sales systems basically cover the ways salespeople cover and serve channels and points of sale. Various combinations of these sales systems form various sales models. Let's think: which sales system gives the business the most control? Does that mean we should make all products company-operated to be safest and most controllable? The answer is definitely no. Why? Because costs are too high. Now let's look back at these six sales systems. From 1 to 6, does the company assign more personnel? In traditional wholesale, one salesperson can serve a batch of traditional wholesale customers, basically just arranging payment and shipment. In controlled wholesale, the salesperson's management requirements increase; they must not only arrange payment and shipment but also manage the customer's shipping channels and prices. In exclusive distribution, we not only assign a customer manager to manage and serve the distributor but also assign salespeople to help the distributor serve their downstream customers. In wholesale cooperation, we go deeper and finer, assigning salespeople to serve small and medium retail outlets, doing pre-sales and merchandising. In "we sell, they deliver," not only does the company's business do the selling, but delivery is also arranged by the company through a third party. In direct sales and direct delivery, the company handles all business processes itself. We find that from 1 to 6, the company's control over the market increases, but operating costs also rise. According to the degree of market control, we divide the six sales systems into active and passive sales systems. Simply put, in active sales systems, we not only sell products to distributors but also help them sell the products. In passive sales systems, we sell products to distributors, and they handle the selling on their own. Passive sales systems:
Traditional wholesale
Controlled wholesale Active sales systems:
Exclusive distribution
Wholesale cooperation
We sell, they deliver
Direct sales and direct delivery Now that we understand the concept of sales systems, we can discuss sales models. When talking about models, let's first analyze the sales models of some successful companies in the industry:

Let's start with the No.1 in the beverage industry—Coca-Cola. Coca-Cola currently has branches/sales offices in most county-level cities across the country. What sales systems do these offices use to cover channels and points of sale?

They use direct sales and direct delivery to cover KA channels, key schools, internet cafes, entertainment venues, restaurants, etc.
They use wholesale cooperation (101 system) to cover the vast number of small and medium retail outlets in cities that order small quantities but frequently.
They use exclusive distribution and controlled wholesale to cover township markets.

Next, look at PepsiCo. Pepsi's sales structure is much smaller than Coca-Cola's. They only set up sales offices in some key prefecture-level cities. What sales systems does Pepsi use to cover channels and points of sale?

They also use direct sales and direct delivery to cover KA channels, key schools, internet cafes, entertainment venues, restaurants, etc.
In cities with sales offices, they use the wholesale cooperation system (WAT system) to cover the vast number of small and medium retail outlets that order small quantities but frequently.
They use exclusive distribution to cover county-level cities around the sales offices.
Sometimes they use "we sell, they deliver" to cover key points of sale in cities without sales offices.
They use controlled wholesale to cover township markets in cities with sales offices.

Now look at Master Kong. Master Kong basically has no direct-operated companies in the Chinese market. They set up auxiliary sales offices in some key cities. What sales systems do they use to cover terminals?

Master Kong once called distributors "postmen." What does that mean? Connecting with the sales systems, we immediately understand: they use the "we sell, they deliver" system, where distributors handle delivery.
In fact, Master Kong more widely uses the exclusive distribution system. Wahaha and Uni-President's models are basically similar to Master Kong's. The following is a casual talk about several internationally and domestically known beverage companies, just to give you some history, treat it as a story. It must be mentioned that Coca-Cola has closed a certain number of sales offices in the Chinese market in recent years. Why? Costs are too high. More and more second- and third-tier beverage companies are adopting models between exclusive distribution and controlled wholesale. Some smaller companies simply use the traditional wholesale model in many markets. Now let's look at the models these companies use. Coca-Cola's sales office model definitely has the strongest market control and high sales returns, but why have they closed some offices in recent years? The answer is simple: 1. In recent years, carbonated beverage sales have declined sharply, competition is fierce, leading to high operating costs. In fact, Coca-Cola's having offices in so many county-level cities has historical reasons. In the 1980s, Coca-Cola entered the Chinese market by granting bottling and sales agency rights to companies like Swire and COFCO. At that time, China's market was just transitioning from a planned economy to a market economy. Products were extremely scarce, and domestic companies in the same industry were still stuck in the era of advertising "provincial excellent, ministry excellent," with basically no market awareness. Coca-Cola seized this opportunity and used their advanced marketing methods to develop rapidly with high profits. People from the 70s and 80s should remember that Coca-Cola in China was basically sold from vehicles (direct sales and direct delivery). A driver and a salesperson would drive a box truck, selling along the road, calling out to shops, "Want some drinks?" If yes, unload and collect payment. Because of low competition and high gross margins at the time, Coca-Cola was able to set up so many branches/sales offices in China. Why? Fast performance growth and affordable costs. Back then, there was no such thing as the 101 system. Watching the industry leader conquer cities and territories in China and make a fortune, the eternal second, Pepsi, sitting in the small Atlantic city of North Carolina, couldn't sit still and wanted to come to China to strike gold. Pepsi's bosses carried beverages and came to China to get rich, but once they arrived, they realized it wasn't that simple. They watched others eat meat and gnaw bones happily, but when it was their turn, they found it hard even to get a sip of soup. It turned out that the Chinese government was implementing a distinctive market economy of "crossing the river by feeling the stones." Foreign enterprises had to have licenses issued by the organization to enter. One license blocked their dream of getting rich. They had to enter; China had money and people were naive. If they didn't enter soon, they wouldn't even smell the meat. Besides, the beverages they brought had been around for a while; if they didn't sell soon, they'd expire. And if they had to carry them back home, wouldn't their relatives laugh at them? After thoroughly studying China's national conditions, the second decided to settle for the next best thing. If they couldn't do it head-on, they'd go around. China had capable people; things that outsiders couldn't do, they could. So, they found them. At that time, people like Little Chen from the bustling city, Little Ye from the south, and Little Hu who liked pickled fish, played joint ventures with the second. In this way, the second finally solved the problem of getting the right to sell beverages in China. Finally, the right to sell was resolved. The second breathed a sigh of relief. As for how to sell? Originally, "the front shoe is the pattern for the back shoe," just follow the leader. But new problems arose: 1. The leader was wealthy and bold, willing to invest in what they saw as right, setting up branches/sales offices, buying vehicles for direct sales and delivery. But the second didn't have that strength. Besides, it was a joint venture; everyone would be happy making money, but pouring money in was hard to sell. 2. Even if they had money, they didn't have the time and space the leader had when doing exclusive business. Even if they also got a vehicle and parked on the left side of the street while the leader was on the right, they couldn't compete; the leader had already established a first-mover advantage. The second had a headache again. What to do? They had to change. Change brings progress. The second gathered a group of experts and locked themselves in a dark room for exactly 3 days, 2 hours, and 27 minutes, finally coming up with the WAT system. What is the WAT system? It's actually a way to cover up the fact that they didn't have money to buy vehicles. The second didn't have money for vehicles, so they simply didn't buy them. Instead, they went to a wholesale market, found a wholesale department, and persuaded them: "I'll send people to sell your goods. You just need to deliver according to orders within the specified time and collect the money. I'll pay the salespeople's wages. You just need to maintain 'reasonable' inventory and deliver on time. That's it." Such a good deal, of course, someone would take it. Remember, back then, there was no such thing as manufacturer salespeople directly serving terminals. The delivery idea was born. The second also taught their salespeople a killer move—"product merchandising." These salespeople not only sold products but also chatted with shop owners, built rapport, and worked hard. Most importantly, they placed their products in the best positions in the store. At first, the leader didn't take the second seriously. "He's just a poor guy who can't even afford a car, and he wants to compete with me?" But the WAT system was quite effective. Think about it: the leader sold well but was also aloof. They'd sit in the car and shout, "Want some?" If yes, collect money and unload; if no, drive away. The second, on the other hand, would go out of their way to approach, salute, flatter, and be cautious, even doing free work. Although they had a bit of a scheme, putting their products in front of the leader's, the store's display looked better anyway. Besides, the leader never gave them the feeling of being a god. Why not sell the second's products? Moreover, the second always placed their products in the best positions, making them visible and easy to grab, and sales seemed no less than selling only the leader's products. Most importantly, the second had low operating costs and passed some profits to the terminals, so their prices were always a bit lower than the leader's. Gradually, the second's feathers grew. The leader felt pressure and was a bit aggrieved. Fully armed, they still couldn't beat the second's "millet plus rifles." If sales kept declining, the leader's job would be at risk. "If you change, I'll change too. If you can do it, I can do it. But you call it WAT; I can't use the same name. I'll call it the 101 system—simple and clear: one wholesaler with one salesperson." The second tasted success in model and system innovation and later developed PDS (exclusive distribution system) and DC (we sell, they deliver system) to counter the leader's competition in county-level markets and key accounts. To be fair, the second contributed to the industry in system and model innovation and research, but it was all out of necessity—driven by lack of money. In short, these two brothers fight fiercely all over the world, creating a "duopoly phenomenon." They grow stronger by fighting, but they make it impossible for other companies to survive. However, the leader's first-mover advantage in the Chinese market has never been surpassed by the second. For a long time, Sprite was almost synonymous with beverages in the vast land. The second has also been paying the price for taking the roundabout route to get the license. "It's easy to invite a god but hard to send them away." Those gods, seeing the big money taken by foreigners every year, were inspired by patriotism and once tried to take control of the second. After years of struggle, business suffered, and eventually, the second sold its operating rights in frustration. After talking about these international giants, let's talk about Master Kong and Uni-President, the two Taiwanese rivals. Speaking of Uni-President's current boss, Kao Ching-yuan, his growth story is a "My Chinese Dream"—from a worker to chairman. Uni-President was born in the 1960s and grew rapidly in Taiwan in the 1980s with the Taiwanese economy, establishing a food dynasty on that small island and maintaining a leading position. Compared to Uni-President, Master Kong's predecessor was almost a beggar. The Wei brothers' father ran a small oil mill in Taiwan, passing the business to the four brothers, who muddled along in Taiwan without much success. In the late 1980s, the four brothers came to mainland China to run an oil mill, hoping to expand the business. But at that time, mainlanders were used to small-press oil, not the refined oil they sold. They persisted for three or four years, almost going back to Taiwan broke. One day, the second Wei brother was on a train and saw that people had difficulty eating. At that moment, inspiration struck. He decided to gamble on instant noodles in mainland China as a last resort. From then on, he carved out a vast territory in mainland China. Seeing Master Kong's repeated successes in mainland China—it was said that Master Kong sold ten times more instant noodles in mainland China than the entire Taiwanese market—Uni-President in Taiwan couldn't sit still. If this continued, the leader would become the second. So, they marched across the Taiwan Strait, determined to get a share of the mainland market and compete with Master Kong. The power of first-mover advantage is formidable. Master Kong was almost synonymous with instant noodles in mainland China. You could say, "In Taiwan, I'm the leader," but few people knew that, so it was hard to shake Master Kong's position. During this period, both companies basically used the traditional wholesale model to race for territory in the mainland market. In the mid-1990s, both companies entered the beverage market. In bottled tea and water, Master Kong got ahead of Uni-President. The launch of Fresh Orange brought some dignity back to Uni-President. During this period, both companies gradually shifted from the extensive traditional wholesale model to controlled wholesale and exclusive distribution. In market performance, they each had their strengths. Entering the new century, the Taiwanese leader was getting restless. Why couldn't they beat Master Kong? The leader's temper flared. Conventional warfare wasn't working, so they switched to a frontal assault. Isn't it said that the more active the sales system, the stronger the market control? Immediately, they expanded their forces, rapidly establishing a large number of sales offices nationwide, attacking Master Kong with a huge personnel advantage. After a year, the results were evident: sales increased somewhat, and market share rose. But when the finance department calculated, they were losing money—the input-output ratio was severely disproportionate. The leader was furious! They quickly dismantled most of the sales offices nationwide. Distributors, markets, and terminals were all caught off guard. Master Kong seized the opportunity and counterattacked. From then on, Uni-President was no match for Master Kong in the mainland market. Life is a drama; one after another takes the stage. As Uni-President's front lines contracted, Master Kong had a few days of comfort, but a new rival appeared. Hangzhou's school-run small factory Wahaha, which started with AD calcium milk, was competing with Guangdong's Robust's "Healthy Express" in the south, both trying to win over children. The international giant Danone took control of Robust, ending their war. Danone was first-rate at speculation but mediocre at operations, especially in China. They were like a greenhorn, leaving the once-good Robust in a state of limbo for a long time. He Baiquan was happy, "treating the enterprise like a son but selling it like a pig," happily taking the money to open his budget hotel chain "7 Days." With the old rival retreating without a fight, Wahaha was seeking better opportunities and opponents in the market. Uni-President's contraction allowed Wahaha to quickly focus on new rivals and opportunities, rapidly intensifying competition with Master Kong in tea, water, and low-concentration juice markets. Speaking of Wahaha, we must mention Mr. Zong Qinghou. Mr. Zong was born in Jiangsu and became famous in Zhejiang. He is a descendant of a distinguished family, a third-generation official. His grandfather served as finance minister under Zhang Zuolin. He has the typical Jiangsu-Zhejiang entrepreneur style: low-key, pragmatic, wise, tenacious, adaptable, and uneducated. Although Mr. Zong is a legitimate third-generation official, he didn't benefit from his ancestors. He grew up in a poor rural area in northern Jiangsu, moving to Hangzhou with his parents at 17. His father had no job, and the five siblings lived on their mother's meager salary as a primary school teacher. After junior high, he answered the call to "go up to the mountains and down to the countryside," spending several years in the vast countryside. It wasn't until he was 33 that he was allowed to return to the city due to policy implementation. Unable to find a regular job, he did odd jobs everywhere. At 42, he was still a "youth waiting for employment." Finally, his mother's work unit gave him a chance as a favor to employees' children: he contracted the school-run enterprise. That officially ended his "odd job" career. Fate is fickle; Mr. Zong then embarked on a bright path, and his career soared. Zong Qinghou's greatest successes lie in three points:
Proper profit distribution;
"Creatively" weaving the "joint sales body" wholesale system;
Fast-follow tactics. Regarding "profit distribution," whether it's ensuring distributor profits or ensuring that all levels of customers involved in Wahaha's business have reasonable profits higher than the industry average, including employee shareholding, it all reflects the boss's wisdom of "everyone makes money." Regarding the "joint sales body," it's essentially exclusive distribution plus controlled wholesale. Regarding "fast-follow tactics," everyone in the industry knows that Wahaha is first-rate at following others' new products. As soon as a new product shows signs of success in the market, Wahaha will have a similar product out immediately. If Master Kong's tea sells well, they have "Heavenly Water, Longjing Tea"; if Uni-President's Fresh Orange is good, they have Wahaha Fresh Orange Juice; when carbonated drinks were popular, they had Future Cola, though that ultimately wasn't very "future" because the duopoly was too strong; if you have "Mizone," they have "Activate"; if you have "Water Soluble C," they have "Hello C." In short, as long as you sell well, they have a similar product. Doing new product R&D is a complete waste of money, and the smart Mr. Zong generally doesn't do that. Until one day... One day, Mr. Zong was out on the market for half a day. At noon, he sat down at a roadside food stall for a simple working lunch. Watching flies buzzing around the stall, he lost his appetite. Four people sat down and ordered three dishes, but the boss didn't pick up his chopsticks, so the others didn't dare eat either. They all sat with the boss. One of his companions happened to look up and saw a large wall advertisement across the street: "Drink Wahaha, eat with a good appetite." Inspired, he immediately went to the nearby shop and bought a pack of AD calcium milk (6 yuan) and placed it in front of the boss. After running around the market all morning, the boss was actually hungry. Seeing the AD calcium milk in front of him, he naturally drank it. After three bottles, his mind became sharper. Nowadays, not only children but also adults often don't have a good appetite. If I put this AD calcium milk in a bigger bottle and sell it, wouldn't it have a market? Thinking this, Mr. Zong smiled quietly, and the meal became enjoyable. That sip of AD calcium milk led to the birth of a product that was unrivaled for a time—"Nutrition Express." AD calcium milk in a big bottle achieved unprecedented success. Mr. Zong's confidence in his creative ability soared. At an internal meeting, he announced, "Who said I can only imitate? In the past, Wahaha used a follow strategy, but from now on, we will be the market leader." Subsequently, he launched "Youyou Milk Coffee" and "Beer Tea Shuang" to solidify his position as the beverage trend leader. But consumers, who now had a good appetite, didn't buy it. The products ended up in a state of limbo, and distributors wished they could use Beer Tea Shuang as foot-washing water. Ah! It seems being the leader isn't easy! If new products fail, it must be a brain problem. This should be addressed from childhood. The richest man then launched "Edison" milk powder, telling the R&D guys to drink a few buckets of "Edison" first to see if they could come up with something decent. What? You say even God doesn't believe China has safe milk powder? What if the gods don't buy it? The richest man isn't afraid. He said, "Dear gods, if you don't drink 'Edison,' when it expires, I'll take it back and make it into 'Eat with a good appetite' and sell it to you anyway." You see how he does business—attack or retreat, he's always in an invincible position. Let's get back to marketing. Let's talk properly about the "joint sales body" model. I think Wahaha's "joint sales body" is essentially based on county-level regions as business units, using the exclusive distribution system, designating one exclusive distributor. Then, under the exclusive distribution system, the market is divided into several small areas, each with a designated wholesaler to cover, using the controlled wholesale system to cover the vast number of terminals. The company requires sales volume and distribution rate. Later, they used the wholesale cooperation system to fill gaps for those controlled second-tier wholesalers. You might say, "That's nothing special! Anyone can learn and do it?" Yes, the design of this model isn't complex, but don't forget, Wahaha also has a powerful profit distribution mechanism. Generally, a company can win in the market through three aspects:
Technology leadership;
Relationship leadership;
Cost leadership. Wahaha excels at cost leadership. Their most powerful advantage is that for similar products, while ensuring the terminal purchase price and selling price are better than competitors, the price difference at each distribution stage is much larger than competitors. I remember when Wahaha was doing Future Cola, the terminal price for a case of cans was 33 yuan, and distributors could still earn 5 yuan per case. The two rivals, the duopoly, sold at 40 yuan per case, and distributors earned 1 yuan. What a gap! Because of such high purchase-sale price differences, Wahaha's cost leadership translated into relationship leadership with distributors and channels. Even with unfair treatment like deposits, advance payments, and forced stocking, Wahaha's distributors rarely left. They even worried that if they didn't perform well this year, the company might replace them next year. The middlemen made money, but the poor consumers suffered. When drinking tea, the "Heavenly Water" might be heavenly, but the "Longjing Tea" might not be real Longjing. Okay, let's stop the stories here. Listening to stories also has its knowledge. Outsiders watch the excitement, insiders watch the craft. I've been rambling about these beverage companies to help you see some of the craft. --------------------------------------

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