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It's Not Simply a Channel Outlet Issue

The redevelopment of a so-called "mature market" often faces three major bottlenecks. Let's take the liquor industry as an example to discuss this.

Bottleneck 1: Customer bottleneck. After a market reaches a certain share, especially when it ranks among the top in the local industry, distributors often become constrained by their own thinking, vision, capabilities, and team limitations, particularly the shackles of past successful experiences. They may develop rigid thinking, declining drive, and reduced sensitivity to market opportunities, even turning a blind eye to them. This leads to insufficient momentum for personal and company development, sluggish growth, or even stagnation. Without timely self-renewal and adjustment, they urgently need external forces to activate them.

Bottleneck 2: Outlet bottleneck. Distributors or sales staff believe that existing outlet coverage has reached its maximum, that local market capacity is limited, and their pioneering spirit has degraded. Outlet coverage stagnates and cannot continue to expand; coverage density does not meet standards, failing to support subsequent development. For example, some customers have covered the county seat but not townships and villages. Some core stores only distribute mid-range products, not high-end or low-end ones.

Bottleneck 3: Channel bottleneck. Due to customer capabilities or product limitations, target channels cannot be covered. For instance, existing customers may not be skilled at or willing to do hotel channels, or the current products they distribute are not suitable for hotel sales, leaving hotel channel outlets blank. Existing customers primarily focus on circulation channels, have limited social connections, and cannot cover channels such as group buying or system-customized exclusive sales (e.g., salt industry, postal network systems).

Only by breaking these bottlenecks can we activate the "mature market" and drive breakthrough development.

Why Use Channel Outlets as the Breakthrough?

Having outlets doesn't guarantee sales, but without outlets, there will definitely be no sales!

With outlets, there is the possibility of sales; channel outlets are the foundation for product sales. To achieve good outlet coverage, focus on the following aspects:

First, improve outlet coverage rate through intensive distribution.

Some customers have done well in the county seat but haven't done much in townships, leaving many blank outlets. Others have distributed to townships but villages remain blank. These blanks need to be filled; all target outlets should be covered to increase the breadth and depth of outlet coverage.

Second, improve product coverage rate through three-dimensional distribution.

Some famous tobacco and liquor stores only have mid-range products, not high-end ones; some convenience stores have mid-range products but not low-end ones, failing to achieve full coverage of target terminals across price points. Missing one price point means missing one sales opportunity.

Third, activate existing customers and their teams.

Combine market research to find opportunity outlets and price segments, tap into the huge space and opportunities in the market, and fully expose existing market crises. To activate the market, assist customers in product segmentation and combination, and in business team segmentation and combination. Establish multiple specialized business teams oriented by product. Each team focuses on a group of products, and through competition among different business teams, activate the distributor team to maximize outlet coverage and sales volume.

Product combination can be either a subdivision and combination of existing products or an appropriate introduction of new product combinations. New products can be at different price points for differentiated competition, or at the same price point to introduce same-price competition, creating internal competition, squeezing competitors, seizing their share, and activating the market. For same-price competition, choose price segments with larger market capacity.

To activate existing customers and their teams, you can either split the existing customer team into two or more teams, or develop new customers through new products; you can develop customers in the same channel type or customers in different channels or emerging channels to achieve channel complementarity. The former should be laid out by product and price point for differentiated competition and product complementarity; the latter can be laid out by product and price point, or not by product but by channel, for channel complementarity.

Coverage Improvement Is Not the Goal

Improving coverage is not the goal; the goal is to activate the so-called "mature market," squeeze competitors' market share, or seize new market share, increase market share, and become a monopolistic market leader. Therefore, expanding channel outlet coverage is only the basic work of the market. To achieve breakthrough development and increase market share, we must do well in both horizontal development and vertical improvement. On one hand, focus on the sell-through and reordering of main and promoted products; on the other hand, focus on increasing single-store contribution, tapping potential to increase volume, and cultivating high-yield stores. 20% of core terminals contribute 80% of sales. To build core stores well, construct and build your own core terminal network, and establish an effective core store service and control system. This will raise barriers to competitor entry, break through and firmly occupy a market, and truly achieve market breakthrough.

How to Build a Second Network

In a sense, channel outlet expansion is physical expansion, at the "tactical" level, belonging to the "selling" stage. Product and price positioning is chemical stimulation, at the "strategic" level, which can solve direction and positioning issues, belonging to the "marketing" stage. To activate a "mature market," we must not only talk about tactics but also strategy, and combine both to create a competitive, replicable operating model.

Therefore, to build a second network and activate a "mature market," we must first focus on solving "one positioning, two constructions."

One positioning: Combine local market reality and competitors to make price point choices and product positioning, occupy price segments, select main promoted products, and do product combination well.

Two constructions: The first construction is to develop and build an advantageous customer team combination. Only when customers achieve breakthroughs can the market break through; only with customers superior to competitors can we defeat competitors. If existing customers cannot break through their fixed thinking patterns and reform and split, we must use external forces to awaken them, promote their transformation, and break their complacency.

The second construction is to collaborate with customers to recruit and build an excellent business team combination. With team breakthroughs, execution can break through, creativity can break through, and then channel outlet breakthroughs and sales breakthroughs will follow. With a second and third team, there will be a second and third network. With a team superior to competitors, we will surely defeat competitors!

With clear positioning, restructuring customer teams and business teams, starting from basic outlets, starting from core store sell-through and reordering, grasping execution details, and solving operational problems, the market will develop healthily and sustainably, and bottlenecks will inevitably be broken.

Text/Shan Hong Source: "Sales and Market" Magazine Management Edition, Issue 06, 2014

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