Currently, the market environment is more severe than a few years ago. Per-product profits are generally declining, so distributors are constantly introducing new products, but the survival rate of new products is getting lower and lower. Many distributors think this doesn't matter much, as new products keep appearing, and if one doesn't work, they can find another. As a result, many distributors fall into a 'find, lose, find again' new product development model, wasting significant resources such as capital and manpower. How can we effectively improve the survival rate of new products? Below are some analyses by the author on common issues before introducing new products.
Select new products based on the basic profit model Distributors are essentially middlemen, using their sales networks, market services, storage and transportation, and capital resources to cooperate with manufacturers for profit. The most basic profit model is to earn money through product distribution. This is also the core profit model for distributors, and other new profit models are built on this foundation. Manufacturers are the product makers and the main responsible parties for market promotion, so they should provide relatively mature products or comprehensive new product promotion plans, and should not leave consumer cultivation and other market development work to distributors. In the current market environment, manufacturers that simply provide products are a thing of the past.
A distributor's profit must be guaranteed by overall sales volume. For distributors, without sales volume, even products with high profit margins are not worth choosing. The guarantee of overall sales volume comes from product maturity and adaptability to the local market. When selecting new products, distributors must pay attention to three points: first, whether the product itself is mature; second, whether the manufacturer's market promotion strategy is mature; third, whether the product fits local consumers.
Distributors must be clear: for products with uncertain prospects, do not pay out of your own pocket to cultivate the market; that is the manufacturer's job. If you take on too much, you may end up working for others or losing everything. When selecting products, distributors should be cautious about choosing special alcoholic products that require a lot of market cultivation, such as health wine and milk wine. These products have concepts that are too new, and consumers may not accept them quickly. If you choose such products, you should check whether the manufacturer has done market warm-up, such as test marketing in a small area, whether they have collected relevant market data from the test, and whether the large-scale promotion plan fully incorporates lessons from the small-scale promotion.
Are the resources needed to support the product sufficient? As mentioned earlier, new products must be suitable for the local market. But being suitable for the local market does not necessarily mean it is suitable for the distributor, because each product has certain requirements for the operating platform, such as market service response speed, specific conditions for warehousing and logistics, development capability for special terminals, and requirements for capital occupation and turnover. When selecting new products, distributors should first solve two problems: first, effectively assess the match between their own resources and the resources required for market development. In the market, talk to peers with good relationships to understand the resource requirements for similar products in actual operation. Second, consult the manufacturer. Responsible manufacturers have detailed and clear requirements for distributors and do not easily hand over products to unqualified distributors. They will also tell qualified distributors how to fully utilize their resources during market operations and how to handle problems that arose in earlier verification operations. Some irresponsible manufacturers like to describe the product's survival platform as very simple and accept anyone, recruiting a large number of distributors at trade shows or sugar and wine fairs, regardless of where they come from or their strength. When encountering such manufacturers, distributors must be careful. Every product has specific requirements for operational resources, and not everything can be that simple. In such cases, the manufacturer has not actually verified the product's market operation and only writes recruitment ads based on imagination. Once you take on such a product, you bear the risk of market verification to see if it matches your resources.
The author encountered such a distributor, Manager Li. This spring, he introduced a beer with a large amount of capital. After signing the distributor contract with the manufacturer, he stocked up without distinguishing specifications, from high-end canned beer and small bottles to low-end large bottles. Large bottles are easy; just go through regular channels. But small bottles are mainly sold in night venues, involving many things such as promotional staff arrangements, delivery capabilities, customer development, and terminal maintenance. Manager Li originally mainly operated in supermarket channels, and the catering channel was his weak point; he had only done distribution for other beer brands. Therefore, in a short time, this would cause huge financial pressure on Manager Li. This is like 'a small cow pulling a big cart—it will tire you to death.'
Think about your exit strategy; it's most important It's okay not to make money, as long as you don't lose money. Therefore, before introducing any new product, distributors should plan carefully and think about an exit strategy to deal with possible problems after the new product is introduced. This should be considered from two aspects.
First, if sales problems occur and the responsibility is attributed to the distributor, such as sudden changes that make it impossible to continue normal operation of the product, the distributor should proactively and quickly terminate cooperation with the manufacturer. Where is the exit? This requires prevention in advance and compensation afterwards. Prevention in advance means that when signing the contract with the manufacturer, it must be clearly stated that if the distributor has major operational mistakes, such as bankruptcy or other events caused by other product operations, the manufacturer should actively recover the existing goods. Responsible manufacturers generally do this because it eliminates the potential threat of cross-regional selling. Compensation afterwards means that the distributor should actively take measures to reduce the manufacturer's losses. For example, contact a good second-tier distributor downstream to replace your position and coordinate the relationship between the two. This leaves a responsible impression on the manufacturer and may lead to continued cooperation opportunities.
What if the responsibility is attributed to the manufacturer, and it refuses to accept returns? First, observe whether the product's hot-selling area is close to your area. If it is close, you can engage in cross-regional selling. Second, make full use of existing special closed channels, such as group buying. When the product is unsalable, you can sell it through these special channels as a favor. Third, if the product has not been fully developed in township markets, you can use the township channels of other products for distribution and reduce prices, because consumers in township markets pay more attention to product prices.
Look at the manufacturer's attitude towards sample markets A responsible manufacturer that aims for long-term development generally does not directly promote a product in a large area, but only finds a test market for verification, that is, first do a sample market to gain practical experience and data. When introducing new products, distributors should not just listen to the manufacturer's one-sided words; they should go to the sample market for on-site inspection.
Distributors should learn some questioning skills to distinguish the authenticity of the manufacturer's sample market. Of course, whether you go to the sample market or not is one thing, but in front of the manufacturer's staff, you must firmly say that you want to go to the sample market for on-site inspection. If the recruitment staff is evasive about the claimed sample market and cannot give a clear and definite response to arranging your visit, then the sample market is probably fake.
In addition, some manufacturers agree readily and arrange actively. But there are two situations: one is a real sample market; the other is a pre-packaged fake sample market. Fake sample markets are still easy to identify. Generally, manufacturers that have conducted detailed product verification will not have only one or two sample markets. According to different consumption characteristics across the country, manufacturers will arrange several sample markets that can represent certain regions. The number of sample markets is usually more than four, while fake sample markets are mostly only one or two. In addition, when inspecting the sample market, it is best for distributors to avoid the manufacturer's accompanying staff and conduct a secret visit, asking relevant people around, such as employees of nearby restaurants and hotels, the so-called main sales channels of the product, and industry peers in the area.
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