---
title: "Channel Control: The Foundation of a Distributor's Future Survival and Growth!"
description: "Mastering terminals is key to market dominance. Mr. Wu, a beverage distributor in Guangxi, has maintained his position as regional agent for Brand A for over a decade by cultivating key accounts, enhancing channel relationships, and developing special channels. However, increasing pressure from manufacturers to deepen market penetration and his own neglect of small and medium clients threaten his leadership. To improve channel control, distributors should plan channels rationally, implement fine management, and optimize logistics and distribution."
author: "New Distribution"
publisher: "New Distribution"
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telephone: "+8615854817671"
published: "2014-09-03"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/uVkBoVWUFXqJUY3GSIb6lA"
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# Channel Control: The Foundation of a Distributor's Future Survival and Growth!

> Mastering terminals is key to market dominance. Mr. Wu, a beverage distributor in Guangxi, has maintained his position as regional agent for Brand A for over a decade by cultivating key accounts, enhancing channel relationships, and developing special channels. However, increasing pressure from manufacturers to deepen market penetration and his own neglect of small and medium clients threaten his leadership. To improve channel control, distributors should plan channels rationally, implement fine management, and optimize logistics and distribution.

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**Mastering Terminals Achieves Market Position**

Mr. Wu is a beverage distributor in a city in Guangxi Province. He has been distributing Brand A for over a decade, primarily handling beverages, red wine, and snack foods. His coverage of catering and nightlife terminals exceeds 90%, but his main business remains Brand A. For over ten years, Mr. Wu has been the regional agent for this brand. After more than a decade of development, Brand A has become widely known among consumers, and Mr. Wu naturally became one of the company's core distributors, holding a high position in the eyes of the company's leadership.

Despite this, under the banner of deep distribution, the manufacturer has tried to shrink his sales area to achieve fine market cultivation and expand sales share. Over these ten-plus years, the office manager has changed eight times, but Mr. Wu's position as general agent has remained solid, and he has even expanded his sales area. The reason is his strong ability to control terminals: channel distribution rate exceeds 85%, and he controls 90% of the city's sales. To lightly shrink his sales area would mean uncertainty about completing sales tasks, and could even ruin the market! Although difficult to control, facing increasing sales volume and market share year after year, the manufacturer can only turn a blind eye. So, how does Mr. Wu operate his terminals?

1. **Cultivate key accounts.** Mr. Wu started with Brand A and over the past decade, the sales that support his volume come from these "loyal buddies." These customers hold important positions in the city: large businesses, good locations, wide networks, and timely information. They are Mr. Wu's key support targets. By establishing a professional business team, he develops and maintains key retail customers, stabilizes relationships with key customers and channels, and achieves steady sales growth. These major customers are the main reason Mr. Wu completes his sales tasks and are also his capital for maintaining his position as the city's general agent.

2. **Enhance channel relationships.** Mr. Wu has been distributing Brand A for over a decade, growing from a young man delivering goods by tricycle to a multimillionaire. Despite this, he personally handles every delivery and always brings small gifts or premiums to important customers. Through over a decade of interaction with terminals, he has gained the recognition of terminal owners, who naturally promote Brand A enthusiastically, stabilizing confidence in the sales channel.

3. **Develop special channels.** Facing the pressure of increasing sales tasks year after year, Mr. Wu has his own approach: increase distribution channels and develop special channels. Using local network resources, he sells beverages and red wine to government agencies, high-end clubs, coffee shops, and other special channels. After years of operation, Brand A has achieved good results in these channels, and Mr. Wu has reaped considerable benefits.

**Market Pressure from Terminal Downward Expansion**

However, since 2008, the manufacturer has advocated channel sinking and fine management. Although Mr. Wu's sales area has not decreased, his annual sales tasks have greatly increased. Coupled with the economic downturn, pressure is growing daily. Sales from major customers have stagnated. Although the market channels are stable, after reaching a certain level, sales growth slows and cannot be improved; small and medium customers are continuously lost.

Due to over-reliance on major customers, attention to small and medium customers is low, and market investment is small, so these customers often complain; some manufacturer policy restrictions. Although Mr. Wu's sales area has expanded, the manufacturer has added restrictions to the contract to better control; additional costs have increased. Mr. Wu has found that the profit from the mature brand A is gradually decreasing each year, and rising delivery and labor costs have made direct terminal control much more expensive. The main business of beverages not making money has led to a decline in overall company operating profit, etc. All these have brought unprecedented pressure to Mr. Wu. If left unchecked, his position as general agent will eventually be lost.

Direct terminal control brought Mr. Wu rich returns and established his strong leadership position in the city. However, as competition intensifies and the manufacturer's channel sinking and market control capabilities strengthen, Mr. Wu's former terminal leadership position is gradually weakening. The main reason is his extensive management of terminals, which can no longer meet the increasingly clear division of labor in society. Specific reasons are as follows:

1. **Focus on results while neglecting process.** Mr. Wu has always operated the market with early business thinking, valuing sales volume and profit returns while neglecting terminal performance. Although sales have remained good, market performance is poor, and results naturally are not too good.

2. **Neglecting the value of small and medium customers.** In recent years, Mr. Wu has found that the key supported major customers have grown, but slowly, and can no longer meet the manufacturer's sales requirements. The main reason is that Mr. Wu puts main energy and resources on these major customers, giving them priority in policy and resource investment. Long-term neglect and poor service attitudes have led to increasing complaints from small and medium customers and their continuous loss, so sales naturally decline.

3. **Inappropriate resource allocation.** On one hand, relying on good relationships with major customers, he reduces investment in promotional gifts; on the other hand, he sells intercepted gifts to increase profit sources. Unbeknownst to him, over time, when other manufacturers invest more resources, these major customers gradually shift their attention to other high-profit products, and small and medium customers do not receive manufacturer benefits, so they naturally do not enthusiastically recommend the product. This is also an important reason for customer loss and sales decline.

**How Distributors Can Improve Channel Control**

In today's increasingly clear division of labor, it is crucial to control channel terminals. Mr. Wu's direct terminal control strategy is a direction for us to learn from, but his shortcomings are worth reflecting on. So, how can distributors improve channel control? It mainly includes three aspects:

**Rational Channel Planning**

1. **Planning strategies for circulation channels and current channels.** For the FMCG industry, rational channel planning is a prerequisite for market control. We can divide channels into circulation channels and current channels based on specific market conditions, then find profit points within these channels and conduct overall layout based on these points to maximize terminal control. For example, in modern channels, chain convenience stores are a new retail terminal. To effectively control terminals and shorten the contact layer with consumers, we can choose convenience stores near communities with good quality for terminal display and relationship maintenance.

2. **Development and maintenance of special channels.** Special channels are very attractive to distributors because they have concentrated consumer groups, low development thresholds, and low maintenance costs, making them popular among distributors. If traditional channels are the regular army, special channels are the flanks of the army, playing a defensive role for the overall situation. For distributors or agents with strength, consider setting up an independent department or dedicated personnel to maintain and follow up.

**Fine Management**

1. **Channel division.** This is a further division under the overall channel division. Based on specific market conditions, divide the market into A, B, and C markets, and decide resource investment based on market performance. These markets can be divided into sales-oriented, investment-oriented, image-oriented, and sales-image-oriented markets. For example, chain stores are a mature channel for Brand A, i.e., a sales-oriented market. In this market, consumers already have a certain awareness of Brand A, so we can invest fewer resources, invest periodically, and maintain relationships. By analyzing and effectively dividing channels, resource investment becomes more effective and targeted.

2. **Store management.** Store management is the most important part of fine management. Many distributors think that good store management is just timely delivery and preventing stockouts. However, it is not that simple. In today's increasingly fierce competition, distributors must continuously adapt to market development needs. How to do effective store management?

First, establish detailed customer profiles, including the store's operating history, owner, contact phone, address, operating area, and product items. By establishing profiles, you can effectively understand the store's overall operations.

Second, conduct sales analysis, including item analysis, item sales, monthly sales, achievement ratio, and competitor share, to promptly understand market dynamics and adapt to market needs.

Third, make a replenishment plan. Often, we find that relying solely on the store owner's replenishment plan can lead to stockouts affecting sales. We can remind the store owner to replenish at appropriate times to prevent stockouts from affecting sales.

3. **Promotion arrangement.** By holding irregular promotional activities, attract terminal owners' enthusiasm and enhance brand influence. If it is a leading brand, consider the company's development plan and hold promotions for key promoted items; if it is a follower brand, consider competitor investment for targeted counterattacks. Note that promotion arrangements must fit the annual market support budget, and effective supervision and feedback on promotions should be conducted to monitor channel dynamics.

4. **Personnel allocation and division.** In practice, we find that some distributors are casual about maintaining mature markets. The better the market foundation, the fewer personnel they often invest. Little do they know that because the market foundation is good, business personnel's work is relatively easy and simple. Long-term relaxation often leads to sales decline or competitor counterattacks causing sales to drop.

**Logistics and Distribution**

1. **Choose an appropriate warehouse location.** Controlling terminal distribution is key. The key to reducing distribution costs and ineffective distribution is choosing an appropriate warehouse location. After detailed market division and planning, the next step is to do distribution work well. Timely distribution not only improves terminal customer satisfaction and trust but also prevents losses from delayed delivery causing stockouts.

How to choose an appropriate warehouse location? First, set it based on the demand of market stores, including the distance between stores, arrangement of key items, and placement of promotional items, for overall arrangement. Second, choose based on the actual convenience of inbound, outbound, handling, and vehicle dispatch. For example, if the wholesale market is internal and loading and unloading are extremely inconvenient, affecting delivery efficiency, then consider setting up a warehouse in a place with convenient loading and unloading.

2. **Good inventory management.** Whether inventory management is good or not directly affects the effectiveness of distribution. For distributors with direct terminal control, stockouts not only miss greater sales opportunities but also affect relationships with terminals. Distributors should pay attention to changes in their own inventory to manage it promptly, and also pay attention to terminal store inventory to replenish in time, strive for greater sales opportunities, and win terminal trust.

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