Let's first look at a daily life example, as shown in the figure below: When we have a pimple on our face, there are three responses. The first is a temporary fix: squeeze it and apply makeup. The second is deeper thinking: it might be due to internal heat, so we should eat less spicy food. The third is a fundamental solution: it might be a constitutional issue, so we need to adjust our diet, control the body's acid-base balance, and maintain a regular sleep schedule. All three methods are viable, but some address symptoms while others address root causes. The symptomatic approach may lead to another pimple the next day, while the fundamental approach gradually reduces pimples over time. So, what does this have to do with the systematic development of distributors? Brand owners all hope that distributors can add personnel and vehicles to meet the needs of market outlet development and maintenance. There are three responses. The first is a temporary fix: frontline staff address the issue directly, learning techniques to persuade distributors to add vehicles and personnel. The second is deeper thinking: mid-level staff delve into the distributor's business operations to find solutions. The third is a fundamental solution: senior management start with the channel coverage model, redefine the rights, responsibilities, and interests of both parties, and establish a long-term mutually profitable model. Now, let's get to our topic: From a fundamental perspective, we will discuss the systematic development of distributor channels as part of the brand owner's channel strategy – how to effectively activate distributors and unleash maximum market competitiveness. Think: Is the current task 'adding horses' or 'changing the carriage'? A one-horse carriage travels at about 15 km/h, with an investment of 10,000 yuan. Adding one horse increases speed to 25 km/h, a gain of 10 km/h. Investing another 10,000 yuan to add another horse increases speed to 30 km/h, a gain of only 5 km/h. With the same cost, the efficiency decreases, and this model's cost-effectiveness approaches zero. The operational characteristics of the horse-drawn carriage explain why many companies previously achieved results by trading expenses for sales, but now the results are diminishing. Many senior brand executives say: "In the past, a promotion would significantly boost sales, but now even with greater intensity, it's like punching cotton – almost no effect." In fact, Nongfu Spring achieved qualitative and quantitative leaps through the distributor contract model; Jinmailang through the four-in-one model; Coca-Cola through the 101 model; and Master Kong through the intensive distribution model. These companies reached the top of the industry primarily by replacing the 'horse-drawn carriage' with an 'automobile,' fundamentally changing their operational models. That is: Exploring and researching a channel coverage model that fits the brand owner's current situation is the key to solving the main contradiction; secondary contradictions will then be resolved. So, as FMCG has developed to today, what channel coverage models have emerged? 1. Offline Channel Coverage 1.0: Traditional Agency Model Time: Around 1995. Characteristics: Supply falls short of demand; agents operate independently; companies only provide products. Brand owners raced to secure provincial, municipal, and county agents, then distributed through second and third tiers. The channel featured multi-level distribution, building volume through layers. For distributors, securing agency rights was key to success; for brand owners, the deeper the agency level, the more agents, and the more secure the sales. Agents operated independently; companies provided products and management personnel (mainly responsible for payment, delivery, and communication of expenses). Businesses relied on demographic dividends. In an era of material scarcity, as long as a factory could produce quality products, natural distribution sufficed to cover outlets for small and medium enterprises. Representative Brand: Wahaha's joint sales model: "Brand Owner" – "Provincial Company" – "Tier 1" – "Tier 2" – "Tier 3" – "Outlets." The marketing team's role was to develop and manage the entire channel. Channel Role Analysis: Both brand owner and agent are athletes, each doing their own thing. 2. Offline Channel Coverage 2.0: Intensive Distribution Model Time: Around 2000. Characteristics: Intensified competition, terminal is king, channel model focused on controlling terminals, brand owner leads operations, distributor handles delivery. Product proliferation led to fierce competition, exposing the drawbacks of crude channel distribution. Brand owners began optimizing channels, and the intensive distribution model emerged, shifting focus to terminal outlets. The slogan was "Win at the Terminal." Various methods appeared, such as Coca-Cola's "101" and tripartite cooperation between manufacturers, agents, and KA. All aimed to strengthen terminal maintenance and customer relationships. Key metrics: distribution rate and single-store sales. Leading FMCG brands began implementing intensive distribution. To improve operational efficiency, they recruited large numbers of sales personnel for a human-wave strategy, sweeping streets indiscriminately. The basic requirement was a replicable, adaptable operational system. At this time, domestic leading brands' channel coverage became dense, though the model was simple and crude. Representative Brands: PepsiCo, Master Kong, Coca-Cola, etc. Channel Role Analysis: Brand owner is athlete, distributor is sparring partner, with division of labor. 3. Offline Channel Coverage 3.0: Traditional Distributor Model Time: Around 2005. Characteristics: Distributor leads market operations, brand owner supports, relying on enterprise resources and guidance. Around 2005, with booming domestic economy and demographic dividends, product demand gaps widened, and many FMCG companies emerged like mushrooms. More people entered this low-barrier business. Agents were educated by companies like Wahaha and Master Kong, and channel chains were quickly established. New brand owners needed to build local distributor networks to reduce operating costs, giving distributors more responsibilities, rights, and interests, and retreating to "logistics support." Representative Brands: All new brand owners of that period. Channel Role Analysis: Distributor is athlete, brand owner is sparring partner. 4. Offline Channel Coverage 4.0: Distributor Contract Model Time: Around 2010. Characteristics: Distributor leads operations, brand owner provides macro guidance, with clear division of rights, responsibilities, and interests. As demographic dividends disappeared, incremental markets became stock markets. Brand owners found it harder to grow, and profit pressure increased. Additionally, labor costs rose due to labor law regulations and price increases, making the human-wave strategy unsustainable. Some brand owners designed rights and delegated authority to distributors. The basic requirement was that distributors possess high operational efficiency. Representative Brand: Nongfu Spring. Channel Role Analysis: Distributor is athlete, brand owner is coach + referee. 5. Offline Channel Coverage 5.0: Small Boss Contract Model Time: Around 2015. Characteristics: Distributor boss partners with frontline staff; brand owner acts as sparring partner. The employment relationship between distributor boss and frontline salespeople transforms into a partnership. Jinmailang believes that the more decentralized the distribution rights, the stronger the initiative of personnel. Only by stimulating people's primal desires can market competition be invincible. As a result, under the four-in-one model, Jinmailang achieved leading annual growth rates among FMCG head enterprises for several consecutive years despite market weakness. The basic requirement is that both the execution team and distributors possess certain operational efficiency. Representative Brand: Jinmailang. Channel Role Analysis: Distributor is athlete, brand owner is referee. 6. Offline Channel Coverage 6.0: Three-Power Separation Partnership Model Time: Around 2020. Characteristics: Distributor boss, professional manager, and frontline staff form a partnership; brand owner provides logistics support. The three-power separation model is the endpoint of channel coverage models when distributors exist. It fully defines the rights of both parties and more precisely empowers distributor managers and business teams in daily operations, using management as the core incentive logic to stimulate initiative at all levels. The basic requirement is that execution, grassroots management, and distributors possess operational efficiency. Representative Brands: Some liquor companies, some first-tier brands' new marketing departments. Channel Role Analysis: Distributor is athlete, brand owner is referee, professional manager is sparring partner. Overall Approach to Distributor Optimization The complete offline channel chain: Brand Owner – Distributor/Sub-distributor – Salesperson – Outlet – Consumer. The core of effective offline channel coverage is to unblock all links in product circulation. Above that, three questions must be addressed: First, who does it? Second, what to do? Third, what model is conducive to doing it well? 1. Solving the 'Who Does It' Problem In recent consulting work, the debate over whether the brand owner or distributor should hold market operation leadership has been central. Some traditional brand sales management teams argue that the brand owner must retain leadership for unified command and consistent pace. Others argue that whoever operates more efficiently and has stronger combat effectiveness should lead the market. If distributors are more efficient and competitive, a new distributor model – contract distributor – can be chosen, which is more conducive to resource integration and improving operational efficiency. Who should hold market leadership? It is not determined by the manufacturer but by the market. Seeking a leader that can outcompete rivals is the core of sustainable development. So, how to identify which type of distributor has the capability for market leadership? For brand owners, the preferred distributor standards are only two: one is capability (can do it), and the other is willingness (wants to do it). This requires brand owners to establish a complete distributor capability-willingness evaluation system to select those with strong capability and willingness to lead regional market operations. Brand owners daring to delegate authority is a major innovation and progress in channel coverage models! 2. Solving the 'What to Do' Problem In the FMCG industry, transactions (sales) between brand owners and distributors are often not a problem; the difficulty lies in distribution (B-end work) and promotion (C-end work). It would be best to advance both simultaneously, but in actual operations, constraints such as frontline team energy, market budget limits, and varying competitive conditions across markets make it crucial to seek a replicable, sustainable model. Generally, I recommend that brand owners initially segment markets based on population and annual per capita consumption, matching different market types with different operational methods to achieve overall market improvement. 3. Solving the 'What Model Is Conducive to Doing It Well' Problem Channel model definition is essentially the division of rights, responsibilities, and interests between manufacturer and distributor. What market matches what distributor, and what rights, responsibilities, and interests? Let me share a channel model planning case I did for a listed company. 1) Leading Operation Model: Match distributors with strong capability and strong willingness. The distributor as market leader focuses on: market outlet construction, development and visits to various outlets, display maintenance; market promotion plan formulation and implementation; team and shopping guide management and assessment. The brand owner as market assistant focuses on: market supervision and inspection, promotion activity summaries; brand building, company brand implementation; daily morning meetings, data tracking and process advancement; market co-visits and standard training, assisting in creating models. Additionally, support work includes expense models, coverage models, and inspection models. It must be emphasized that the leading operation model is not simple expense contracting, nor is it management by contract; it is about both parties performing their respective duties and maximizing their efficiency. 2) Following Operation Model: Match distributors with weak capability but strong willingness. The distributor is positioned as investor and participant, while the brand owner team is the business leader. The distributor's core work includes: market outlet construction, development and visits to various outlets, display maintenance; market promotion plan formulation and implementation; team and shopping guide management and assessment. The brand owner's core work includes: building systems, negotiating and formulating standardized operation systems (organizational management systems); building teams, helping distributors with daily team management, attending morning meetings, tracking data and process advancement; market co-visits and standard training, assisting in creating models; building brands, company brand implementation. It must be emphasized that the brand owner's regional supervisor, acting as the distributor's professional manager, must first possess good operational capability, not only to undertake the brand owner's management objectives and act as market operator but also to manage the distributor's team and daily operations. Therefore, their capabilities, qualities, and job responsibilities must be supported by actionable processes and systems. Market success depends on the brand owner supervisor's operational capability. Implementing Specific Operational SOPs All work ultimately falls on frontline sales personnel. Designing simple, clear, and "foolproof" implementation steps is crucial. Here are a few processes for reference. Final Thoughts For FMCG manufacturers and distributors, the next decade will be the best of times and possibly the worst of times. Whether it's good or bad depends on how you view the market and how you undergo self-reform and iteration. Distributors are the most powerful and indispensable partners of brand owners. Both parties need to be highly aligned in cognition, capability, and willingness, and mutually achieve and grow, to secure a place in an uncertain competitive market environment. 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