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Four types of distributor transformation.
Exclusive distributors Definition: Distributors that exclusively operate this product and do not handle any other brands. Function: These distributors can fully commit their capital, personnel, and energy, ensuring that there is no "collision" phenomenon during peak and off-peak seasons. Applicable environment: The promotion and achievement of such distributors are suitable for building channel barriers in base markets, representing the highest level of distributor management.
Dedicated distributors Definition: Customers who operate multiple brands and categories, such as liquor, beverages, and beer, but only operate this product within the beer category. Function: Dedicated distributors can effectively concentrate resources on this product and effectively prevent competitors from using the channel. Applicable environment: The promotion and achievement of such distributors are suitable for building channel barriers in base markets.
Primary distributors Definition: Operate multiple brands, but this product is the main one. Function: Squeeze competitors' living space in the same channel, maximizing sales of this product. Applicable environment: Such distributors are suitable for channel transformation in offensive markets.
Mixed distributors Definition: Operate multiple brands and also sell this product. Function: Leverage the channels built by competitors to drive this product. Applicable environment: Newly opened distributors or new markets are mostly of this type.
Distributor type transformation should refer to market classification standards.
Eight steps of channel evolution.
Any channel has a gradual evolution process from initial to mature. This process can be summarized as:
Blank stage. In areas where this product has not yet entered or channels controlled by competitors, there are blank channels. The existence of blank channels is both a competitor's advantage and an opportunity for this product.
Target stage. Looking at the entire market, the area of blank channels is vast. Even if there are no blanks within the province, there will be countless blanks outside the province. How to select targets from these vast blank channels requires the enterprise to define based on its market maturity and resource follow-up. For example, some distant areas may have to be abandoned due to logistics cost constraints.
Relationship stage. After confirming the target channel or area, the enterprise's marketing personnel will contact and visit the target channel, introduce the company and products, and gradually build trust from unfamiliarity to familiarity.
Transaction stage. Trust leads to transactions, which is the most basic guarantee of commercial exchange. After the transaction is reached, subsequent distribution and sales promotion actions should be followed up promptly to ensure continuous transactions and avoid one-time deals.
Mixed sales stage. As a new product entering the channel or area initially, there is little space for independent survival. It can stick to competitors, use their channels to survive, engage in parasitic sales, and gradually take the initiative in the same channel.
Primary sales stage. Use the advantages of this product to squeeze out competitors and turn from guest to host. At this stage, it is necessary to fully utilize the channel profit lever. It is a common problem in most markets that best-selling products do not make money. In the same shared channel, best-selling competitors may inadvertently become tools for occupying territory. On the contrary, non-best-selling products may be transformed by the channel into money-making tools.
Exclusive sales stage. Driven by profit, this product quickly seizes competitors' original market share. At this time, it is possible to seize the opportunity, provide exclusive sales rewards to the channel, sign exclusivity agreements, and drive competitors out, forming a channel barrier for this product in that channel or market.
Exclusive operation stage. This stage mostly applies to the distributor level. For distributors of this product in mature markets to achieve exclusive operation, the enterprise must have strong channel profit creation and delivery capabilities. For example, strong single-product profit guarantees, multi-product line support, and a rich category portfolio.
Channel policy grasp in three types of markets.
Base market. High distribution rate, high share, and high profit margin are the most basic indicators of a base market.
Hinterland market. High distribution rate, medium share, and low profit margin are the basic characteristics of a radiation market. Radiation markets mostly rely on and surround the base market.
Radiation market. Low distribution rate, low share, and high profit margin.