City Manager in a First-Tier City: When Prices Were Chaotic Across 3 Channels Before, How Should Prices Be Managed Across 8 Channels Now?

At today's weekly meeting, the discussion was particularly intense, and a meeting that would normally end in an hour had already lasted over two hours... Lao Wang felt that more debate wouldn't change the old problems, so he quickly called a halt: "Price chaos is not a new problem! Market prices are chaotic every day! Don't just complain! Previously, you complained about hypermarkets and cross-regional channel stuffing, and now you're complaining about e-commerce and B2B. Is there no end to this?" Years pass, people change, but the flowers bloom similarly each year. In fact, Lao Wang himself knew that price conflicts truly never end... Price has always been a very sensitive and eternal topic. For years, "price chaos" has also been the standard "excuse" and universal "shield" for frontline staff failing to meet sales targets. In the past, hypermarkets undercut distributors, wholesale markets undercut retail stores, and distributors fought across regions... Now it's even more lively! New channels like e-commerce, B2B, and community group buying have joined the fray. With more channels, price management has become increasingly difficult. When it comes to pricing, city managers feel even more pressure. Now, the era of omnichannel distribution has arrived, and 3 channels have become 8. How should prices be managed, especially as new channels like e-commerce, ERTM, and community group buying gradually become mainstream? These new channels and platforms, which operate on the underlying logic of "explosive products," have used "price" as a weapon for traffic generation, customer acquisition, and market expansion since their inception. Brand owners cannot avoid this and must actively face it. In the era of omnichannel distribution, frontline city managers are more important than ever! Because it's no longer possible to implement a "centralized" nationwide strategy, follow headquarters, and get bonuses every month. Now distribution is fragmented, communication is fragmented, and the market environment each region and city faces is also fragmented and more unique. Even with the full explosion of new channels and scenarios, the pace and quality of development vary across cities, with each city having its own characteristics! This requires every city manager to face higher challenges in managing local market prices, i.e., to guide according to circumstances and adapt to local conditions. Therefore, this article explores how a city market's pricing strategy should be upgraded in the era of omnichannel distribution. Whether for a company or a single market, price is always the lifeline. If prices are not managed well, how can business growth be discussed?

1. Not only manage your own turf, but also keep a close eye on external developments; 2. What is the key lever for "controlling prices, preventing channel stuffing, and maintaining market stability"? 3. Don't just defend; also launch attacks at the right time! -01- Not only manage your own turf, but also keep a close eye on external developments The FMCG market is multi-tiered, and the industry's commercial, logistics, and information flows are also layered and multi-level, influencing each other from top to bottom. Although frontline city managers manage their own turf, prices are fluid and affected by many external factors. Even if you manage your own territory well, you can still be affected externally. It's like driving: a truly good driver isn't one who never hits anyone, but one who can effectively prevent being rear-ended by others. City managers need an overall understanding of the patterns of price movement. Although they cannot control the price trends of the external environment, as grassroots business managers, they must at least know the external price levels and accurately predict and guard against them! Only then can they effectively protect their own market and secure a peaceful life for their "turf." First, the headquarters' pricing strategy. In the current environment, the core of the pricing strategy formulated by headquarters is to maximize the avoidance of price risks in mainstream channels, which is an important strategic protection for the frontline sales team. Currently, price chaos comes from three sources: first, goods leaked from e-commerce platforms; second, goods dumped by national KA hypermarkets; third, goods flowing out from emerging channels like ERTM. For these three types of national channels, the first step is to establish a price gradient. As a brand owner, to build channel competitiveness, the more mainstream and promising the platform, the more resources it will support, not only to grab sales but also to seize the track, traffic, and mindshare. Therefore, EC and KC often receive more resources than traditional distributor channels, but gradient pricing can be adopted. Assuming a purchase price of 100, it is suggested to give e-commerce 100, KA 90, and traditional channels 80. Although online e-commerce gets 100, various electronic coupons and activities will bring it down to 80. Similarly, KA hypermarkets, with various contract advantages and promotional resources, will gradually drop to 80. Although frontline city managers cannot influence headquarters' pricing strategy, they should understand the difficulties and good intentions behind it. They should not always complain or slack off on pricing issues but should empathize and align with headquarters. Similarly, for headquarters, this tests their pricing expertise. Once the headquarters' pricing design has loopholes, it can easily lead to a situation where "incompetent headquarters exhaust the troops." Second, the national price ecosystem. Even if the headquarters' pricing strategy is in place, the overall market price ecosystem must be considered. Years ago, before e-commerce became mainstream, wholesalers in various regions mostly sourced from KA and rarely from local distributors. Over more than a decade of evolution, major hub markets (such as Beijing, Guangzhou, Linyi, Changshu, Changsha, Zhengzhou, Xi'an, etc.) have nurtured many leading wholesale giants, who have formed alliances and interconnected networks, establishing a nationwide distribution network. Around 2015, when online e-commerce became a mainstream FMCG channel, leading wholesalers had more sourcing channels. Coupled with historical policy differences across regions, it can be said that leading wholesalers in major wholesale markets control the national price levels of many products. These leading wholesalers are the bellwethers of prices. Although frontline city managers cannot control them, they should always stay alert and attentive. Next is the provincial market price environment. Changes in the national price ecosystem often first impact provincial wholesale markets. Typically, price fluctuations in the provincial capital's wholesale market can directly affect the price levels of lower-tier markets in the province. At this point, it is recommended that city managers have some "informants" in the provincial market, or maintain regular communication with provincial city managers and wholesale sales representatives. Once there are signs of trouble, take precautions in advance to prevent channel stuffing. Compared to the headquarters' pricing strategy and the national price ecosystem, which are beyond reach, city managers can proactively predict and respond to provincial market prices. The first step is to grasp provincial market price information in real time; the second step is to be thoroughly familiar with local and regional logistics and commercial flows. Clearly understand the price differences and logistics costs between different regions, and predict in advance which areas may be prone to channel stuffing. Finally, implement the local price system. City managers have relatively high autonomy. The design of the price system should include considerations for the three-tier low-level markets of "towns, townships, and villages." Design it according to the specific local market conditions. Looking at FMCG pricing across the board, despite the rise and fall of new channels, the hierarchy and gradient of prices have never changed. New retail and new channels have changed the content of each price level and gradient, but the layered logic of the price ecosystem has long persisted. Therefore, overall, "controlling prices, preventing channel stuffing, and maintaining market stability" is a key responsibility for frontline city managers. Not only must they guard their own positions, but they must also be alert to all sides and grasp price trends in a timely manner. Understand that even in a small city, prices are not entirely subject to your will. City managers need to design the local price system objectively and rationally. -02- What is the key lever for "controlling prices, preventing channel stuffing, and maintaining market stability"? National prices are uncontrollable, but at the local market level, city managers must achieve "proactive control." What does "proactive control" mean? It means establishing a price warning mechanism based on the proportion of business each category has in different channels. For example, in the old scenario, large stores account for 50% of business, BC stores 20%, wholesale 20%, and community group buying 5%. Large stores and BC stores are the core business for distributors and local sales teams, and everyone usually watches them closely. The manufacturer's direct sales team and distributors have relatively strict control over these two channels, so wholesalers and new retail channels have relatively little price impact on them. The wholesale channel has always been price-driven, with cash as king. Community group buying is driven by explosive products; only with explosive products can there be traffic. Both have excessively low prices. Therefore, combining the characteristics of each channel, for city managers, the easiest to execute and most practical is to implement price ranges for each core SKU, calculated based on comprehensive gross profit. The operating logic of each retail channel determines that there cannot be a single fixed price without flexibility. Simply put, for each channel, what is the price floor? Once the floor is breached, the city manager must intervene. For example, in the old scenario, the core SKU1 price range for large stores is [105-100], and for community group buying, it is [93-98]. If the threshold is exceeded, communication and coordination with the channel must occur immediately to prevent damage to the entire market. Why calculate based on gross profit? Because city managers have sales KPIs, while local distributors, as businessmen, care more about gross profit margins. Therefore, city managers must consider the distributors' gross profit while achieving sales targets. Otherwise, focusing only on sales will only kill the distributors. If the skin is gone, what will the hair adhere to? City managers must make distributors clearly realize that the days of easy money are gone. With so many new channels now, distributors must make trade-offs. Don't expect all channels and all SKUs to be profitable. Business is about comprehensive gross profit; profit is a whole chess game, not the gross profit of a single SKU. When designing price ranges for each channel corresponding to core SKUs, city managers must continuously use calculations to make distributors understand that only new products and high-margin products are the key to future profitability. -03- Don't just defend; also launch attacks at the right time! In summary, for the operation and maintenance of the local market price system, city managers should focus on the following six tasks: First: Monitor the provincial price environment and grasp trends in time; Second: Fully control the city price system locally; Third: Monitor key local channels and key SKUs; Fourth: Focus on key local customers, catch the ringleader first; Fifth: Seize opportunities for price increases and lead the push for new and premium products; Sixth: Build a local price structure and continuously optimize profits. Any best-selling product starts as an unknown new product, gradually promoted and developed, eventually becoming a source of profit for manufacturers and distributors. Therefore, the first four tasks of price operation are essentially about "defensive warfare." By understanding external price trends, controlling the local market, and focusing on key channels, key SKUs, and key customers, you can extend and stabilize the market cycle of best-selling products. But as frontline commanders, besides defensive warfare, you must also wage offensive warfare. What is offensive warfare? It is using opportunities for corporate price increases to push more new products. New products have fewer market references, so they can not only meet the company's profit needs but also meet distributors' profit expectations. Once new products take root locally, a healthy local price structure will gradually form, benefiting both parties. Therefore, as a city manager in the era of omnichannel distribution, facing multiple distribution channels, the upgrade of pricing strategy must build a moat for the local price structure. Set up price warning mechanisms for each key channel and key SKU, and keep a close eye on "repeat offender" customers. At the same time, to reduce external price impacts on the local market, city managers should also continuously introduce new products to build a new local price structure that is sustainable, profitable, and growth-oriented! "In the era of omnichannel distribution, more channels and more price conflicts seem frightening, but they are also opportunities! The more new channels rise, the better the time to systematically solve stubborn market problems! Don't waste the huge opportunity that fear brings us. Great fear means great opportunity... The more fear, the more it triggers deep thinking. The antidote to fear is objective analysis!" Thinking of this, Lao Wang didn't want to stay in the office wasting time. He put on his mask and went to the front line, to the channels and stores, to find methods and solutions! He rushed to the garage, started his Passat with 180,000 kilometers on it. The car stereo was old, but the sound was still full and rich as it played: "I am still the same boy as before, without a single change. Time is only a test, the faith planted in my heart has not diminished at all..." About the author: Xu Xiang, currently Sales Director of Unilever South China, with 20 years of experience in FMCG daily chemicals, dairy, and condiments, deeply involved in regional market management and customer marketing, willing to exchange and learn with peers for mutual progress.