In business, from the perspective of enterprises and distributors, regardless of the new retail solution applied, the ultimate goal is to create organic growth.
Over the past two years, the FMCG industry has seen more new concepts and terms than in the previous two decades. Everyone is exposed to different new terms daily, bombarded by various information and consultations. I want to share two viewpoints, two universal value concepts:
First, no matter what concept in marketing or the FMCG industry, with the evolution of tools and technologies, there will no longer be a single method that solves all marketing problems, just as no product can satisfy all 1.3 billion consumers in China. This might have been possible 30 years ago, but not today.
Second, when enterprises, distributors, and stores implement a solution, regardless of what it is, it must create effective results today. This is the hardest indicator for measuring any solution and a market necessity. Following logical methods, helping customers create value, and generating organic growth is our reason for being in this circle.
Let me give a brief case: In our database, we have 540 distributors, typical and ordinary in the FMCG industry. The categories they represent are shrinking. However, under the new normal of the FMCG industry, they achieved a turnaround. What kind? Comparing 2017 full-year operating data with 2016, their outlet coverage achievement rate increased by 15.44% in 2017. More importantly for enterprises and distributors, in terms of order quantity, order cases, and order value, they saw at least two to three times growth. These outlets ensure regular and efficient distribution, with quantity on the left and quality on the right. These are key indicators that help create what we define as organic growth, rather than relying on luck or demographic dividends. Behind these ordinary distributors is a management system. Under this system, distributors hold daily morning meetings and summarize work logs using data and technology to meet management needs in line with FMCG industry logic.
Today, I stand from the perspective of enterprises and distributors to look at the evolution of all new retail technologies. I believe every company will embrace these emerging technologies and solutions, that's clear. But when each enterprise and distributor faces so many technology choices, do we have a standard to measure which one can serve us? I've met many headquarters managers in FMCG companies. They started paying attention to new retail, B2B supply platforms, and consumer e-commerce platforms early on. They remain cautious because, in their words: "I can't figure out if my sales are truly growing or just shifting from my left pocket to my right pocket." This is a key consideration. So when facing so many concepts, it's crucial to discern the authenticity of the proposition. From the boss's perspective, what you really care about is how to organically define growth.
If deep distribution is version 2.0, then precision marketing is version 3.0. The dilemma of having more or fewer outlets must be measured against a standard platform to determine authenticity. So we say it's not about pursuing more outlets; absolute coverage rate is meaningless. We pursue the proportion of effective outlets. We classify outlets suitable for selling FMCG into 183 types. Why so many? Because anyone in marketing knows that stores near universities face different customer segments than those in aging communities. If both stores stock condoms, the small store in the aging community won't sell any. Is it meaningful to pursue 100% outlet distribution? So how to use data to define outlets more precisely, define clear consumer attributes, and define consumer scenarios (TPO) is key. Therefore, we must convert mechanical coverage into a weighted, effective measure with one or multiple reference indicators to form external resources for enterprises and distributors.
Another interesting proposition is DMS. Many large new retail companies are trying to capture distributor data through DMS, but it's hard and unsuccessful; Master Kong, Uni-President, and Coca-Cola all failed. For distributors, when you give me a vision that truly helps me create growth in this region, then I might share my outlet, inventory, and distribution data with you. Why share? Because if I share 10%, you can help me create 20% growth. It's always profit-driven.
From the perspective of distributors and enterprises, the problems we face under the new normal are not caused by new retail, nor will they be automatically solved by its arrival. This is determined by whether marketing capabilities are reliable and high, which is key to whether the next ten or thirty years will go smoothly.
Kong Haobo: Chief Marketing Officer of Molihutong (This article is compiled from Mr. Kong Haobo's speech at the "2017 China Marketing Ceremony," with content abridged.) -END-