Promotions are the most common market stimulus, and every distributor is familiar with them. Moreover, almost every distributor constantly applies to their upstream manufacturer for promotional activities, but manufacturers plan promotions in phases and cannot arrange them year-round. If the upstream manufacturer has no promotion scheduled for the current period, but a competitor launches one, it spells trouble. Downstream secondary wholesalers and retail stores are profit-driven and will flock to whichever manufacturer offers the biggest promotion, showing little loyalty. 【Analysis】 When a distributor encounters a competitor's promotion, the first reaction is often to report the situation to the upstream manufacturer and apply for a corresponding promotion to counter it. However, manufacturers have their own overall arrangements and generally do not easily add temporary promotions based on a distributor's request. Furthermore, even if the manufacturer agrees to arrange a promotion, it still goes through a series of applications, approvals, product transfers, and publicity, which inevitably delays the optimal timing. After all, the control of promotions remains in the hands of the manufacturer. Of course, in extreme cases, distributors sometimes fund their own promotions to counter competitors and win over downstream customers. In fact, whether the promotion is arranged by the manufacturer or the distributor, the premise is often that a competitor is promoting, making it a reactive and confrontational measure, with the core goal of winning customers. However, this back-and-forth promotion war often hurts both manufacturers and distributors. To win customers, competitors increase promotional intensity and frequency, even sacrificing their own profits to give to downstream customers. This allows secondary wholesalers and retail terminals to reap the benefits and develop a habit of demanding promotions, refusing to sell without them. This creates greater trouble for future market work, and many markets are ruined by excessive promotions. Therefore, when planning local market promotions, distributors must consider the negative issues that promotions can bring, to avoid falling into a vicious cycle. 【Response】 Of course, when competitors run promotions, distributors need some countermeasures; they cannot just watch competitors snatch customers one by one. But two premises must be considered: first, the upstream manufacturer has an overall promotional plan and generally will not change it based on a distributor's request; second, distributors will not fund their own promotions unless absolutely necessary. In short, distributors need low-cost countermeasures. As the old saying goes, in business, there is no unsolvable problem; it's just a matter of the cost of the solution. How to apply these low-cost countermeasures? First, we must determine who the promotion targets are—clearly, they are secondary wholesaler bosses and retail store owners. Next, let's analyze the psychological attitudes of these two groups toward promotions:

  1. There is no fixed quantitative standard for promotional intensity; the more, the better.
  2. They link the amount of promotional support they receive to the degree of respect they feel, i.e., their face or status.
  3. They always think the distributor has more promotional policies and resources that haven't been released.
  4. They are very concerned about differences in the promotional policies they receive compared to other similar customers.
  5. They always suspect there are newer promotional policies they don't know about.
  6. Regarding the dissemination of promotional information, secondary wholesaler bosses and retail terminal owners often do not trust the formal notices from manufacturers (or distributors) but prefer to believe various rumors. The premise of solving a problem is to analyze its core. The core of the above points lies in two aspects: mindset patterns and information acceptance. Grasp these two cores for secondary wholesalers and retailers, and designing counter-strategies becomes easy. Research has found that for these promotion recipients (secondary wholesaler bosses and retail terminal owners), whether there is a promotion or not is not the most important issue; the key is the amount when accepting a promotion. If a manufacturer (or distributor) has no promotions all year, secondary wholesaler bosses and retail terminal owners will only complain a bit, but they generally won't harbor resentment. However, as soon as a manufacturer (or distributor) runs a promotion, several issues immediately arise:
  7. Is the promotional intensity strong enough?
  8. Have all secondary wholesalers and retail terminals been notified?
  9. Is the promotional intensity applied equally to all? In fact, many manufacturers (or distributors) that run promotions stumble on these issues. In the eyes of secondary wholesalers and retail terminals, as long as there is a promotion, the intensity is never strong enough. Moreover, they always suspect the manufacturer (or distributor) of favoritism, believing they didn't get the best deal. This leads from complaints to suspicion, from suspicion to resentment, and from resentment to hatred. Often, manufacturers spend money on promotions but end up with a lot of blame. From the manufacturer's (or distributor's) perspective, channel promotions inevitably involve incomplete information notification or uneven resource allocation, leaving opportunities for attack. If cleverly exploited, these can significantly counter a competitor's promotion. For example: A distributor in Hebei, whenever a competitor ran a promotion, would find ways to learn the highest promotional policy offered by that manufacturer, then spread this information (even with variations) to secondary wholesaler bosses and retail terminal owners through third parties. This catered to the suspicions of these bosses, making them feel even more that they were being shortchanged, and they would desperately demand more promotional policies from the promoting manufacturer (or distributor). If they didn't get them, these secondary wholesalers and retail terminals would become very displeased, thinking: "This isn't just about the promotional policy; it's clear they don't take me seriously and are playing with me!" After a few rounds, the competitor's promotions not only failed to achieve much positive effect but also earned a lot of complaints among secondary wholesalers and retail terminals. This led the competitor to drastically reduce promotional activities, thereby reducing the pressure on this distributor. Thus, this distributor effectively blocked the competitor's promotions at a very low cost. 【Summary】 Chinese people place great emphasis on emotions, especially on intangible indicators such as relationships, feelings, trust, and face, which often outweigh material benefits. Rational indicators like promotional intensity and forms are easily drawn into constant comparisons. In other words, if a distributor fails to manage the emotional relationships (face, trust, respect, etc.) with downstream secondary wholesalers and retail stores, even the strongest promotions will be futile. Conversely, if a distributor leverages this, using the mindset and information acceptance habits of secondary wholesalers and retailers in promotional matters, they can wage an "information war," even actively spreading distorted information about competitors' promotions to stir dissatisfaction and worsen customer relationships, thereby avoiding competitive pressure. The author, a private business owner, has managed a family distributor company for many years and has concurrently served as a business manager and trainer in several manufacturing companies. Research focuses on internal management of small and medium-sized private enterprises, with main topics including personnel management, cost control, management backend setup, and the integration of retired military personnel into private enterprises. They have continuously broken down over 400 topics related to internal management of private enterprises and keep updating material collection and solutions. The 2017 (3rd) FMCG + Internet Conference will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecology," inviting 1,000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions to jointly explore a new chapter of cross-border integration! Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: 2016 "FMCG + Internet" Summit Forum -END-