Dealer 2.0 Era: From Manufacturer to End Customer, Changing the 'Romance'

Dealers clearly feel that business is tough now, with declining sales and rising costs for wages, rent, and operations. Many feel that business is hard and need new ideas and innovative management. However, many are confused about how to innovate and where to start. Here we summarize eight successful experiences for dealers for your reference.

1. Segmenting Markets Offers Great Opportunities

In the industrial era, goods were scarce, and as long as there were innovative products with new functions, there was a chance to lead the market trend. So the market didn't need segmentation to achieve good sales. In the Internet age, consumer demand is segmented, and the way information spreads makes product information accessible. Personalized, innovative, and fashionable products are sought after and favored.

Each market segment has consumers with similar needs. Even if a city has only a few thousand target consumers, due to the convenience of information dissemination, it is possible to connect consumers with the same needs across the country or even globally. In the 1990s, a small biotech company in the United States developed a new drug called "imiglucerase" specifically for Gaucher disease. By 2008, this drug earned the company $1.24 billion a year, with only 5,000 patients annually.

Fortune Weekly predicts: The future business opportunity is that we will lose mass brands, and most small and medium-sized enterprises will serve a specific group of people. As long as you form your brand concept within this specific group and they recognize your product price, you can become a very small but beautiful excellent enterprise.

2. Establish a Reasonable Product System

Many dealers are looking for new products every year, changing manufacturers every year, and their agency products cannot form a reasonable system. After visiting many dealers, we found that more than 80% of profitable dealers insist on representing products in one category for many years, and during the process, they gradually form a relatively reasonable product portfolio.

A widely recognized reasonable product portfolio includes: volume-driven mature products, which help develop and control strong channel outlets; help maintain stable cash flow; and help expand more resources in the industry. Profit-driven growth products are mostly new products with high profits, but the volume is not large, and the turnover cycle is not stable. They require time and effort to cultivate, but once cultivated, they can become new profit growth points.

3. "Three Haves" Standard for Selecting New Products

Dealers who have been fighting in the market all year round are the most market-savvy and have the strongest sense of changes in consumer demand. What kind of new products are most worth choosing? After summarizing, there are three standards for selecting new products:

A. Market has pain points. Pain points determine market capacity. The larger the market capacity, the easier it is for dealers to do business and succeed. Another important factor in judging market pain points is whether there is potential to tap. If there is potential, there can be growth, and with growth, you can sustainably represent the product.

B. Product has selling points. Products with selling points are easier for retailers and consumers to accept. Products with selling points have a story to tell. When consuming products, consumers not only consume the core function but also hope to satisfy more emotional needs.

C. Agency has profit, with a gross margin of no less than 20%. If there is no gross margin of more than 20% between the factory price and the terminal supply price, it is difficult to do business. Now dealers have high operating costs, at least around 10 percentage points. So, for new products with a gross margin below 20%, after deducting various operating expenses, there will be little profit at the end of the year.

4. Core Competitiveness of Dealers: Terminals

Dealers are an indispensable link in the industry chain. In the Internet age, the connection between manufacturers and consumers is easier, and the functions and roles of dealers have been impacted and challenged.

The number of downstream terminals controlled by dealers, their business types, distribution of outlets, cooperative products and scale, and the relationship with terminal repair shops are the core competitiveness of dealers. Some dealers also try more cooperation methods with terminals to enhance their control over terminals.

In the past, dealers relied on a simple model of "taking money to buy goods from manufacturers, then asking for support," which has also changed. Some dealers will timely communicate and interact with manufacturers about the terminal situation, consumption characteristics, and market conditions in their region. Manufacturers also seek support and opinions from key dealers when developing new products and formulating launch plans.

In the Internet age, the survival of dealers faces serious challenges. Only by increasing control over terminals and strengthening communication and interaction with manufacturers can they have better survival opportunities.

5. Dealers' Money-Making Tool: Knowing Users Better

Traditional dealers prefer to have a "romance" with manufacturers; in the Internet age, dealers are required to have a "romance" with terminals to operate better and make money.

Manufacturers face the national or even global market, making it difficult to conduct in-depth research and understanding of a specific regional market or sales channel. Although the concept of "deep distribution" has been popular in recent years, most manufacturers cannot achieve it alone and still need dealers to conduct detailed research on local channels, terminals, and consumers.

Therefore, dealers in the Internet age must master two tools: one is "deep distribution," and the other is "having a romance with users."

Who are the target consumers of the product? What channels and terminals do they prefer to change oil in? What consumption habits do they have? What factors prompt purchases? Knowing users better is like having a passionate romance with users.

6. Dealers' Secret Weapon: "Big Data"

In the Internet age, the most important thing is "big data." Traditional dealers are used to the era of "saving a phone number and an address" to do business, which is over. "Big data" sounds high-end, but in fact, dealers now basically have the ability and conditions to gradually establish "big data," and the most important thing is to be able to use "big data" to operate and make money.

Terminal big data: Existing cooperative repair shop terminals; information on all repair terminals in the region, etc. These data need to be continuously updated and maintained, which is the core weapon of dealers.

User big data: Larger dealers will have many channels to obtain third-party data about car owners, market research data, including data compiled by dealers themselves.

Product retail big data: Shipping and settlement data with retailers; regularly request retailers to provide sales flow sheets for certain products, etc.

Whether it is terminal repair shops, car owners, or retail data, necessary analysis and research can reveal local market characteristics, consumption habits, trend changes, and other information. This will be the "magic weapon" for dealers' operations.

7. Becoming a 2.0 Version Dealer

Traditional dealers are used to waiting at home for customers to come, not actively expanding the market; used to placing products at the terminal and waiting to collect money, not actively working on the terminal; used to the routine of replenishing goods and collecting money, not actively researching consumers; used to playing the role of "porter," not actively innovating business models.

Dealers in the Internet age, with control over terminals and a better understanding of local consumers, naturally have more creativity and ideas in marketing and promotion, and they are more down-to-earth and operational.

How to do display and presentation at the terminal? What promotional methods do car owners like? What kind of promotional activities can achieve goals? Dealers in the Internet age must do the following:

(1) Use Internet thinking to gain insights into consumption characteristics; (2) Use entrepreneurial mindset to distribute products and markets; (3) Refine terminal management; (4) Professionalize marketing methods.

8. The Essence of Dealers is Service Providers

The distribution link is a bond between the factory and consumers, undertaking the function of product circulation and earning reasonable profits. Therefore, the essence of dealers is service providers.

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