Dealer Development in the New Era: How to Cut Off an Arm to Save Oneself?

Whenever I read 'The Return of the Condor Heroes', I always feel aggrieved by the two regrets: Yang Guo's lost arm and Xiaolongnü's loss of chastity. It's like a fish bone stuck in my throat! But as I gain more life experience, I realize these two events are real and inevitable. It's not that Jin Yong's writing of these tragedies spoils the beauty; rather, it more truthfully reflects the principles of life and society. Only then can readers appreciate the perfect match between Yang Guo and Xiaolongnü, beautiful and magnificent.

In the previous chapter, we discussed how dealers can smoothly navigate the current economic downturn by focusing on four aspects. Today, we will focus on how dealers can sort out their product portfolio. To be honest, as a manufacturer's representative, I often feel that dealers don't pay enough attention to our products and don't give enough support. But that's actually wrong. As long as we calmly ask ourselves a few questions, it becomes clear.

Is the product shipped to the dealer on a cash-before-delivery basis? (Currently, only a few FMCG products can be sold on credit or with shelf stocking.)
Which manufacturer is willing to fully buy back expired or near-expiry products from dealers?
Which manufacturer dares to claim that a new product will be a hit?

The answer is clear. Manufacturers, based on their own considerations and the real business environment, use a pre-sale system (cash before delivery), only promise promotional support within a certain date range, and launch new products with strategic purposes—some products are not intended for long-term development. But we can be sure that every product is bought with the dealer's hard-earned money, and every product can be compared to a dealer's child. It's just that some dealers favor sons over daughters, or like our school teachers, they prefer students who perform well academically, even if those students have more flaws—as long as they do well in studies, teachers overlook the rest. Dealer friends, think about it: if a product has high profit and good sales, even if the manufacturer is strict or even harsh, we always convince ourselves to keep doing it. Conversely, if a product has good manufacturer service, good relationships, and good profit, but no sales, what would you do? Over time, we lose confidence and eventually let it eliminate itself.

During economic upturns, we can afford to keep some products that look good but have no short-term benefits. But in today's deflationary economy, I think we should be realistic and quickly eliminate these products. Otherwise, they tie up not only your capital, warehouse, and network, but more importantly, the team's confidence. If a product doesn't improve over time, salespeople won't have the patience to promote it, let alone do basic display work. So how do we sort them out? Teacher Yipian Bianzhou will explain how to distinguish problem products, star products, cash cow products, and dog products.

1. Problem Products: These are in the introduction stage. Generally, products go through introduction, growth, maturity, and decline stages. The duration of each stage varies, and many products skip growth and maturity, going straight to decline and disappearing. How to judge if a product will go directly from introduction to decline? Here are some characteristics:

First-tier companies entering a different industry. For example, Coca-Cola, the recognized leader in carbonated drinks, entering the milk business. The manufacturer itself may not have much confidence, just wanting to skim some profit. To push the product to market, they often offer more favorable policies than competitors (especially the top three in the industry) to persuade dealers to pay and stock up. The outcome? I think dealer friends will have the same feeling because this scenario is familiar—everyone has some products in their warehouse that don't sell but look good in all aspects. Here, I want to remind you: such products are not impossible to do, but during economic deflation, they absolutely cannot be done and should be sorted out directly. Only during economic upturns, as Lei Jun said, 'When the wind blows, pigs can fly.' Now, the wind is weakening; they might not fly and could even hurt people.
Second- and third-tier companies launching products that lead a new category. Case in point: Kvass. We all know Qiulin Kvass tastes good and was introduced earlier, but in the end, the category didn't take off, and Wahaha skimmed a lot of profit. Why? Because Qiulin didn't solidify its base market. After getting the first pot of gold, they stayed at a low-level promotion and didn't seize the high ground, allowing Wahaha to take the lead. Imagine if you had taken on a product like Qiulin Kvass.
Small brands' copycat products. Every year at the糖酒会 (Chengdu Food and Drink Fair), we see many copycat products. Since there are only a few big brands, most products in a category are followers. (Counterfeit and edge products are not analyzed here.)

Sorting: These products should be identified promptly and decisively eliminated. If you don't cut off the arm now, you'll suffer later.

2. What are star products in a dealer's portfolio? Star products have these characteristics for reference:

The product has stable sell-through with an upward trend (lasting more than half a year);
Profit distribution across channels is reasonable, terminal merchants are willing to recommend it, and when visiting the market, terminal owners will affirm that the product is good and has a stable consumer base;
The manufacturer's conditions gradually become stricter, such as starting to collect deposits, raising ex-factory prices, or sharing material or policy costs;
Product advertisements are frequently seen on provincial satellite TV or higher-level media.

Sorting: If you have such products, be grateful. You should start planning to increase team personnel and vehicle support, actively cooperate with the manufacturer to expand channels, increase distribution rate, and enhance terminal quality and stocking volume.

3. What are the characteristics of maturity-stage products? Let's sort them out:

Continuous advertising on major satellite TV, promotional activities one after another, but sales drop immediately when promotions stop;
Monthly shipment volume is basically fixed, with no obvious growth points, more driven by policies and advertising;
The manufacturer frequently changes sales representatives, or the same representative stays for years, and communication with the manufacturer always revolves around the same three topics (policy intensity, support personnel, distribution cost gross margin).

Sorting: Products like these in a dealer's hands are generally big brands. Although they are cash cows, they are tasteless to eat and a pity to discard. We often hear dealers say, 'This product helps drive traffic and volume.' If that thinking worked before, it doesn't now. Dealers should change their mindset, actively cooperate with the manufacturer, and strive to find growth points suitable for local characteristics to extend the maturity stage, because this stage actually requires the least effort from dealers. Such products can be held, but be cautious about rashly raising sales targets or increasing new channel investment without budget.

4. What do dog products look like? How to identify them? Let's see:

Dog products show continuous lack of sell-through, terminal relationships decline sharply, and sales show a decreasing trend;
No product promotion heard in the air, manufacturer personnel rarely make demands, and every visit is only about collecting payments, with little else;
The cost-effectiveness ratio of personnel, vehicles, and sales becomes inverted.

Sorting: If you see these signs, be vigilant and take action immediately. Confront the manufacturer and adjust or eliminate the product as soon as possible.

Summary

No manufacturer doesn't want to do well, and no dealer doesn't want products to make money. But product success has its reasons—it's the result of matching various resources and conditions. During economic downturn, don't expect perfection. Be brave enough to cut off an arm. Only by cutting off the arm can there be future perfection!

-END-

China's best FMCG dealer learning platform Dedicated to providing professional, practical, and actionable tutorials for enterprises and dealers Committed to helping Chinese FMCG dealers grow rapidly The most professional and practical knowledge base in the FMCG industry