Review of the Previous Article: The previous article analyzed the essence of the relationship between manufacturers and dealers, drawing the following conclusions:

  1. There are three layers to the manufacturer-dealer relationship:
    • Dealers are the entry ticket for manufacturers to enter new markets.
    • Manufacturers rely on dealers' people, vehicles, goods, capital, and networks to achieve sales in various markets; dealers act as regional sales managers for the manufacturer.
    • Dealers are commercial partners of the manufacturer, with both unity and opposition in their relationship.
  2. The relationship between a manufacturer's sales representative and a dealer is like that between a "special commissioner and local armed forces."
  3. The ultimate purpose of a manufacturer's sales representative managing dealers is encapsulated in four words: "coordination and containment."

This section moves into practical action training.

Practical Action Training: How to Choose the Right Dealer (Part 1) The best way to solve a problem is to prevent it from happening. To minimize future dealer management issues, the first step is to learn how to select a good dealer.

I. Dealer Selection Mindset Mindset 1: Selecting a dealer is like hiring an employee: strict entry, lenient exit. Manufacturers choose dealers because they lack local sales networks and direct market operation costs are too high. By partnering with dealers, they leverage the dealer's local network, people, vehicles, and resources to enter and manage the market cost-effectively, integrating the dealer's network into the overall marketing network. From this perspective, dealers are akin to employees. Companies follow a "strict entry, lenient exit" principle when hiring: rigorous screening and thorough background checks during recruitment, followed by training, coaching, and incentives to maximize performance. They avoid hasty hiring that leads to frequent dismissals, which waste training costs, delay market work, and destabilize the workforce. The same applies to dealer selection: choose carefully and investigate thoroughly. Once selected, support the dealer through sales policies, promotional support, and field staff efforts to encourage better cooperation. Many companies, especially well-known ones, become arrogant when products sell well, thinking, "Our products sell well, we have detailed market coverage, and the terminal network is in our hands. The dealer is just a driver delivering goods; we can replace them anytime if they don't comply." This mindset leads to careless screening and replacement, causing the following harms:

  1. Excessive arrogance toward dealers: dealers may swallow their pride while products sell well, but when the company faces market obstacles, they may face collective abandonment.
  2. Hasty dealer selection leads to later replacement when the dealer proves "unqualified." By then, the market is often in chaos: price wars, product dumping, supermarkets delisting products, and many near-expiry or damaged goods. Restarting with a new dealer means dealing with legacy issues (returns of expired products, supplier transfer procedures, price normalization, and dumping control). Reviving a messed-up market is harder than starting a new one.

Mindset 2: Comprehensive evaluation in dealer selection. Selecting a dealer is like hiring a sales manager: you assess education, experience, work ethic, past performance, and reasons for leaving previous jobs. Similarly, evaluate dealers comprehensively:

  1. Strength: dealer's manpower, transport, capital, and reputation (like checking a sales manager's education).
  2. Marketing awareness: whether the dealer has a strong sense of terminal market operations or is an old-style "sitting merchant" waiting for business (like checking work ethic).
  3. Market capability: whether the dealer has sufficient network and how well they are doing with current brands (like checking past performance).
  4. Management capability: the dealer's own operational and management status (like assessing ability to manage subordinates).
  5. Reputation: feedback from peers (other manufacturers) and competitors (other wholesalers) regarding the dealer's behavior, such as leading price dumping, intercepting fees, or withholding payments (like checking for past misconduct).
  6. Cooperation willingness: whether the dealer strongly identifies with the product and brand and has confidence in the market. Without willingness, the dealer won't invest actively (like ensuring the environment can retain and motivate a sales manager).

Mindset 3: Dealer selection must align with the company's market development strategy. Marketing is a planned action. Before selecting a dealer for a new market, consider: "What products will I sell here? Through which channels? What new products will I introduce within two years? Will I expand the dealer's sales area?" These factors should be considered to prepare for future strategies. Otherwise, today's qualified dealer may become an obstacle tomorrow. For example, a dealer may excel at selling small-pack beverages but fail with large-pack new products because large packs are mainly sold through supermarkets and hotels, while small-pack dealers typically serve small shops and wholesale channels. Supermarkets require dealers to have substantial capital (payment delays often three times sales), sufficient transport (small, frequent deliveries), and general taxpayer status (to issue VAT invoices). Dealers focused on small shops and wholesale may struggle to transition to supermarket channels quickly.

Mindset 4: Balance size; the right fit is best. Avoid the big-customer bias. Bigger is not always better: larger dealers are harder to control, have greater potential for price dumping, and often handle multiple brands, making it difficult for them to focus on one brand. Of course, dealers shouldn't be too small either. As mentioned, small dealers serving small shops may struggle to transition to supermarkets due to resource limitations. From a size perspective, choosing a dealer is like choosing a marriage partner: wealth and power aren't everything, but love without bread is unrealistic. The right fit is best. What is "right"? Before developing a new market, clarify the regional and channel targets, and define the area and channels where the dealer will sell. Then, based on target market size and channel requirements (network, capital, transport), determine the dealer's necessary capabilities. The dealer must at least meet the supply and service needs of those target areas and channels. Under this premise, smaller may even be better, as larger dealers are more "disobedient."

II. Dealer Selection Criteria and Specific Action Breakdown Training on selection mindsets clarifies concepts, but to apply them in practice, convert mindsets into specific standards and actions.

Dealer Selection Criterion 1: Marketing Awareness Explanation: Marketing awareness refers to whether the dealer's approach aligns with the manufacturer's terminal sales strategy. Advanced marketing awareness often determines the dealer's future. Having spent twelve years in consumer goods marketing, I've seen many old-style dealers (especially those who started in the 1980s) with people, vehicles, capital, and strength, yet their business is declining. Meanwhile, newer dealers (entering commerce in the late 1990s, under 35, with newer knowledge) may lack resources but use flexible methods and thrive. Why do old-style dealers decline despite advantages? The difference is marketing awareness! Why did old-style dealers rise quickly in the past?

  1. Manufacturers used a master agent system, where one agent monopolized distribution rights for several provinces.
  2. Compared to small peers, old-style dealers had vehicles, capital (early start, rapid primitive accumulation), and networks (fixed large downstream customers in counties and cities), enabling quick distribution. Manufacturers sought them out, offered special policies, and helped them grow. Why are they declining now?
  3. Manufacturers now use intensive distribution, with dealers at county and township levels. The old dealers' large downstream customers have been poached by manufacturers, making it impossible to rely on a few fixed customers for bulk transshipment.
  4. Manufacturers now demand terminal sales, and the rise of hypermarkets pressures traditional dealers. However, old-style dealers often fail to recognize the changing situation, clinging to past "successful experiences" (finding good products, lowering prices, waiting for customers). They avoid supplying hypermarkets (fearing payment delays and paperwork) and small shops (considering small orders and high delivery costs).
  5. Market changes alter manufacturer needs, and old-style dealers fail to adapt, leading to abandonment by more manufacturers. Dealers without manufacturer support inevitably shrink. Why do new-style dealers grow rapidly? New-style dealers entered later, without the burden of past "easy money" experiences, and due to age and education, they accept new things faster. They understand manufacturers' desire for terminal sales, hypermarket entry, and small shop delivery. They take risks to supply hypermarkets because they know that failing to control hypermarkets today means being squeezed out tomorrow. They deliver to small shops despite small orders, knowing that more customers mean more network, which can sell multiple products for profit and serve as a bargaining chip with manufacturers. Their style aligns with market changes and manufacturer requirements, making them favored partners and growing larger.

Specific Actions: Marketing awareness is abstract. To determine if a dealer has it, use three questions and two hours of on-site observation.

  1. Ask about the dealer's current product sales performance. Script: "How much of Product A do you sell per month? Product B? How much of Product A in supermarkets? Product C in supermarkets?" Many dealers will answer, "I sell about 30,000 yuan a day, about 10 million a year. Last year I netted 600-700 thousand, but this year is worse. As for specific products per channel, who has time to calculate that?" This is a typical old-style dealer: even with a large store, they can't track sales per product or know if they're profitable monthly. Such "confused" customers must be avoided. In contrast, new-style dealers will tell you monthly sales, channel breakdown, which products are low-margin but high-volume (for traffic), which are high-margin with low price transparency (for profit), and which are being phased out.

  2. Ask about the local market basics. Script: (In a respectful tone) "Mr. Zhang, I'm new here and unfamiliar with this market. Could you tell me about its characteristics?" Old-style dealers might say, "What characteristics? It's poor, so only cheap goods sell. Advertise more and lower prices, and I can sell for you." New-style dealers will tell you about population, wealth distribution, border areas suitable for bulk distribution, local enterprise potential for group purchases, and consumption habits of various cities. We don't expect a dealer to analyze the market perfectly, but a shrewd businessman should understand the basics.

  3. Ask what support the dealer needs. Script: "Mr. Zhang, if we sign an agreement and our factory appoints you as agent, what support would you like?" Old-style dealers will ask for "more advertising, more special offers, gifts, lower prices, higher rebates." This indicates they rely solely on low prices, lack terminal sales awareness, and may be prone to price dumping. New-style dealers will ask for "a few people and vehicles to help with distribution, and some promoters to enter supermarkets and set up counters." They want terminal promotional resources, understanding that real sales happen at the terminal.

  4. Observe the dealer's operations for two hours at opening or closing time. This observation reveals the dealer's staff division of labor.

  • Some dealers' staff never go out; they sit in the store waiting for customers to pick up goods, helping load. Others wait for phone orders and then deliver. These are traditional "sitting merchants."
  • More dealers send staff out randomly to sell on commission. This is slightly better but leads to issues like deceptive sales, overstocking, unbalanced product mix, and near-expiry products.
  • New-style dealers assign clear responsibilities: each staff member covers a specific area, follows a fixed route daily, and makes periodic visits—proactively visiting terminal customers, taking orders/delivering, arranging displays, and handling complaints.

In summary, through three questions, two hours of observation, and four actions, you can quickly and relatively accurately assess whether a dealer's marketing awareness is adequate.

Review and Preview: This article covered the mindset for selecting dealers and the specific actions sales reps use to evaluate a dealer's "marketing awareness" (one of the selection criteria). The next article will continue with actions to evaluate the other five criteria!

Wei Qing, Founder of "Concept to Action" Marketing Training

  1. Founder of "Concept to Action" marketing training, advocating that the most effective training translates concepts into actionable steps, enabling participants to apply them immediately.
  2. Started as a grassroots sales rep, with 12 years of frontline marketing experience; held positions as sales manager, brand manager, and sales director at Coca-Cola, Ting Hsin International Group, and a well-known domestic enterprise.
  3. Provided marketing training to hundreds of companies including Coca-Cola, Uni-President, TCL, and Midea.
  4. Columnist for several authoritative marketing media; published a series of training DVDs and four marketing books, including "The Complete Dealer Handbook," which has been adopted as internal training material by Wahaha Group, Hong Kong Jiajia Soy Sauce, and Wandashan Group.
  5. For more about Wei Qing, visit his training website: http://www.head-to-hand.com, where you can read thousands of student evaluations, freely read and download nearly a million words of his marketing articles and books, and learn about his training courses. Contact: head-to-hand@head-to-hand.com

New book "Dealer Management Action Breakdown Training" is now available! Companies are welcome to purchase in bulk as employee training or work manuals.