---
title: "Dealers Choosing 'Small Brands' - Think Twice Before Acting"
description: "Because many company executives understand that in today's market where products are largely oversupplied and competition is fierce, those who control the channel may win the market. In China, the role of the channel has never been more important than it is today. Dealers are a crucial part of the channel. So when you open a well-known financial newspaper or magazine, you see various sizes of franchise advertisements. Companies use every means to attract dealers, from strong corporate strength, R&D capabilities, and the charisma of leaders, to product performance and quality, broad market prospects, and strong support like TV, newspaper ads, celebrity endorsements, and comprehensive marketing planning support, as well as promises of strict market protection, no cross-region selling, generous year-end rebates, and complete return and exchange policies, and so on."
author: "卢旭成"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-05-05"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/dealers-choosing-small-brands-think-twice-before-acting-67905f2b/"
markdown: "https://xinjignxiao.com/en/articles/dealers-choosing-small-brands-think-twice-before-acting-67905f2b.md"
original_source: "https://mp.weixin.qq.com/s/Fq6BdFuxJ1MBNfw-ru23xA"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E9%80%89-%E5%B0%8F%E5%93%81%E7%89%8C-%E5%BF%83%E5%8A%A8%E4%B8%94%E6%85%A2%E8%A1%8C%E5%8A%A8-67905f2b.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/dealers-choosing-small-brands-think-twice-before-acting-67905f2b/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Dealers Choosing 'Small Brands' - Think Twice Before Acting

> Because many company executives understand that in today's market where products are largely oversupplied and competition is fierce, those who control the channel may win the market. In China, the role of the channel has never been more important than it is today. Dealers are a crucial part of the channel. So when you open a well-known financial newspaper or magazine, you see various sizes of franchise advertisements. Companies use every means to attract dealers, from strong corporate strength, R&D capabilities, and the charisma of leaders, to product performance and quality, broad market prospects, and strong support like TV, newspaper ads, celebrity endorsements, and comprehensive marketing planning support, as well as promises of strict market protection, no cross-region selling, generous year-end rebates, and complete return and exchange policies, and so on.

Because many company executives understand that in today's market where products are largely oversupplied and competition is fierce, those who control the channel may win the market. In China, the role of the channel has never been more important than it is today. Dealers are a crucial part of the channel. So when you open a well-known financial newspaper or magazine, you see various sizes of franchise advertisements. Companies use every means to attract dealers, from strong corporate strength, R&D capabilities, and the charisma of leaders, to product performance and quality, broad market prospects, and strong support like TV, newspaper ads, celebrity endorsements, and comprehensive marketing planning support, as well as promises of strict market protection, no cross-region selling, generous year-end rebates, and complete return and exchange policies, and so on. In short, as long as the dealer agrees to distribute my product, they are guaranteed to make a profit and become a millionaire without worry! These manufacturers offer generous terms that make many dealers' hearts race. But before acting on that excitement, remember: there is no free lunch in the world. Doing business is not just sitting and collecting money. Think twice before you act. Dealers should pay attention to the following points when choosing a partner.

1. **Thoroughly Investigate the Company's True Financial Strength**

Often, companies' franchise ads and materials claim: "XX Company is a high-tech subsidiary of XX Group, which has assets of tens of billions and many nationally famous companies as its subsidiaries." Such companies seem to have strong backing, and dealers might think they can benefit from being under such an umbrella. But dealers should not blindly trust these so-called wealthy big companies. The parent company may be rich, but it is a diversified conglomerate with large expenses. How much money actually goes to the subsidiary that the dealer deals with? The "big money" that can be invested in the product and related business the dealer wants to distribute is what dealers truly seek. Of course, as an outsider, the dealer may not need to know the exact financial details initially, but by looking at the company's advertising expenditure, registered capital, and talking to other dealers and customers who deal with it, one can get a general idea.

2. **Does the Product Really Have a Market and Does It Conflict with Existing Products?**

Although companies will boast about their products, the market is ruthless. Even if the company believes the product has reached a high level and is indeed high-tech, its applicability and whether it meets consumers' real potential and actual needs are crucial. The extent to which consumers accept the product's price-performance ratio indicates the potential market opportunity. Of course, this is closely related to advertising, pricing, channel management, etc. However, product quality and accurate positioning are the foundation of all other marketing efforts. This requires dealers to have rich knowledge of the product, which is also the so-called "don't do what you don't know."

Additionally, dealers should carefully weigh whether their existing product line conflicts with the company's product policies. Some companies may want dealers to exclusively distribute their products and not carry competing brands. However, many dealers act as "spokespersons" for consumers, carrying multiple similar bestsellers, which is not only a consumer need but also the basis of dealer profitability. When forced to choose, dealers must weigh whether giving up existing products to introduce new ones is worth it. This involves assessing the product's market prospects and the company's advertising and financial capabilities. Of course, if the new product complements the existing products in promotion, it should be prioritized.

3. **Is the Company's Advertising Effective?**

Whether a company spends heavily on advertising has become an important criterion for dealers when choosing a partner, but dealers must pay serious attention to advertising effectiveness just like the company. Nowadays, ads for products, companies, and services are everywhere, filling CCTV, satellite TV, newspapers, magazines, etc. Advertising costs are staggering. With audiences rejecting ads and decreasing ad reach, the effect of a company spending tens of millions on national ads versus hundreds of thousands on city ads is completely different. So dealers should not only look at how much money the company spends on ads, but also how it is used; more importantly, the quality of the ad creative and whether it attracts audiences; the media mix and whether it can create a dense bombardment effect, ultimately carving a clear path for the product in the sea of advertising.

4. **Thoroughly Examine the Model Market**

To increase success chances, reduce risks, and make it easier to persuade dealers, companies often concentrate their marketing efforts in one region to create a successful model market. Dealers should not be impulsive just because they see the model market dealer's warehouse bustling with pickups. Look at the model market calmly. First, the model market is the result of the company's meticulous work; will the company invest the same effort, manpower, and money in other regions? Second, how much of the model market's success can be replicated in other markets, given that regional environments differ (especially in a country like China)? Third, can the problems that arose in the model market be effectively overcome in the dealer's own territory? If, after considering these points, the dealer is confident they can do as well as or better than the model market, then boldly take it on.

Additionally, dealers should be cautious of companies that had successful products before and now launch new products, trying to ride on the success of the old ones. The previous success proves they have some successful experience, but it often leads to the new product heavily copying the old methods, which is a result of lowering marketing costs and habitual thinking. This mindset is very harmful in a rapidly changing market. Dealers who pay attention to the industry market should intuitively know whether the old ways will work and make their own choices.

5. **Alignment of Dealer's Market Coverage with the Company's Expected Sales Area**

The dealer's market network is the foundation of their survival and the basis for bargaining with the company. When choosing a company, dealers should have a clear understanding of their market coverage. This includes the geographical area covered by the network and the stable customer base the dealer has. If the company's expected sales area in that region differs greatly from the dealer's market coverage, meaning the dealer cannot effectively cover the market the company wants, the company may consider adding more dealers in that area to better penetrate and refine the market and block competitors. Therefore, dealers should fully assess their market scope from the start, including future network growth, so they can negotiate regional distribution rights and protections upfront, avoiding channel conflicts like cross-region selling or carrying goods.

6. **Is There a Stable Price System?**

Some companies, to attract new dealers, promise to offer lower supply prices than other dealers. If you inadvertently receive such a promise, be wary. Because your lower purchase price will inevitably be reflected in lower wholesale prices downstream, and correspondingly, retail prices can be lowered. When small and medium retailers from neighboring areas are attracted by the lower prices and come to your area to purchase, you may unknowingly be accused of cross-region selling, leading to complaints, accusations, or even retaliation from neighboring dealers. Similarly, when other dealers get more favorable pricing, they may also impact your distribution area. A stable price system is the guarantee of a win-win situation for the company and dealers. A stable price system includes reasonable profit margins between factory price, wholesale price, and retail price, and ensures the final retail price is basically consistent. Pay special attention to whether the company's discounts to retail giants or group consumers who deal directly with the factory, and price differences between regions, will impact the price system, and how the company balances these. Are the company's measures effective in maintaining price stability? A company with an unreasonable price system design and poor execution can severely damage its channel system.

7. **Does the Company Have Effective Anti-Cross-Region Selling Measures?**

Cross-region selling is the most common and troublesome issue for dealers, so dealers should pay close attention to the company's promises and measures to prevent it. First, check if the distribution contract includes a "no cross-region sales" clause. Second, see if the factory's general distribution price is a CIF price, with all freight costs borne by the factory, to ensure all general distributors have the same price basis. Third, see if there is a stable price system. Fourth, see if year-end rebates are tied to whether dealers engage in cross-region selling. Fifth, see if there are text or barcode identification systems, with different trademarks (at a subtle level) or different barcodes for different regions, providing evidence for monitoring cross-region selling. Sixth, see if there is strict freight monitoring to ensure goods are basically shipped to designated areas, creating obstacles for cross-region selling. Seventh, see if the company has dedicated personnel to handle cross-region selling and whether they handle it successfully.

8. **The Company's Financial Policies**

Companies naturally hope dealers will pay in advance, even if it means giving more discounts, while dealers hope the company will let them sell on consignment. In this game of capital occupation, the stronger party has the say. Dealers should carefully understand the company's settlement methods, rebate levels, weigh their own capital situation, expected sales, and choose a reasonable settlement method. Also, pay attention to how the company allows dealers to use advertising and promotional funds, and how dealers can reasonably utilize the company's financial benefits to maximize profits.

9. **The Company's Market Service Status**

Dealers of well-known brands often have an easier time than those dealing with unknown products from small and medium enterprises. Not only because well-known brands sell well, but also because they provide many market service supports, such as sending staff to work with dealers to collect and study market and consumer conditions, formulate new promotional plans to increase sales, handle and coordinate conflicts between dealers in a timely manner, provide more consumer information, help dealers develop markets and establish new outlets, and help train dealer staff. The company's support for dealers to grow is an aspect that dealers with ambitions for growth should consider.

10. **The Company's Channel Structure**

Distinguish whether the company implements a deep (i.e., traditional) channel structure of manufacturer → dealer → retail → user, or manufacturer → dealer → retail → user, or even manufacturer → retail → user and direct sales forms. The company's different channel designs and combinations determine its price system and the degree of attention and support it gives to dealers. If the company focuses on developing the latter two sales channels, then dealers will only be transitional tools in the company's channel, indicating the company wants to control the terminal and strictly maintain the price system. Only by understanding this design can dealers position themselves correctly in the short and long term and choose their exit strategy.

11. **Identification with the Company's Corporate Culture and Management Style**

Although dealers prioritize profit, before cooperation, they should try to deeply understand the company's business philosophy and management principles to see if they can accept them, or at least not dislike them. Otherwise, once the contract is signed, if the dealer disagrees with the company's measures and ignores them, or even pays lip service, and the dealer's suggestions are shelved, the manufacturer and dealer will not cooperate, leading to inevitable conflicts and eventual separation. For future smooth cooperation, dealers should deeply "collide" with the corporate culture.

Reply with the following keywords to categorize and read related professional articles: Sales Supervisor, Second-Tier Management, Regional Manager, Dealer Management, New Channels, City Manager, Competition, 2015, Manufacturer-Dealer Game, Product Stagnation, Terminal Visit Management, Route Management, Deep Distribution, Internal Management, Sales Skills, Profit Improvement, Recruitment, Distribution, Daily Management, Team Motivation, Trade Promotion, Sales Mistakes, New Product Launch, Township Market, New Product Pricing, Sales Target Achievement, Closing, Market Visit Inspection, Baijiu, Beer, Sales Increase, Agency Products, Cross-Region Selling, KA, Terminal Merchandising, New Market, Market Operation, Learning, Book Recommendations, Inventory Management, Sales Novice, Consumer Promotion, Execution, Old Products, Expired Product Handling, Model Market, Franchise, New Media, Dealer Development, Performance Appraisal, Assessment, Annual Planning, Shopping Guide, Morning Meeting, Display, Transformation, Stock Pressure, Holidays, Dealer Cost Control, Channel Operation, Marketing Theory and Laws, Brand Truth, Order Meeting, Team Management, Training, Debriefing, Debriefing Report.


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671