Click the image for details A well-known marketing expert once said: "Those who engage in cross-regional selling are shameless, and those who suffer from it are incompetent." No matter how beautifully it is dressed up, cross-regional selling is a tumor in the healthy development of a company's sales, the difference being whether it is a "benign tumor" or a "malignant tumor." But whether benign or malignant, it needs early treatment, otherwise it will harm health and even life. This is a troublesome but necessary problem to solve. Benign Cross-Regional Selling Benign cross-regional selling is normal market circulation, with little price fluctuation. The solution is relatively simple: point out the issue, make your stance clear, but there is no need to use coercive measures. The main types are as follows: 1. Cross-regional selling as a side business. Usually, dealers have multiple product categories, and customers need to serve the terminal as much as possible, but not for the purpose of price undercutting, but rather as a side business. For example, a truck of 500 cases might include 30-50 cases of other products, which is generally not malicious to the market. 2. Cross-regional selling in blank markets. The market is blank and waiting to be developed, or development is in progress. Generally, goods flow across regions, and customers are seeking high gross margins from new products, not maliciously undercutting prices. Similar cross-regional selling can also spur the local dealer to improve, but this situation is not advocated to happen passively. 3. Border area circulation. When two markets are close, normal product circulation occurs, and price differences are within normal gross margin ranges. 4. Short-term dealer inventory overload. Inventory ties up capital, and dealers may dump goods to recover funds or worry about shelf life, but this is not habitual or malicious behavior. Product prices are slightly lower but not undercutting, and it is not a long-term behavior. The above issues have little impact on the market. Depending on the reaction intensity of the local dealer in the affected area, generally, one can take a clear stance but act slowly, with appropriate control, depending on the manufacturer's control capability. It is like a benign tumor: after removal, there are basically no aftereffects, at most a scar; if not removed, it might worsen, or it might stay healthy for a lifetime. Malignant Cross-Regional Selling Where there are best-selling products, there is cross-regional selling; among cross-regional selling, there must be malignant cross-regional selling. Malignant cross-regional selling is like corruption in state administrative organs: if not addressed, it will eventually damage the entire administrative mechanism. Similarly, if malignant cross-regional selling is not addressed, it will eventually become the "cancer" of the market. The main types of malignant cross-regional selling are as follows: 1. Boosting sales to get rebates. The dealer's own territory has normal prices, but they don't care about others' territories. They use direct cross-regional selling or indirect cross-regional selling through second-tier distributors, especially hidden cross-regional selling through second-tier distributors, to boost sales and obtain special policies and rebates. 2. Vendetta cross-regional selling. Two dealers, A and B, have "historical grudges" and want to put each other "to death." This is a severe form of malignant cross-regional selling, using the manufacturer's products as "cannon fodder," and must be addressed. Typical manifestations include: normal local prices, but undercutting prices in the other's market; or malicious quoting, providing a small amount of goods at prices far below the dealer's net price. This can be between dealers of the same manufacturer, or the manufacturer's products being carried by dealers of other brands. This type is special and requires senior management to intervene and coordinate across multiple regions. 3. Malicious cross-regional selling with side products. In territories that are not their own, they use the manufacturer's best-selling products at below-market prices to open the way, mixing in other generic brands to enter others' markets, ultimately sacrificing the price system of the best-selling brand to introduce high-margin generic products and gradually replace them. 4. "Killing" best-selling products through cross-regional selling. When a best-selling product holds the majority of market share, hindering the market expansion of other brands the dealer carries, the dealer disrupts and messes up the channel price distribution of the best-selling product, with the goal of "killing" it to promote other brands. The above cross-regional selling will hit dealers who truly want to do a good job and are meticulous in their work. For the healthy development of the market, these malignant cross-regional selling must be resolved. Why Does Cross-Regional Selling Happen? 1. Historical issues, especially the historical attribution of regions. Before the manufacturer subdivided the market, some "old-timer" dealers refuse to obey the regional division, claiming "This region has always been mine," acting shamelessly. 2. Geographical issues, the cross-regional selling area is too close to the cross-regional dealer, and surrounding terminals have close business cooperation with them. 3. Price difference issues, the price in the affected area is generally too high. 4. Policy difference issues, the affected area does not enjoy the same favorable prices, policies, rebates, or hidden discounts as surrounding areas. 5. Habitual cross-regional selling issues, some dealers started their business with cross-regional selling, are not down-to-earth, and don't know when to stop. 6. The manufacturer's attitude. Does the manufacturer have the will to solve and govern? Has cross-regional selling become serious enough that the manufacturer has to deal with it? Has the contradiction between the shamelessness of the cross-regional seller and the incompetence of the victim escalated to an irreconcilable level? If so, it must be resolved. The so-called solving contradictions first creates contradictions; the key to solving contradictions is the manufacturer's attitude, which is the essential issue. Everything else is a false proposition. Which Dealers Like Cross-Regional Selling? 1. Meritorious contributors, the financial backers in the manufacturer's early development stage. They think highly of themselves, believing the manufacturer grew up under their watch, so they engage in cross-regional selling without fear. 2. Tycoons. These customers have good capital accumulation, know the manufacturer's operational tactics well, and are good at asking for policy resources. These are all good things, but once they get the policies, they become "five-clawed golden dragons" running around cross-regional selling, and they are not pragmatic. They are the nemesis of loyal dealers and terminal dealers; others work meticulously, and when it matures, the tycoon comes with a harvester to reap. 3. Vagrants. These customers are in the transition stage to becoming regular forces. They use best-selling products to raise their banner, gradually develop, and are ruthless in cross-regional selling and price undercutting. 4. Tai Sui, the emperor's relatives. They enjoy privileges when the system is not yet sound, holding a "death exemption" to do evil and harm the common people. Where products sell well, there is cross-regional selling; where there is cross-regional selling, there is price undercutting; where there is price undercutting, there are interests; where there are interests, there are conflicts. The cross-regional seller is shameless, and the victim is incompetent. When the contradiction between shamelessness and incompetence escalates to an irreconcilable level, the manufacturer's role as referee is crucial. How Should Manufacturers Handle Cross-Regional Selling? When the manufacturer has developed to a considerable strength, for the healthy development of the market, it can no longer ignore the disorderly development of cross-regional selling. The solutions are as follows: 1. Clear attitude and strict system. Start with ideological education, publicize the manufacturer's determination to govern cross-regional selling, start with internal team education, "to resist foreign aggression, one must first stabilize the interior," form a unified understanding internally, and then continuously instill it into the dealer team through the sales team, creating an atmosphere of strict governance; use systems and clauses to deeply impress, clarify territories, price systems, and rebate policy fulfillment, from publicity to action, telling stories that doing the market well makes money, while malicious cross-regional sellers are detained, sentenced, given life imprisonment, death with reprieve, or executed. 2. Team adjustment and job rotation. Transfer internal cross-regional selling experts to blank markets, so that major cross-regional sellers have no enablers. 3. Prevent major dealers from using policies to hold the manufacturer hostage, and adjust regional policies benignly. Cross-regional selling areas are mainly mature markets. In mature markets, the dealer's total sales volume is one of the assessment targets, not everything is based on sales volume. Differentiate product promotion rewards, so that cross-regional dealers have something to do, promote single products, and make money, letting dealers earn money from hard work in promotion rather than dumping goods to get major dealer policies. 4. A warrior's wrist-cutting. Treat customers who have long-term malignant cross-regional selling that has affected the overall market health as tumors, and make an example of them to prevent future problems. 5. Establish an inspection team, take action against the "Tai Sui" first, let the common people see hope, and publicize this matter widely, making it a good story. 6. The manufacturer's strength determines the actions taken, such as canceling quotas, cash on delivery, requiring deposits or cross-regional selling funds, deducting rebates, reducing policies, cutting policies, cutting single products, cutting supply, etc. Use whatever means are appropriate. 7. In the era of advanced information technology, collecting evidence of cross-regional selling is not difficult; the key is characterization. In the initial stage, handle gently: if a cross-regional selling product is found, reduce the policy for that product; if found again, cut the policy for that product; if found again, cut the supply of that product; if found again, reduce the policy for the overall product; if found again, cut several products. For those who refuse to change despite repeated education, when there are other dealers in the region who can reasonably structure and develop better, let the cross-regional selling customer enter the "cold palace" and slowly "freeze to death." Cross-regional selling is difficult to solve, but not impossible. The key depends on the manufacturer's attitude. Dealers do business ultimately to make money, and they are downstream; if the upstream water is clear, the downstream will not be turbid. Source: "Frozen Food" magazine July issue -END-