---
title: "Deep Distribution Fails, Advertising Ineffective: How Can Brand Owners Build a New Marketing Operations System in the Post-Deep Distribution Era?"
description: "The Chinese market is vast and deep. Before the internet, brand owners used a model of large single products, mass production, extensive channels, and retail to reach consumers. However, as market growth slows and consumer behavior changes, the traditional deep distribution model is failing, prompting the need for a new marketing system that combines deep distribution with precision distribution."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2018-12-07"
language: "en"
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---

# Deep Distribution Fails, Advertising Ineffective: How Can Brand Owners Build a New Marketing Operations System in the Post-Deep Distribution Era?

> The Chinese market is vast and deep. Before the internet, brand owners used a model of large single products, mass production, extensive channels, and retail to reach consumers. However, as market growth slows and consumer behavior changes, the traditional deep distribution model is failing, prompting the need for a new marketing system that combines deep distribution with precision distribution.

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The Chinese market is huge, characterized by being wide and deep. Before the internet, targeting mass consumer demand and market characteristics, brand owners produced a small number of SKUs through mass production, used television media for national advertising, and leveraged thousands of distributors and tens of thousands of sales representatives to distribute products into millions of mom-and-pop stores, thereby reaching every consumer. This model of "**large single products + mass production + extensive channels + large retail**" allocated social resources with the highest efficiency, completing the entire process from factory to consumer.
During this process, a theory that influenced Chinese marketing for over a decade was born: **deep distribution**.
The basic feature of deep distribution is that manufacturers (or agents) directly bypass secondary wholesalers and reach the terminal. In KA (Key Accounts), it manifests as terminal interception, terminal merchandising, and terminal promotions. In circulation, it initially appeared as display and customer relations.
**In an article by teacher Liu Chunxiong:**
> Chinese marketing is driven by two forces: one is product (brand) driving, the other is channel driving;
**Deep distribution became the best marketing practice for the following reasons:**
> 1. No high resource threshold;
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> 2. High efficiency, making it a phased priority for corporate marketing investment;
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> 3. Phased universal applicability;
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> 4. Consistency of epistemology, methodology, and methods.
The premise for deep distribution being so effective is that there is huge incremental market space. The 20 years from 1988 to 2008 in China were 20 years of rapid growth for FMCG. It can be said that deep distribution was a specific product of that era in Chinese marketing history.
However, in recent years, due to the disappearance of market incremental space, rising labor costs, and the impact of the internet, the previously effective deep distribution model has begun to fail and even become unsustainable. We see many brand owners starting to abandon deep distribution, handing channels over to distributors and secondary wholesalers, and using partners to complete channel distribution work.
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**What brand owners face is not just high costs; more importantly, consumers have changed:**
> 1. Attention has shifted from TV and PC to mobile, making brand communication costs increasingly high;
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> 2. Consumers increasingly value personalized consumption, and Maslow's needs have risen to a higher level;
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> 3. Purchasing methods are becoming more convenient, and consumers no longer rely solely on going to stores and supermarkets to buy goods.
Liu Qiangdong, in "The Fourth Retail Revolution is Coming," analyzed changes in consumption:
One trend in future consumption changes is the diversification of scenarios, meaning consumption scenarios will become increasingly fragmented, and the contact points between enterprises and consumers will no longer be limited to shopping malls or websites, but will be ubiquitous.
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In the future, we will move to an era of "**1 to positive infinity**," where one person will face countless screens, countless scenarios, and countless entrances.
These changes lead to a problem: **with total traffic unchanged, consumption scenarios become increasingly fragmented, countless screens mean centralized traffic disappears, and traffic is continuously diluted**.
From traditional "golden corner, silver edge" location traffic, small store shelves, and hypermarket displays, to Tmall and Taobao's Zhitongche, to WeChat business circles and various community group buying, traffic is continuously diluted by various new channels. But total traffic is limited; new retail species continuously segment it, the traffic of big rivers decreases, and small streams increase.
This continuous redistribution of traffic leads to a very serious problem: FMCG companies like P&G can no longer reach consumers only through original methods.
Liu Qiangdong said: "Today's traffic centers become unimportant; what truly matters is customer-centricity. For retail, the future must be borderless—ubiquitous and anytime. When shopping entrances become extremely fragmented and changeable, retailers sticking to a single platform will be very fragile."
**However, all big brands have enormous inertia in their operations:**
**1. Organizational systems and KPIs are designed around the original business model, characterized by focus and concentration of resources to accomplish major tasks, making it difficult to be flexible and respond quickly;**
**2. Slowly shrinking market stock; reducing staff is not the answer, nor is restructuring;**
**3. New demand traffic is too small; for companies with sales in the tens of billions, a few hundred million in sales is a drop in the bucket;**
**4. A series of conflicts between new and old channels.**
Facing external changes, although brand owners attach great importance and have established e-commerce or new retail departments internally, most brand owners currently treat e-commerce/new retail departments only as patch departments for supplementing and covering new channels, rather than as strategic departments based on customer-centricity, providing consumers with one-stop solutions for all scenarios and needs.
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This era has entered the mobile internet × consumer sovereignty era. The underlying logic of traffic, products, and services has fundamentally changed. If you only set up a supplementary department with very low authority for new scenarios and new retail species, rather than a strategic department, and restructure the entire company's support system and business processes around it, then most companies are destined to lose the initiative in the new retail battle from the start.
New retail has two cores: **one is the reconstruction of people, goods, and scenes; the other is the optimization of cost efficiency and experience (supply chain)**. In FMCG industry jargon, these translate to **innovation and change in channels/products/marketing, and the upgrade and reorganization of the product distribution system**.
Based on the above new retail core, the author believes that the entire marketing theory system for FMCG needs a profound upgrade:
**Brand, product, and marketing: build, reach, perceive, and delight consumers;**
> **Build:** refers to creating a consumption scenario with a sense of ritual or strong consumption experience for consumers, combining products and consumption needs;
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> **Reach:** wherever consumers are, we are there, and we must achieve: full network, full-time online, full traffic, full entrances, visible on every "screen," and what you see is what you get;
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> **Perceive:** using technical means to achieve precise user profiling, knowing where consumers are, who they are, what they like, what they have done, what they put in their shopping carts, what they searched for, what they collected...
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> **Delight:** through products and services that offer value for money, and content that resonates and identifies with consumers, making consumers recognize and accept our products and services.
**Channels and supply chain: must achieve intensification, visibility, rapid response, and platformization.**
> **Intensification:** through centralized warehousing and distribution, achieve efficient turnover of inventory.
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> **Visibility:** real-time, precise capture of data across the entire process, all time periods, and the entire chain.
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> **Rapid response:** be able to respond quickly and deliver based on different consumer needs.
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> **Platformization:** use platform models to produce multi-variety, small-batch, multi-batch products to meet various consumer needs.
**For brand owners, to achieve this change, they need to do the following:**
> 1. Break and reconstruct the organization, eliminate the distinction between online and offline departments, and sales and marketing departments, and build a complete digital precision division around user scenario needs;
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> 2. Based on consumers' consumption needs in different scenarios, formulate integrated online and offline marketing strategies.
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> 3. Use B2B to build a flexible, efficient, and rapid-response supply network;
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> 4. Use digital tools and platforms to do well in both whole-network social communication and localized circle marketing, achieving rapid sales ignition.
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As mentioned earlier, for companies with annual revenues exceeding 10 billion, making a brand too niche or too vertical is meaningless. The focus of big brands has always been the mass market, and it can only be the mass market. For example, annual sales of 100 million might be a dream for a small brand, but for first-tier brands like Coca-Cola or Master Kong, it might be a failing product that needs to be cut.
Therefore, the above methods are very easy for small brands or brands without offline presence. But for big brands, they may be like scratching an itch through a boot, and for large enterprises, drastic reform is unrealistic. Big brands are already held hostage by their own value networks; they cannot change just because they want to. All large companies face the "**innovator's dilemma**" problem.
The train of the times is accelerating toward an unknown future. The external environment for enterprises will only become more complex, consumers will only become more picky, and scenarios will only become more diverse. Once the train appears, no matter how fast your horse runs, it's useless.
In this era, **enterprises must ensure deep distribution capability while also polishing precision distribution capability.** The author believes that to do both well, merely establishing a new retail department to supplement channels is wrong. The premise for possessing both capabilities is that the internal marketing system must be upgraded, and organizational restructuring must be carried out around new trends. Only by polishing a new organization, designing a new marketing system for new products, and using new distribution channels can precise marketing and precise distribution be achieved.
The ideal product and organizational structure for large enterprises in this era should be a T-shaped structure, that is, **while ensuring existing products are deep enough in traditional offline channels, also build a shallow but wide small team and small product line to meet diverse consumption needs**, looking like the English letter T from the outside.
The "**I**" part of this T is based on the existing stock market and mass consumer demand, continuing deep distribution, and using innovative tools and methods to make it more efficient;
The "**—**" part requires producing products that meet diverse and niche needs for various personalized scenarios and niche demands, and based on product and consumption demand characteristics, build multiple precision special forces teams with different capabilities, allowing them to use digital communication tools and methods for innovative attempts from the start.
This requires enterprises to provide sufficient resources and platform support for teams at the strategic level, continuously polish and test, and thus find a new marketing operations system suitable for their own enterprise.
What are your views and opinions on precision distribution? Welcome to leave a comment for discussion.
**The 10th B-end E-commerce Inspection--"From Products to Scenes"**
Activity time: December 10-13
Activity location: Wuhu, Nanjing, Changsha
Activity process:
> Morning of December 10: Inspect Three Squirrels headquarters + feeding store
>
> Afternoon of December 10: Inspect Nanjing Squirrel Small Store
>
> Evening of December 10: Inspect Nanjing Master Gao Beer Workshop Store
>
>
>
>
> All day December 11: Nanjing-Changsha, or free arrangement
>
>
>
>
> Morning of December 12: Community group buying exchange salon
>
>
> Afternoon of December 12: Koala Select Hero League press conference
>
> Night of December 12 to early morning of December 13: Field inspection of Koala Select logistics center—**This time period is the peak warehouse sorting period, allowing direct observation and learning of the backend operation process of community group buying e-commerce**
**Distributor friends who are interested are welcome to join us to learn and conduct field inspections:**
**Organizational forms**
************1. Big shot exchange salon************************2. Company visit
3. On-site explanation
4. One-on-one exchange************************************5. Actual market case visit************************
Friends who want to participate can register separately if interested in a specific day's content
Long press this QR code or click "Read Original" to register with one click!
Add friend and note your intention
**The 10th B-end E-commerce Inspection--"From Products to Scenes"**
Activity time: December 10-13
Activity location: Wuhu, Nanjing, Changsha
Activity process:
> Morning of December 10: Inspect Three Squirrels headquarters + feeding store
>
> Afternoon of December 10: Inspect Nanjing Squirrel Small Store
>
> Evening of December 10: Inspect Nanjing Master Gao Beer Workshop Store
>
>
>
>
> All day December 11: Nanjing-Changsha, or free arrangement
>
>
>
>
> Morning of December 12: Community group buying exchange salon
>
>
> Afternoon of December 12: Koala Select Hero League press conference
>
> Night of December 12 to early morning of December 13: Field inspection of Koala Select logistics center—**This time period is the peak warehouse sorting period, allowing direct observation and learning of the backend operation process of community group buying e-commerce**
**Distributor friends who are interested are welcome to join us to learn and conduct field inspections:**
**Organizational forms**
************1. Big shot exchange salon************************2. Company visit
3. On-site explanation
4. One-on-one exchange************************************5. Actual market case visit************************
Friends who want to participate
can register separately if interested in a specific day's content
Long press this QR code or click "Read Original" to register with one click!
Add friend and note your intention
-END-


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