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When discussing the development of township and rural markets, several basic concepts naturally come to mind: suitable products, reasonable prices, stable channels, and appropriate promotions. However, it is almost impossible to fully explain the vast topic of township and rural market development with just these few words. Perhaps because facing the vast rural landscape of our country, with its diverse consumption habits, it is difficult to clarify in one or two articles what is suitable, reasonable, stable, or appropriate.
This article focuses on the practical operations of baijiu enterprises in township and rural markets, omitting the above basic parts, and explores channel setup, customer selection, channel management, and business operations.
I. Characteristics of Consumption and Product Sales in Township and Rural Markets
- Overall characteristics of township and rural markets: These markets have large populations. With the increasing consumption level and awareness in townships, it is expected that in the future, they will grow at a rate 4%-5% higher than urban markets annually (data from Nielsen).
- Township and rural markets are highly potential markets. Economic development is unbalanced; there are significant differences in consumption levels and habits between the eastern and southern coastal areas and the central and western inland regions. For example, consumption levels in rural areas of the Pearl River Delta, Yangtze River Delta, and coastal areas are close to urban levels, while consumption in central and western rural areas is at another tier. Generally, these markets are geographically dispersed, with scattered retail stores and relatively dispersed purchasing power; market dispersion is their most notable feature.
- Consumer psychology, consumption habits, and local customs vary greatly by region, but overall, township consumption is still at a relatively functional stage, emphasizing the actual use value and material value of products, rather than added value and spiritual enjoyment. Price and taste will be important factors affecting product sales; baijiu is a seasonal consumer product influenced by consumption habits, which is more evident in townships.
Compared to urban market customers (including wholesalers and terminals) who are accustomed to sales personnel from various types and manufacturers, visits by sales personnel to township and village-level customers, especially terminal customers, still have a significant psychological impact.
II. Analysis of Baijiu Retail Channels in Township and Rural Markets
The channels in township and rural markets are interconnected, consisting of three levels: county town channels, township seat channels, and village-level channels. From a terminal perspective, the relationship is: urban terminals + township seat terminals = village-level terminals. The number of terminals is related to population, with an average of one terminal per 200 people, and about one terminal per 350 people at the village level. In terms of sales volume, rural non-immediate consumption terminals are 90% of urban areas. Note: These data may vary by region and are for reference only.
Baijiu products are mainly sold at retail, with retail stores concentrated in townships, fewer in villages (natural villages); they are often sold alongside condiments, beverages, and food.
The purchasing relationships in retail channels are relatively stable (this is very important for distributor selection!).
- General township baijiu retail stores often engage in both wholesale and retail, while village retail stores mainly focus on retail (bulk purchases may enjoy certain price discounts).
- Restaurants that can sell baijiu are mostly concentrated in townships or at transportation hubs (or roadside); rural areas basically have no restaurants.
- The population and geographical dispersion of townships and natural villages directly lead to the dispersion of baijiu retail stores and restaurants.
Analysis of township consumer characteristics:
- Low brand attention.
- Focus on price and taste.
- Relatively fixed purchase locations.
- A large proportion of purchases are for business gifts.
- Many purchase regularly.
- Non-immediate consumption accounts for a large proportion.
- Concentrated purchasing: e.g., during market days or fairs.
Analysis of wholesale channels in township and rural markets:
- Small capital strength.
- Poor development awareness.
- Mixed selling, not specialized.
- Small purchase quantities.
- Most lack complete legal procedures.
- Limited distribution service capabilities.
- Engage in both wholesale and retail.
Distribution customers in township and rural markets generally have low loyalty and are easily influenced by product prices and sales policies; their product distribution is usually in a natural state, with low competition among customers.
The characteristics of baijiu consumers and retail links in township and rural markets determine that the channel structure is both long (many links) and wide (many distribution customers).
Special note: The current channel structure in township and rural markets means that whoever controls the township distribution channels owns the market.
III. Establishment of Distribution Networks in Township and Rural Markets
Development guiding principles:
- Principle 1: Determine the number of distributors (generally first-level distributors with contracts or agreements with the company) or second-level wholesalers (those signing tripartite agreements with the company and first-level distributors) based on the township population.
- Principle 2: Determine distributor setup based on economic development level, number of terminals, and total baijiu market capacity.
- Principle 3: Determine the number of distributors based on the financial strength and distribution capabilities of township wholesale customers.
- Principle 4: Select second-tier customers in a planned manner based on the distribution network status of confirmed distributors; second-tier should effectively supplement the distributor's coverage capability.
- Principle 5: Decide whether to establish special second-tier distributors among second-tier customers based on their sales capability, cooperation with the company, and market importance.
Establish customer files for township and rural markets:
- Create detailed files for first-tier, second-tier, wholesale-retail customers, and terminal customers in the regional township and rural markets, effectively reflecting their purchase and sales relationships, product varieties, and sales volumes.
- Dynamically update customer files during regular or irregular market visits.
- Based on customer files, systematically sort out the supply relationships from first-tier to second-tier to terminals.
- On the basis of sorting supply relationships, clarify the business areas or service customers of first-level distributors and second-tier distributors.
- Gradually strengthen the regional management and customer service responsibilities of distribution customers, establish and improve regional management systems or customer service responsibility systems, and promote further stability of the channel network.
- Strengthen business visits and relationship maintenance with distribution customers and key township terminal customers.
Management of sales representative customer and terminal visits:
- Clarify the customer visit responsibilities and regional management responsibilities of sales personnel in township and rural markets.
- Reasonably set visit routes based on customer distribution, types, levels, and visit frequency in township and rural markets.
- Develop simple and practical business visit processes, standards, and visit recording tools.
- Strengthen supervision and assessment of sales personnel's township customer visits.
- Establish effective customer relationship maintenance management systems and implementation rules.
- Reasonably use sales policies and promotion policies to achieve dual goals of market development and customer relationship maintenance.
- Consider the profit needs and business expansion needs of township distribution customers when formulating sales policies.
- Based on the characteristics and needs of township and rural market customers and consumers, promotion policies can be combined with their production needs to ensure diversity, flexibility, and practicality.
- Strengthen relationship maintenance with distribution customers and key consumer representatives through humane holiday and birthday greetings.
- Through comprehensive business files, establish supply connections (procedures, systems, etc.) between distribution customers and lower-level customers, effectively integrating order calls and pre-delivery phone contacts to clarify product delivery needs.
- Company sales personnel set scientific and reasonable product delivery routes based on the types of lower-level customers, product needs, and purchase frequency, implementing regular route delivery.
Principles for setting delivery routes:
- Principle of reasonable and effective use of personnel, time, and transportation tools.
- Routes should be based on dynamic customer files or detailed records.
- The number of customers on a route is based on one delivery quantity.
- Routes start and end at the distributor's warehouse or store.
- Routes are set based on full distribution standards for existing direct-sales customers and lower-level distribution customers, while allowing for some flexibility.
- Customers on the route should be prioritized; business tasks should be clarified before departure, such as which customers are distribution customers and which need payment collection.
- Assist distributors in clarifying the business content, procedures, and responsibilities of delivery personnel and vehicles, and implement post responsibility systems.
Ensure safe inventory for lower-level distribution customers and terminal customers:
- Gradually guide lower-level distribution customers and terminal customers to increase awareness of safe inventory (generally meaning product inventory under normal conditions reaches 1.2-1.5 times the sales volume of one supply cycle or sales cycle).
- Emphasize the concepts of supply cycle and safe inventory in supply agreements.
- Provide certain policy preferences and rewards for customers using safe inventory (generally using sales deductions or year-end rewards).
- Emphasize the importance of safe inventory when supplying lower-level customers.
- Combine lower-level customers' safe inventory with regular route sales.
- Use lower-level customers' safe inventory and regular route sales to effectively avoid customer stockouts.
- Use lower-level customers' safe inventory to ensure timely delivery services under normal circumstances.
- To ensure effective implementation of safe inventory methods, sales personnel should guide or assist distributors in establishing relevant service systems:
- Product age management system and operating rules.
- Commitment to adjust, exchange, and return products for lower-level customers' safe inventory.
- Procedures and systems for regular inventory counts of lower-level customers' stock (clarifying responsible persons, methods, and tools).
- Distributor regional management:
- Strictly define the region (or customer supply responsibility) for distributors.
- Regional division in township and rural markets must be clear to facilitate business guidance, planning, and market management, and to set targets (especially regional coverage and share indicators) and performance assessments.
- Regional division should consider market capacity, consumption distribution, distributor service capabilities, and other factors.
- Regional division in township and rural markets is generally based on township and administrative village boundaries, sometimes also referencing obvious natural environmental boundaries, such as rivers.
IV. Distribution Channel Product Placement
- Treat the distribution rate of distribution channels as an important part of the distributor's (or second-tier distributor's) regional management responsibility.
- Actively penetrate competitors' distribution channels through distribution customers.
- Company sales personnel should actively improve distributors' customer development, management, and service capabilities.
- Guide and require distributors to strengthen (and if conditions allow, assign dedicated personnel) visits, business contacts, and customer development for lower-level customers, and provide guidance in actual work.
- Through market research and promotion flow monitoring, clarify terminal distribution and actively guide distributors to place products in terminals.
- Reasonably use the company's promotion policies and product entry policies, with the support of company sales personnel, to "point shoot" at terminals with large sales volumes, difficult product entry, or competitor exclusive points.
- Gradually cultivate consumers with consumption influence in township and rural markets (such as leaders of township government functional departments, village heads), and strengthen relationship maintenance so they can exert influence in improving the company's product coverage.
- Ensure product inventory for distribution customers.
- Establish and improve the customer emergency delivery (product transfer) mechanism.
- Monitor sales changes of distribution customers, scientifically set purchase cycles, and ensure inventory for normal product sales.
V. Market Price Stability
Strictly control and severely crack down on cross-regional sales (channel stuffing) to maintain product sales order in township and rural markets.
- Require distributors to implement product sales prices according to company regulations or guidance, and regularly check and supervise through market surveys.
- Treat distributor product sales price stability as an important part of distribution contracts and distributor performance evaluation.
- Use measures such as collecting penalties and reward controls to ensure distributors distribute or directly sell company products at specified prices.
- Strictly supervise and control distributors' implementation of promotion policies according to company plans, and prohibit unauthorized price reductions.
- When conditions allow, require distributors to provide detailed records of product distribution/direct sales flow, volume, and price execution.
- Actively collect information on group purchases or large-volume purchases in township and rural markets through various methods and channels, and offer discounts within company approval.
Price stability for second-level distributor product sales:
- Require distributors to sign distribution agreements with lower-level customers according to company requirements or under company guidance and supervision.
- Sign tripartite agreements (company, distributor, second-tier distributor) to have the distributor control supply, sales rewards, and price execution for second-tier distributors, subject to company supervision.
- With company approval, distributors may collect a certain amount of deposit when signing agreements with second-tier distributors.
- The company holds distributors responsible for price violations by second-tier distributors.
- With company approval, distributors may use methods such as flat-in-flat-out and rebate control to constrain second-tier distributors' purchasing and product sales (price) behavior.
Price stability for terminal customer product sales:
- Use packaging, product promotional posters, and retail price guidance to guide, without excessive demands.
- Group purchases collected by terminals should be sold under the guidance and support of distributors.
Special note: The village-level market is forced out, managed out, not imagined!
As a unique model in China, the township and rural market is a proven large mineral deposit, but the reserves are scattered, difficult to mine, technically challenging, and costly. The start-up of the township and rural market will be a long process; initial investment is like throwing a pebble into the sea, and it is inevitable that there will be no waves. Facing this "rural cake" with Chinese characteristics, the best strategy is to chew slowly and eat carefully. Only by starting from the basics and doing detailed and solid work can we prevent "coming in a hurry, leaving in a hurry"!