---
title: "Distribution Rate Matters, but Handle These Four Key Relationships Well!"
description: "Some companies emphasize product distribution rate and market presence, believing that achieving 100% distribution is the key to retail success. Others focus only on key outlets and oppose high distribution rates, considering them uneconomical and costly. How should distribution rate be viewed correctly, and how should several relationships in distribution operations be managed?"
author: "New Distribution"
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published: "2015-11-19"
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# Distribution Rate Matters, but Handle These Four Key Relationships Well!

> Some companies emphasize product distribution rate and market presence, believing that achieving 100% distribution is the key to retail success. Others focus only on key outlets and oppose high distribution rates, considering them uneconomical and costly. How should distribution rate be viewed correctly, and how should several relationships in distribution operations be managed?

Some companies emphasize product distribution rate and market presence, believing that achieving 100% distribution is the key to retail success. Others focus only on key outlets and oppose high distribution rates, considering them uneconomical and costly. So how should distribution rate be viewed correctly, and how should several relationships in distribution operations be managed?

1. Handle the Relationship Between "Outlet Quantity" and "Outlet Quality"

Although distribution rate is very important, attention must also be paid to the relationship between "outlet quantity" and "outlet quality." Blindly overemphasizing distribution rate will increase sales costs, causing resource waste and affecting the concentrated investment in A- and B-class key outlets.

For example, if medium- to high-priced products are widely distributed in convenience stores, the investment is large but the results are minimal, because there are few heavy consumers of such products there, and their purchase and consumption processes rarely occur in these stores. Therefore, what products go into what stores should be based on the product's grade and nature, choosing appropriate retail outlets for distribution without forcing "full coverage."

Outlet sell-through rate is as important as distribution rate.

Some companies have high distribution rates, but the sales performance of distributed outlets is not ideal, and the sell-through rate is low. In addition to using distribution rate as a key performance indicator, the sell-through rate of each outlet should also be an important metric. Outlet sell-through rate is as important as distribution rate.

To improve sell-through rates, some companies adopt a "grab the big, let go the small" strategy during distribution, focusing on high-volume outlets and allocating major resources there, while placing smaller outlets in a secondary position. This improves both distribution rate and sell-through rate, with both growing simultaneously.

In developing distribution outlets, the relationship between outlet quantity and outlet quality must be handled correctly. Not only should the number of outlets be emphasized, but also their quality. It is important to establish that "outlet sales performance and manufacturer-dealer cooperation are unsatisfactory, causing resource waste."

Although distribution rate is an important indicator in network development, it is not the only one. A distribution rate that is too low is not conducive to sales, but it is not necessarily better to have more. Some companies have high distribution rates, but the sales performance and manufacturer-dealer cooperation of outlets are unsatisfactory, causing resource waste.

Siemens has a good strategic plan for outlet construction, especially emphasizing the quality of outlet development. In a region, it focuses on supporting one point rather than spreading everywhere. Only when the time is ripe does it add new sales outlets. The selected points basically succeed one by one, following the route of "point leads to line, line leads to area."

Siemens' distribution rate is not particularly high, but it has achieved great success, which is inseparable from its emphasis on outlet quality.

Therefore, it is essential to focus on the quality of outlet construction, not just the quantity of distribution outlets, but more importantly, the operational quality and efficiency of these outlets. The selected distribution outlets should succeed one by one, which is the way to cultivate the market and maintain sustainable development.

2. Handle the Relationship Between "Early Distribution" and "Later Management"

Many companies only emphasize "early distribution" and neglect the "later management" of distribution, thinking that once products are distributed, everything is fine. In reality, distribution does not mean the products are sold; only sales points that can promptly sell products to consumers and form a virtuous cycle are effective distribution outlets. Therefore, companies must not only focus on early distribution but also on later management.

When handling the relationship between early distribution and later management, we should establish two viewpoints:

1. Distribution rate does not equal shelf presence rate.

Although products are delivered to the terminal, sometimes they cannot be found on the shelves. Retailers may store products in the warehouse or in invisible places under the shelves. This only achieves warehouse transfer and does not achieve the desired effect.

Therefore, while emphasizing the quantity of distribution, it is also necessary to strengthen distribution tracking services, focus on the shelf presence rate, and strive to occupy the best display positions on the shelves.

2. Daily shelf management is as important as distribution.

Shelf management is as important as distribution and requires constant attention. Since each retail store carries products from multiple companies, retailers find it difficult to take care of every product, so we need to take the initiative. During regular scheduled distribution and visits, salespeople should strengthen product shelf management.

In some well-known foreign companies, there are professional merchandisers who work daily at various sales points to help store staff with shelf management, showing the importance of merchandising for sales.

A common problem among current salespeople is that they leave the product in the store and go after getting an IOU. If the store owner stores the product in a box in the warehouse or in a corner, consumers cannot see the product at all, and sales cannot be achieved.

In specific operations, always strive for the best display position, keep products clean and defect-free, and let products always appear attractive to consumers; place products together with similar best-selling products to expand the display area and position them at the best visual spot, or use the manufacturer's unified display racks; especially for shopping malls and supermarkets, implement centralized display of series products to expand the occupied area and enhance visual impact; when there are many varieties, set up dedicated counters.

3. Handle the Relationship Between "Distribution Volume" and "Actual Sales Volume"

Products leave the company and are in the "distribution" stage before being sold; after being sold, they are called "actual sales." Although there is a clear correspondence between "distribution volume" and "actual sales volume," the two are not always synchronized. Generally, within a certain period, "distribution" comes first, and "actual sales" follow.

Is a larger "distribution volume" always better? How should it be managed? This depends on the marginal effect of "distribution volume." In the initial stage of product launch, increasing "distribution volume" can drive growth in "actual sales volume," and the growth in distribution volume is synchronized with the growth in actual sales volume. At this time, the marginal effect of distribution volume is increasing. As the market gradually saturates, the impact of the additional distribution volume on actual sales volume becomes smaller, and the marginal effect of distribution volume decreases.

The change in the marginal effect of "distribution volume" indicates that increasing "distribution volume" does not necessarily increase "actual sales volume." Therefore, it is necessary to scientifically arrange the quantity of distribution based on the changes in the marginal effect. It is regrettable if distribution lags or is insufficient, affecting actual sales, but the problem is not difficult to solve. The key is to overcome the negative effects of "distribution volume." In fact, pausing or reducing "distribution volume" during a specific period does not reduce "actual sales volume" because customers still have sufficient inventory.

4. Handle the Relationship Between "Distribution and Advertising and Promotion"

Advertising and distribution are two issues that companies must face in terminal work. It is often said that distribution should be coordinated with advertising, but many companies hesitate in practice, not knowing how to arrange the order of distribution and advertising investment. If distribution comes first and advertising later, salespeople will report that distribution is difficult. If advertising comes first and distribution later, the market may not be fully activated while the advertising budget is exhausted.

However, it is not easy to determine which is more important and which comes first, and to provide support for terminal work accordingly. So, should advertising come first, or distribution first?

One scenario is distribution first, advertising later.

The advantages are two:

First, the risk of advertising investment is relatively low. If distribution is done first, even if distribution does not go smoothly, it will not lead to advertising waste.

Second, advertising investment is relatively reduced. After distribution is in place, launching an advertising offensive uses money where it counts, making it convenient for consumers who see the advertisement to buy the advertised product, facilitating immediate purchase, and relatively reducing advertising investment or reducing the loss of advertising investment, saving advertising costs.

The disadvantages are three:

First, it is difficult to develop strong distributors. Before the manufacturer invests in advertising or the advertising investment is truly in place, strong distributors generally are unwilling to do market development. Therefore, this approach is unlikely to gain support from powerful distributors.

Second, distribution resistance is high. Without advertising support, distribution faces great resistance, the distribution period is prolonged, and large-scale carpet distribution is difficult, making it hard to promote the product on a large scale. At the same time, fatigue may set in, eroding the confidence of marketing personnel and distributors. Moreover, a prolonged distribution period also increases distribution costs.

Third, it is easy to create a "half-cooked" market. After the distribution rate rises, if advertising support does not follow, the product may become unsalable, turning newly shelved products into weak products, eventually leading to returns due to poor sales. Moreover, once retailers form the impression that the product "does not sell well," they will lose confidence and refuse to sell the product for a long time, creating a "half-cooked" market.

Another scenario is advertising first, distribution later.

The advantages are three:

First, advertising provides strong support for distribution, reducing resistance. Advertising combined with terminal distribution makes distributors and retailers feel that this product has advertising support, which can reduce market entry resistance.

Second, it is conducive to concentrated, rapid, and large-scale distribution. With advertising support, distribution goes smoothly, greatly shortening the distribution time. Concentrated distribution time is conducive to large-scale product promotion and saves distribution costs.

Third, it is conducive to achieving cash-on-delivery during distribution.

The disadvantages are two:

First, if distribution lags seriously, it will cause advertising waste. If advertising goes first but distribution is hindered for unexpected reasons, or the distribution surface corresponding to the advertising is narrow, and the distribution rate at sales terminals is low, then even the best advertising will lead to waste of advertising investment. Therefore, launching an advertising offensive before distribution carries high advertising investment risk.

Second, if distribution lags seriously, consumers who see the advertisement may want to buy but cannot find the product, and their purchase impulse cannot be promptly and quickly converted into actual purchase, causing consumer enthusiasm to wane and leading to advertising waste. Let's look at the example of the Fifth Season.

In marketing practice, there is also an innovation: adopting a strategy of alternating advertising and distribution, which is more effective than the previous two methods.

Whether advertising or distribution comes first, each has pros and cons. Is there a way to take the best of both and make advertising and distribution more closely coordinated? Is there a more reasonable, economical, and lower-risk solution? Yes, that is alternating advertising and distribution. This approach should note the following points:

1. Conduct trial distribution before advertising.

Trial distribution is the best distribution survey. Through trial distribution, understand the attitudes of distributors and retailers toward the product, the company's distribution policy, and their opinions and suggestions on advertising support and advertising placement. Through this preliminary survey, we can act with a clear goal, formulate targeted advertising strategies, media strategies, and distribution policies, revise distribution strategies and advertising plans, and greatly improve the success rate of advertising and distribution.

Use a small amount of advertising to support the first round of distribution.

Invest a small amount of advertising to support the first round of distribution, either "advertising first, distribution follows" or "advertising and distribution simultaneously," but only appropriately invest a small amount of advertising to support the first round. The purpose is to make distributors and retailers feel that this product has advertising support, thereby increasing their interest and confidence in distributing the product and reducing distribution resistance.

The first round of advertising is aimed at distributors and retailers. The purpose of the first round is not to activate consumers, because advertising has a gradual process, and with only a small amount of advertising, it is difficult to activate a large number of consumers.

2. Launch a large-scale advertising offensive to support the second round of distribution.

After the first round of distribution reaches a certain level, a second round of large-scale advertising can be launched. The second round of advertising should have a larger investment, longer duration, and stronger intensity than the first, to form a high-density, large-scale advertising offensive.

The purpose of the second round of advertising is twofold: first, to continue activating distributors and retailers, further mobilizing their interest and confidence in distributing the product, thereby completing distribution in places that were not covered or were difficult to cover in the first round; second, to fully activate consumer purchases, combining advertising with terminal promotions to stimulate consumer buying enthusiasm and drive terminal consumption.

3. Terminal promotions should closely follow each round of distribution.

Distribution is only a means; promoting terminal sales is the goal. If after distribution is in place, terminal promotions do not follow up in time, newly shelved products may become "weak products," causing the early distribution efforts to be wasted. Moreover, if distributed terminal sales points cannot generate actual sales soon, these points will be worse than those not yet distributed.

When a product enters the market, the most important thing is to drive terminal consumption. Without consumption, there is no terminal sales. Stagnant terminal sales will inevitably affect distributors and even the company. Therefore, while emphasizing product distribution, full attention should be paid to terminal consumption stimulation.

After product distribution is in place, terminal promotions must follow up in time, combining advertising pull with promotional push. Only then can terminal consumption be stimulated, sales be generated quickly, and distributed sales points start shipping early, forming good terminal sales from the beginning. Advertising stimulates consumers' purchase desire and creates purchase impulses, while terminal promotions convert these impulses into immediate and local actual purchases.

The popularity of the product further stimulates terminal interest, encouraging distributors and retailers to stock up, turning the company's passive distribution into merchants' active demand, thus forming a virtuous cycle. Selling products to distributors and retailers by stimulating terminal consumption is the most brilliant distribution strategy.

It is necessary to correctly handle the dialectical relationship among distribution, advertising, and terminal promotions. Advertising and distribution cannot be separated, and terminal promotions and distribution cannot be separated either. In practice, "alternating advertising and distribution, with promotions following up to activate terminals," forming a virtuous cycle, can be considered a good strategy.

**-END-**

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