---
title: "Distributors Who Don't Understand Product Mix Can't Make Money Even with the Best Brands!"
description: "The market is changing, retail is changing, and distributors' businesses are getting harder. One of the key strategies for large and medium-sized trading companies to break through is product mix and management, which involves rationally combining products from different brand tiers: first-tier brands can cover basic operating costs, ensure normal survival, and bundle with second- and third-tier brands to improve their trading terms, help them quickly cover sales networks, and spread distribution costs; second-tier brands can become the main profit contributors after first-tier brands cover basic costs, enhancing distributors' resilience to risk and providing terminal market maintenance teams for third-tier brands; third-tier brands can further increase profit margins with the backing of first- and second-tier brands."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2026-01-27"
categories: "Brand Marketing, Dealer Operations"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/distributors-who-don-t-understand-product-mix-can-t-make-money-even-with-ce2e157f.md"
original_source: "https://mp.weixin.qq.com/s/6WaEts7ljqh0zcS9F_nQug"
translation: "https://xinjignxiao.com/zh/articles/%E7%BB%8F%E9%94%80%E5%95%86%E4%B8%8D%E6%87%82%E4%BA%A7%E5%93%81%E7%BB%84%E5%90%88-%E4%BB%A3%E7%90%86%E5%86%8D%E5%A5%BD%E7%9A%84%E5%93%81%E7%89%8C%E4%B9%9F%E8%B5%9A%E4%B8%8D%E5%88%B0%E9%92%B1-ce2e157f.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/distributors-who-don-t-understand-product-mix-can-t-make-money-even-with-ce2e157f/"
citation: "高级研究员 海游. “Distributors Who Don't Understand Product Mix Can't Make Money Even with the Best Brands!.” New Distribution, 2026-01-27. https://xinjignxiao.com/en/articles/distributors-who-don-t-understand-product-mix-can-t-make-money-even-with-ce2e157f/"
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---

# Distributors Who Don't Understand Product Mix Can't Make Money Even with the Best Brands!

> The market is changing, retail is changing, and distributors' businesses are getting harder. One of the key strategies for large and medium-sized trading companies to break through is product mix and management, which involves rationally combining products from different brand tiers: first-tier brands can cover basic operating costs, ensure normal survival, and bundle with second- and third-tier brands to improve their trading terms, help them quickly cover sales networks, and spread distribution costs; second-tier brands can become the main profit contributors after first-tier brands cover basic costs, enhancing distributors' resilience to risk and providing terminal market maintenance teams for third-tier brands; third-tier brands can further increase profit margins with the backing of first- and second-tier brands.

The market is changing, retail is changing, and distributors' businesses are getting harder. One of the key strategies for large and medium-sized trading companies to break through is product mix and management, which involves rationally combining products from different brand tiers:
First-tier brands can cover basic operating costs, ensure normal survival, and bundle with second- and third-tier brands to improve their trading terms, help them quickly cover sales networks, and spread distribution costs;
Second-tier brands can become the main profit contributors after first-tier brands cover basic costs, enhancing distributors' resilience to risk and providing terminal market maintenance teams for third-tier brands;
Third-tier brands can further increase profit margins with the backing of first- and second-tier brands.
This layout makes sense, but in actual visits, many distributors have different confusions. They cannot balance the relationships between brands and products, often focusing on one at the expense of another, and some even end up on bad terms with brand owners. Today, let's talk about this topic.
Two Basic Concepts to Clarify
1. Whether it's a first-tier brand or a second- or third-tier brand, they all have the same product positioning and development stages. Distributors must understand these positions.
1. Product positioning includes:
  * Strategic products: win the future
  * Traffic products: win the present
  * Profit products: the foundation for survival and development
  * Disruptive products: improve the competitive landscape
Different product positioning requires different market operation models.
2. Product development stages include:
  * Introduction stage
  * Growth stage
  * Maturity stage
  * Decline stage
Different product development stages require different market operation models.
2. The core big single product is to occupy the mind, a category with absolute leadership in the region.
Every brand, to adapt to competition, has or is building its own core single product. Distributors must cooperate in this process. There are six specific dimensions to build:
1. Brand power building: The part involving distributors is mainly how to build brand communication at channel points, bridging the last meter of consumer purchase decisions, and also undertaking some offline brand expansion activities, such as manufacturer weeks, local special official activities, etc.
2. Coverage improvement: This is key. Distributors need to cooperate with brand owners to achieve basic coverage. Generally, this is calculated based on the relationship between population and outlet count, combined with coverage percentage.
3. New customer acquisition: Distributors need to do well in trial experiences and maintain continuous consumer interaction.
4. Repurchase enhancement: Distributors need to do well in consumer promotions and plan diversified promotional activities.
5. Outlet quality improvement: The distribution of core single products is not just about having stock; it also requires detailed work such as shelf space quantity, floor stack quantity, visual merchandising requirements, and scene building elements.
6. Absolute sales share: The sales of core single products generally should not be less than 30%-50% of the brand's total sales. Some first-tier brands also require not less than 30%-50% of the market's category capacity.
So core single products are something distributors must do well, otherwise they will be judged as unqualified customers.
Summary: The above basic concepts must be clarified. Distributor business is often about doing a good job of cooperation. The premise of good cooperation is clear goals and tactics, so that cooperation can be harmonious.
Products Can Be Together, But Brands Must Be Separate
Many distributors have never understood this logic. They sign agency contracts for multiple brands, and under their efforts, both sales and profits grow, but they still cannot meet the brand owners' requirements, leading to unpleasant outcomes.
The root cause is that distributors use product a from brand A, product b from brand B, and product c from brand C to achieve sales and profits. Brands A, B, and C all have multiple products like a, b, c, d, e, etc. The rest of the brand's products are not given attention, so cooperation naturally won't be pleasant.
So products can be sold together, but brands must be handled separately. How to coordinate the three elements of the first engine product (core single product), product positioning, and development stage within a single brand to drive the business development of both the distributor and the brand owner? I have made a diagram for your reference.
First, we need to clarify a basic concept:
The first engine product of a brand must be traffic-oriented, the second engine product must be profit-oriented, and the third engine product must be strategic. Over time, the roles of the three engines are constantly changing.
Secondly, the development of the three engine products is simultaneous, except for innovative brands.
The first stage is when the first engine product enters the growth stage, the second engine product begins to be laid out and introduced, and the third engine product enters cultivation;
The second stage is when the first engine product enters the maturity stage, the second engine product begins to grow, and the third engine product enters introduction;
The third stage is when the first engine product enters the decline stage, the second engine product enters the maturity stage, and the third engine product enters the growth stage.
Then the first engine product begins to do micro-innovation, such as product upgrades, packaging upgrades, concept upgrades, and so on.
Let's take Nongfu Spring as an example. Now we see Nongfu Spring's annual sales of 50 billion yuan, but you might recall that in 2010 it was also very difficult, which should belong to the first stage of Nongfu Spring's product structure development.
At that time, I had just joined Nongfu Spring. In bottled water, Kangshifu was number one. Nongfu's 550ml water was priced at 1-1.5 yuan, with the mainstream price point mostly at 1.2 yuan. Our main sales came from Nongfu Orchard. At that time, the layout was that Nongfu Orchard was the first engine product, driving traffic and expanding outlets. This product was in the rapid growth stage;
The bottled water series was the second engine, relying on Nongfu Orchard's outlets to quickly enter the introduction stage, combined with relevant policies for distributors to make profits;
In 2011, we began to lay out the third engine strategic product, Oriental Leaf, which entered a long cultivation period (in summer, we carried ice buckets for trial experiences; in winter, we carried thermos buckets for trial experiences, repeating this cycle, never stopping in KA and community channels).
Looking at Nongfu Spring's product structure today, Nongfu Orchard, once the first engine, has undergone product upgrades (new packaging, concentrated NFC, etc.) after entering the decline stage. The second engine, bottled water, has become a traffic product that also contributes to profits. The third engine, Oriental Leaf, has transformed from a strategic product to a profit product.
Of the six distributors I served at that time, three are still operating Nongfu Spring. They adapted and accompanied the enterprise's product structure adjustments, and their businesses have become more and more prosperous.
Summary: Brand owners can choose multiple distributors, and distributors can also represent multiple brands. In terms of opportunity, this is almost equal, but distributors must balance the relationships between brands and their products for long-term cooperation.
Seven Basic Aspects of Products Under a Single Brand
If distributors want to do well in product strategy, they need to deeply consider the following seven basic aspects.
1. Product labeling:
The ideal product has the "three highs" attributes: high coverage, high gross margin, and high turnover. This is ideal, but reality is harsh.
Distributors can divide their products into eight quadrants based on the "three highs" dimensions, with each quadrant matching different product layer strategies.
For example, if coverage is low, increase the outlet introduction plan; if gross margin is low, design a scientific and reasonable channel price chain system; if turnover is low, design outlet sales logic display standards.
2. Sales logic:
Without deep thinking about the product's sales logic, all product strategies are empty. What is sales logic? It is to find, reshape, or spread the product's selling points based on its differentiated characteristics, giving consumers a reason to buy.
The product displays that distributors often do are not mainly for aesthetics; the goal is to make the product "speak for itself" and produce ideal sales results. So the essence of display is also to understand the product's sales logic.
3. Channel chain grading system:
The length of the channel chain determines the product's profit space and service efficiency. The longer the channel chain, the thinner the profit margins at each level, and the lower the brand owner's control over outlet services. Conversely, it strengthens, but it is not always better to be shorter; it needs to match reality.
For example, a common channel chain model for distributors in first-tier cities: distributor - sub-distributor & wholesale - outlet - consumer.
The main consideration is that these regional outlets have high operating costs and do not stock large quantities, making the contradiction between direct delivery logistics costs and product gross margins irreconcilable. Therefore, they must rely on intermediaries to integrate logistics and warehousing resources to achieve cost reduction and efficiency.
4. Channel chain price system:
The setting of the product channel price system is key to ensuring channel profits. Here, it is necessary to collect the channel profit structure information of major competitors in the market, design the price chain from a market competition perspective, strictly adhere to the price bottom line, and punish any breach.
It is worth emphasizing: salespeople, under sales pressure, often apply for various promotional combinations to indirectly reduce prices. Distributors must strictly prevent this kind of "killing the goose that lays the golden egg" sales growth.
5. Product opportunity forecasting:
What is the basis for setting tasks and allocating indicators? How to analyze product opportunities from a category perspective to make next year's sales forecasts? How to analyze this year's actual achievements, study the sales share of each product in your market area and routes, and discover growth opportunities through horizontal and vertical comparisons? These all require distributors to research and solve.
6. Channel product age management:
In the future, fresh product age will definitely be the first competitiveness of FMCG companies. The mask incident taught consumers the biggest lesson that physical health is the primary need.
At this time, distributors should establish a channel product age management system that suits their own product characteristics and current situation. Distributors with conditions can also set up dedicated personnel to check and supervise, ensuring a better product age experience for consumers at the outlet end.
7. Assessment implementation:
Assessment is not the goal, but it cannot be lacking. It is a necessary means to ensure the healthy development of products. However, the premise of assessment is organizational establishment and method implementation. Distributors cannot replace teaching with management or punishment.
After clarifying the thinking, the next key step is action and resources.
At the "CFC 6th China FMCG Distribution and Retail Conference" in Chengdu on March 16-18, 2026, we will bring you:
1. Find answers: On-site release of the "Next Generation Intermediary White Paper - China FMCG Distribution Insights 2026", providing a roadmap for "redefining intermediaries": who is improving matching efficiency, and who is becoming the growth infrastructure.
2. Three parties in the same venue: Brand x Distributor x Retailer collaborative reconstruction, focusing on the "three rights structure" of price rights, supply rights, and user rights, pushing the manufacturer-dealer relationship from "upstream-downstream game" to "demand loop community", forming executable collaborative tactics.
3. Benchmark guidance: "Intermediary" benchmark case studies to deconstruct what the future intermediary looks like, reviewing organizational structure, product strategy, expense tactics, and growth paths, ready to use.
4. Regional chain supermarket resource matching: 100+ regional chain supermarkets, 1600+ stores, covering 14 provinces and autonomous regions, precise matching.
Come with specific questions, leave with clear action plans.
See you at the conference in Chengdu in March. Let's make the business principles practical and thorough together!


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## Citation metadata

- Publisher: New Distribution
- Author: 高级研究员 海游
- Published: 2026-01-27
- Canonical: https://xinjignxiao.com/en/articles/distributors-who-don-t-understand-product-mix-can-t-make-money-even-with-ce2e157f/
- Original source: https://mp.weixin.qq.com/s/6WaEts7ljqh0zcS9F_nQug

## Copyright and AI use

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