Click to read the original text for details " Introduction: A well-known marketing expert once said: "Diversion is shameless, the diverted are incompetent." No matter how beautiful the cloak, diversion is a tumor in the healthy development of a company's sales. The difference lies in whether it is a "benign tumor" or a "malignant tumor." But whether benign or malignant, it needs early treatment, otherwise it can harm health and even life. This is a troublesome but necessary problem to solve. " Benign diversion Benign diversion is the normal circulation of the market, with little price fluctuation. The solution is relatively simple: point out the problem, state your position, but there is no need for coercive measures. The main types are as follows: 1. Incidental diversion. Usually, distributors have multiple product categories, and customers need to serve the terminal, but not for the purpose of price cutting, but as a side business. For example, a truck of 500 cases, with 30-50 cases of incidental goods, is generally not malicious to the market. 2. Diversion to blank markets. The market is blank and waiting to be developed, or development is in progress. Generally, goods flow in, and customers seek high gross profit from new products, not malicious price cutting. Similar diversion also spurs local distributors, but this situation is not advocated to happen passively. 3. Border area circulation. The two markets are close, normal commodity circulation, prices differ slightly but within normal gross profit range. 4. Short-term distributor inventory overflow. Inventory occupies capital, and distributors dump goods to recover funds or worry about shelf life, but it is not habitual or malicious. Product prices are slightly lower but not price-cutting, and it is not a long-term behavior. The above problems have little impact on the market. Depending on the reaction intensity of the local distributor, generally one can be clear in attitude, slow in action, and appropriately control, depending on the manufacturer's control ability. It is like a benign tumor: after removal, there is basically no aftereffect, at most a scar. If not removed, it may worsen or stay healthy for a lifetime. Malignant diversion Where there are best-selling products, there is diversion; among diversion, there must be malignant diversion. Malignant diversion is like corruption in state administrative organs. If not addressed, it will eventually damage the entire administrative mechanism. Similarly, if malignant diversion is not addressed, it will eventually become the "cancer" of the market. Malignant diversion mainly includes the following types: 1. Boosting sales to get rebates. In their own territory, prices are normal, but they don't care about others' territories. They use direct diversion and indirect diversion through second-tier distributors, especially hidden diversion through second-tier, to boost sales and obtain special policies and rebates. 2. Feud diversion. Two distributors have "historical grudges" and want to "kill" each other. This is a serious malignant diversion, using the manufacturer's products as "cannon fodder," and must be addressed. Typical manifestations: local prices are normal, but they rush into the other's market to cut prices below market; or malicious quotes, providing a small amount of goods far below the distributor's net price. This can be between the manufacturer and distributor, or the manufacturer's products are diverted by distributors of other brands. This type is special and requires senior management to intervene and multi-regional coordination. 3. Malicious incidental diversion. In territories not their own, they use the manufacturer's best-selling products at below-market prices to open the way, mixing in other miscellaneous brands to enter others' markets, ultimately sacrificing the price system of the best-selling brand to introduce high-margin miscellaneous products and gradually replace them. 4. "Killing" best-selling products through diversion. For best-selling products that occupy most of the market share, causing other brands distributed by the distributor to face obstacles and fail to open up, the distributor disrupts and messes up the channel price distribution of the best-selling product, with the purpose of "killing" it, to achieve the ultimate goal of promoting other brands. The above diversion will hit distributors who truly want to do well and work meticulously. For the healthy development of the market, these malignant diversions must be resolved. Why does diversion occur? 1. Historical issues, especially regional historical ownership. Before the manufacturer subdivided the market, some "old-timer" distributors refuse to obey regional divisions, claiming "this region has always been mine," acting shamelessly. 2. Geographical issues. The diversion area is too close to the diverting distributor, and surrounding terminals have close business cooperation. 3. Price difference issues. The diverted areas generally have prices that are too high. 4. Policy difference issues. The diverted areas do not enjoy the same price, policy, rebate, or hidden discounts as surrounding areas. 5. Habitual diversion issues. These distributors started with diversion, are not down-to-earth, and don't stop when they see good results. 6. Manufacturer's attitude. Does the manufacturer have the will to solve and govern? Has diversion become serious enough that the manufacturer must deal with it? Has the contradiction between shameless diversion and incompetent diverted escalated to irreconcilable? If so, it must be resolved. The so-called solving contradictions first creates contradictions. The key to solving contradictions is the manufacturer's attitude. This is the essential issue; everything else is a false proposition. Which distributors like to divert? 1. Meritorious officials. The financial backers in the early stages of the manufacturer's development. They think highly of themselves, believing the manufacturer grew up under their watch, so they divert with impunity. 2. Tycoons. These customers have good capital accumulation, know the manufacturer's operational methods well, and are good at asking for policy resources. These are all good things, but once they get the policy, they become "five-clawed golden dragons" diverting everywhere, and they are not pragmatic. They are the nemesis of loyal distributors and terminal distributors. Others work meticulously, and when mature, 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 build their banner, gradually developing, and are ruthless in diversion and price cutting. 4. Tai Sui (Crown princes). They enjoy privileges when the system is not sound, holding a "death exemption medal" to do evil and harm the common people. Where products sell well, there is diversion; where there is diversion, there is price cutting; where there is price cutting, there is interest; where there is interest, there is conflict. Diversion is shameless, the diverted are incompetent. When the contradiction between shamelessness and incompetence escalates to irreconcilable, the manufacturer's role as referee is crucial. How should manufacturers handle diversion? When the manufacturer has developed considerable strength, for the healthy development of the market, it can no longer ignore the disorderly development of diversion. The solutions are as follows: 1. Clear attitude, strict regulations. Start with ideological education, publicize the manufacturer's determination to govern diversion, start with internal team education, "to resist external aggression, one must first stabilize internal affairs," form a unified understanding internally, and then continuously instill it into the distributor team through the sales team, creating an atmosphere of strict governance; use systems and clauses to deeply embed the territory, price system, and rebate policy implementation. From publicity to action, tell stories of how doing the market well makes money, and how malicious diverters are detained, sentenced, given life imprisonment, death with reprieve, or executed. 2. Team adjustment, position exchange. Transfer internal diversion experts to blank markets, so that major diverters have no backers. 3. Prevent big customers from using policies to hold the manufacturer hostage, and adjust regional policies benignly. Diversion areas are mainly mature markets. In mature markets, the distributor's total sales volume is one assessment goal, not everything based on sales. Differentiate product promotion rewards, so diverting distributors have something to do, promote single products, make money, and let distributors earn money from hard work in promotion, not from dumping goods to get big customer policies. 4. Cut off the arm. Treat customers who have long-term malignant diversion affecting the overall market health as tumors, kill one to warn a hundred to avoid future troubles. 5. Establish an inspection team, take action against the "Tai Sui," let the common people see hope, and publicize this matter widely, making it a good story. 6. The manufacturer's actions should match its strength. For example, cancel quotas, cash on delivery, pay deposits or diversion funds, deduct rebates, reduce policies, cut policies, cut single products, cut supply, etc. Use whatever means are suitable. 7. In the era of advanced information technology, collecting evidence of diversion is not difficult; the key is characterization. In the initial stage, handle gently: if a diverted single 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 overall products; if found again, cut several single products. For those who refuse to change despite repeated education, when there are other distributors in the region who can reasonably structure and develop better, let the diverting customer enter the "cold palace" and slowly "freeze to death." Diversion is difficult to solve, but not impossible. The key depends on the manufacturer's attitude. Distributors do business ultimately to make money. They are downstream. If the upstream water is clear, the downstream will not be turbid. Source: FMCG Elite Club In late August, the "2018 China Digital Innovation Conference (2018FDIC)" with the theme "Finding New Engines for Growth" will be held in Shanghai, hosted by the China FMCG Industry Association and organized by New Distribution. The conference will last 3 days, focusing on two main themes: marketing and supply chain, with six parallel forums: brand, channel, communication, B2B, same-city logistics, and innovative retail. We will invite industry bigwigs, CEOs, and brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry. This conference will have over 5,000+ enterprises participating. This grand event brings together outstanding explorers and promoters of digital transformation across industries, sharing case practices of digital transformation for industry enterprises and partners, discussing digital technology development trends and cutting-edge applications, building a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers obtain the latest information and understand the best application practices. Help brand owners and distributors find new engines for digital growth in the Internet era! The following is the list of invited enterprises Conference time August 22-24, 2018 Conference location Shanghai Baohua Marriott Hotel Conference content 8.22 Full-day check-in Afternoon 14:00-17:30 Distributor same-city logistics parallel forum Evening 18:30-21:00 New Distribution Night Bigwig Dinner 8.23 Theme: Marketing Digital Innovation Morning 9:00-12:00 Marketing Digital Innovation Main Forum Afternoon 14:00-17:30 Brand, Channel, Communication Parallel Forums 8.24 Theme: FMCG Supply Chain Digital Upgrade Full day: FMCG Supply Chain Conference Registration method Registration channel is now open. Long press the QR code below or click "Read Original" to register. Limited to 200 early bird tickets at half price, while supplies last! Registration consultation Ticket inquiries: Media cooperation inquiries: New Distribution Previous Conference Highlights Click the link below to review the highlights of the 1st, 2nd, and 3rd FMCG + Internet Conferences: -END-