---
title: "Down to Towns and Villages: The Operational Methodology of the 'Sinking Market'"
description: "Rural revitalization is essential for national rejuvenation. Following the Two Sessions, rural revitalization has become a key direction for economic development over the next five years. Consumption data shows that rural residents' income and consumption expenditure growth rates have outpaced urban areas in the past two years, indicating greater growth potential. For some FMCG brands, this is undoubtedly a huge positive. In the current fiercely competitive offline market, where retaining existing market share is difficult and finding new growth is challenging, the vast opportunities in the sinking market will become the next battleground. The author combines personal experience to outline the methodology for exploring county-level market opportunities."
author: "邢仁宝"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-04-21"
language: "en"
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# Down to Towns and Villages: The Operational Methodology of the 'Sinking Market'

> Rural revitalization is essential for national rejuvenation. Following the Two Sessions, rural revitalization has become a key direction for economic development over the next five years. Consumption data shows that rural residents' income and consumption expenditure growth rates have outpaced urban areas in the past two years, indicating greater growth potential. For some FMCG brands, this is undoubtedly a huge positive. In the current fiercely competitive offline market, where retaining existing market share is difficult and finding new growth is challenging, the vast opportunities in the sinking market will become the next battleground. The author combines personal experience to outline the methodology for exploring county-level market opportunities.

Rural revitalization is essential for national rejuvenation. Following the Two Sessions, rural revitalization has become a key direction for economic development over the next five years. Consumption data shows that rural residents' income and consumption expenditure growth rates have outpaced urban areas in the past two years, already demonstrating greater growth potential.
For some FMCG brands, this is undoubtedly a huge positive. **Strategize according to the situation, act according to the trend, and follow the momentum. In the current fiercely competitive offline market, where retaining existing market share is difficult and finding new growth is challenging, the vast opportunities in the sinking market will become the next battleground.**
The author combines personal experience to outline the methodology for exploring county-level market opportunities, hoping to provide some inspiration.
**-01-**
**Deeply Understand Consumers, Prioritize Product Breakthroughs**
Based on the "2020-2021 Sinking Market Retail Store B2B2C Cooperation Report" and the "2020 China Sinking Market FMCG Insight Report" (source: 58 Tongzhen) released by New Distribution, sinking market consumers exhibit characteristics such as valuing low prices and practicality, emphasizing experiential consumption and genuine product guarantees, trusting local networks, having low life pressure, ample leisure time, and preferring online forms like group buying, social interaction, and discount cashback.
In the small but comprehensive sinking market, retail stores primarily sell beverages, instant snacks, leisure snacks, and mineral water. Store owners perceive the sinking market as gradually upgrading consumption, and in the future, they will pay more attention to high-cost-performance products favored by young people. Store owners are more optimistic about future business development than the overall industry outlook.
In terms of sales revenue, 2000-4000 yuan is the main monthly income range in the sinking market, accounting for 41.15% of the total, with an average monthly FMCG consumption amount of 1231 yuan. In terms of consumption scenario choices, consumers most prefer large supermarkets as their offline channel, accounting for 65.09%, and the most preferred online channels are comprehensive e-commerce platforms like Taobao and JD.com, followed by social and short video/live streaming platforms.
Among the factors most influencing consumer purchases, friend recommendations, convenient purchase, intuitive experience, and after-sales guarantee are the top four factors. In terms of information acquisition, the top three media are WeChat, TV/radio, and in-store advertising.
After understanding consumer preferences, it is not difficult to know that not all products are suitable for deep operations in the sinking market. Product selection cannot be separated from its positioning. The target consumers of the product should be the mainstream consumers of the category, and the product price should be in the mid-range or slightly above. Prices that are too low or too high will affect the development effectiveness in the sinking market.
In addition, the product's selling points and functional appeals should also align with the current consumption upgrade trend. For example, beverage products should be sugar-free, fat-free, and calorie-free, focusing on health, light taste, and trendy Gen Z consumption demands.
**-02-**
**Multi-Dimensional Analysis of Potential, Precisely Select Target Markets**
After clarifying the product, conduct a thorough evaluation based on historical sales data, analyze the current operational status of the product in county-level markets, and predict the pace and intensity of next steps. Generally, refer to the following indicators.
Use historical sales results as the basic judgment standard, combined with factors such as population, consumption, competitive product development trends, and the confidence and operational capabilities of the existing team.
Then, based on the distribution of regional industries, analyze the differentiated main channels and target audiences of each market segment, and fully assess the market's development potential over the next few years.
For example, a certain FMCG brand, **comparing the distribution share, growth rate, and growth contribution of urban and county-level markets over the past three years, each close to 50%, and combined with the distribution layout of major competitors in the county-level market, which is already 10 percentage points higher than its own, it can be judged that the county-level market will be a growth point in the coming years and needs to be laid out as soon as possible.**
Next, consider how to select target county-level markets, because the market development process is resource-intensive for manufacturers. You cannot just shout slogans and develop everywhere; each market cannot be deeply developed.
We can **rank county-level markets by per capita consumption (sales/population), compound growth rate, and terminal control quantity, and then select based on dimensions such as local competitive strength, concentration of characteristic industries, and national economic layout, clarifying the priority order for development of each county-level market.**
There is also a principle to note: in the initial stage of development, do not pursue quantity. Prefer markets with less differentiation and special characteristics compared to other markets, where experience replication is strong and results can be achieved quickly, because team confidence is more important for the implementation of any project.
**-03-**
**Digital Tools Enhance Efficiency, Improve Project Implementation**
The use of digital tools is crucial for the efficient advancement, deep opportunity mining, and scientific evaluation of county-level market development. In the early stages of project initiation, it is best to complete the preparation and application training of digital tools in advance. For example, the following scenarios are common.
In terms of data collection, with the help of the SFA system, add relevant market research modules to the system in advance to quickly and efficiently input market research data, upload basic information such as store location, store name, phone number, contact person, and channel type to the backend in real time. At the same time, AI image recognition technology can be used to quickly identify the number of display facings of target products from photos of in-store displays, understanding the differentiation of competitors' displays compared to your own.
In terms of promotional ground promotion, it is very important in the sinking market and is an important means for rapid brand dissemination and market heat activation. However, current promotional methods have the pain points of high personnel costs and difficulty in scaling.
A digital promotion management platform for offline stores and ground promotion activities can rely on the system backend to fully integrate business visit resources, reduce investment in regular promoters, expand the scale of promotional resources, and provide a reliable and controllable marketing ecosystem for expanding the coverage of promotional resources.
At the same time, by connecting the previously fragmented data between store sales and consumer purchases, forming a closed loop of information data, and using two-way incentives to mobilize stores' enthusiasm in product promotion, further supporting frontline business work.
In addition, in terms of channel management, it is necessary to objectively evaluate and optimize the quality of customer delivery services. Through DMS, SFA, and BI systems, a closed loop of business flow and information flow can be formed to improve efficiency.
Furthermore, many other digital tools can be applied in the implementation of this project, which will not be elaborated here. The development of the sinking market is also the best time for enterprise digital empowerment, because resources are already focused, and improving efficiency and precise evaluation can make money spent more worthwhile.
**-04-**
**Step by Step, Key Steps in Development**
Next, introduce how manufacturers can complete the exploration of county-level market opportunities step by step and find market growth.
**1. Establish a Team and Clarify Responsibilities**
Market development requires a dedicated team to operate. Core backbone members should be selected to join the team, which is of great significance for the success of the project and its replication in the next step.
The project leader must clarify the division of labor and performance evaluation standards at the beginning of team establishment, and clarify the standards and success images for each stage of the project.
**2. In-Depth Research to Familiarize with the Market**
For the selected target market, take out a map and conduct block-by-block research with main roads as boundaries. Conduct a comprehensive survey of all terminal outlets covered by each block, including basic store information, location, main competing products sold, display facings, competitor investment costs, and purchase channels.
At the same time, during the research, fully understand local customs and practices, such as folk activities, gift-giving habits, taste preferences, etc. Also, indirectly understand the operational capabilities and industry reputation of local major wholesale customers.
**3. Channel Construction to Seek Synergy**
The selection and structure of channel customers is the premise for healthy and orderly market operation. In the stage of deeply exploring market potential, more channel customers are needed to leverage, and in the sinking market, it is more about leveraging personal connections.
Therefore, in the researched customer list, prioritize selecting distributors or delivery providers with good industry reputation, no cross-regional selling or price chaos, strong terminal service awareness, and brand operation thinking.
At the same time, in the first half year of market development, when sales volume is still low, it is best to adopt a one-tier model where distributors directly serve terminals. This can fully leverage the distributor's local influence and allow distributors to enjoy more gross profit margins in profit distribution, supporting the higher early delivery and service costs. For many surrounding township markets with high delivery costs, consider establishing sub-distributors or monthly vehicle sales for service.
**4. Market Impact for Rapid Activation**
With terminal data in hand, after analysis, you can divide the visit blocks and routes before market launch based on the distribution and quantity of outlets, and mark the outlets on the visit list by level, such as high-potential outlets, general outlets, or strong competitor outlets.
Then, combined with local customs, choose some small gifts that terminal owners like, such as vegetable washing basins, lighters, towels, etc. Follow the planned visit routes, use the right-hand rule for street-by-street visits, and proceed with relationship building - product introduction - order placement - display - merchandising, one by one. Pay special attention to larger local supermarkets or channels with high target consumer concentration (such as internet cafes).
At this stage, it is best to **establish a competition incentive mechanism within the project team. For outstanding frontline staff, consider priority promotion and priority arrangement of core markets. For those who perform poorly, directly cancel their qualification to participate in the project.**
Such market visits are recommended at least twice, with an interval of half a month. The second visit should be based on the first to adjust the outlets through a survival of the fittest process, and combine with sell-out data to assess the market's sales volume.
**5. Promotion Support to Ignite Word of Mouth**
With sales pressure on the channel, there is still a lack of important brand pull, and this step will have a very obvious effect in the sinking market. Of course, in-store merchandising is also part of brand pull, but it is far from sufficient to fully influence current consumers.
Fully focus on the life trajectory and consumption scenarios of the brand audience for brand display and market promotion, and form fixed-frequency, themed, and atmospheric ground activities that fully attract the target audience.
For example, choose snack streets, arcades, leisure squares, and other places where young consumers in the county town frequently gather, and conduct promotional activities 1-2 times a month.
Set up free tasting areas, special purchase areas, turntable lottery areas, photography sharing areas, and other interactive areas with consumers. Innovate activity methods as much as possible to attract young people's participation. If possible, choose to conduct activities during local folk activity periods to attract more people and quickly enhance brand popularity.
**6. Establish a Model for Normal Operations**
After two market activations and offline promotion pull, you can establish a normalized business operation model in these markets. Based on clearer outlet level classification, match different visit frequencies for different levels (to reduce operating costs); based on the number of county town outlets and surrounding township outlets, match corresponding sales teams that can provide better terminal services (manufacturer personnel + distributor personnel);
Based on the importance of outlets, allocate market resources such as freezers, water coolers, and umbrellas; based on the competitive situation, increase the cost investment ratio for some high-potential outlets; through digital tools, conduct normalized visit tracking, performance evaluation, and team management for channel outlets (refer to the series of articles on digital tool usage previously published in New Distribution).
For the sinking market, there are some special considerations to note. For example, for township market business personnel, it is recommended that county distributors recommend people with good relationships with township channel customers, and manufacturer business personnel should go with distributors to stock shelves with channel preferential policies. In the early stage of market entry (within half a year), increase marketing support to customers to build channel confidence.
**-05-**
**Don't Ignore Online Channels, Use Digital Tools for Precise Evaluation**
As mentioned earlier, due to the rapid development of e-commerce in the sinking market, consumers are enthusiastic about online platforms such as community group buying, Taobao, and Douyin live streaming, so this channel cannot be ignored. Manufacturers should have dedicated personnel to analyze and layout cooperation with these online channels.
**It is recommended that in the early stage, brand owners take the lead in investment, with distributors participating in implementation. Actively engage with platforms, sign cooperation agreements, restrict cross-platform selling that is prone to occur, and monitor and limit B-end purchases to avoid affecting the overall price system.**
If conditions permit, it is recommended to differentiate the packaging for online platform supply. For example, traditional channels use 1*24 packs, while online channels use 1*15 packs. In addition, if traditional channels have consumer promotions such as scanning codes for red envelopes or additional purchase offers, it is recommended to cancel these on online channels, maintaining only price advantages.
Of course, the success or failure of sinking market operations cannot be seen in the short term. Manufacturers must not force local sales or hoard inventory just because they have made so many investments.
What needs time is to conduct phased operational evaluations, including analysis and evaluation of distributor service, channel turnover, comparison of in-store execution with competitors, ground promotion execution, team KPIs, distribution year-on-year and month-on-month comparisons, and achievement of special seasonal goals. These data need to be analyzed more precisely and objectively with the help of the digital tools mentioned earlier.
Continuously analyze problems, continuously adjust and optimize. If you can truly see slow performance improvement, be even more patient, focus on operational details, and look forward to the market's explosive growth after accumulation.
Currently, product competition has entered an era of all-factor competition. The competitive landscape in most urban markets has basically been finalized, and the cost of seeking incremental growth is extremely high. The main battlefield between brands has begun to gradually shift to third- and fourth-tier markets and sinking markets such as counties and towns.
The national situation is the general trend, market growth opportunities are everywhere, and online platforms are fueling the fire. Who among brand manufacturers can seize this development opportunity, more broadly lay out various types of markets, complete digital transformation, and establish a sustainable development path? It must be those who dare to resonate with the general trend, changes, and uncertainty.
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