- Traditional enterprises: Don't complain about weak performance!
- To gather popularity online, you need a powerful offline presence.
- Consolidate offline: effective strategies for incremental growth.
Before discussing today's topic, let's look at some data: Wahaha's sales declined 7% in 2014 compared to 2013, with a larger decline in the first half of 2015. Master Kong's first quarter of 2015 saw a year-on-year decline of 16.56%. In the first half of 2015, Uni-President fell 2.9% year-on-year, while Shuanghui fell 14.53%. Coca-Cola declined 3% in the same period.
In the first three quarters of 2015, national soft drink sales volume was approximately 130 million tons, a year-on-year increase of only 4%. In 2014, this growth rate was 13%. From 2001 to 2011, the average annual growth rate of national soft drink sales exceeded 20%.
This is some weather forecast data for the FMCG industry: The weather is bad!
1. Traditional FMCG enterprises: Don't complain about your performance! Besides the bad weather (everyone is struggling), in the past two years, we often hear two terms: online and offline! We also often hear that online will subvert offline, offline is being robbed by online, etc. Many times, it feels like online tactics are high-end, while offline things are despised or abandoned, with a trend of division between the old and new worlds.
Today, let's use the old and new worlds to describe online and offline: The new world represents emerging brands with internet attributes! The old world represents the traditional brand camp.
Of course, I want to emphasize that today's sharing focuses on the FMCG category, and may not apply to other industries!
Regardless of which world you exist in, there is a common point for survival: sales volume!
Let's first sort out the sales capture logic of the two worlds:
- Old world (traditional marketing) FMCG sales basic logic = number of terminals * sell-through rate! In the old world's sales logic, terminals (channels) are primary. Note: terminals (channels) come with their own traffic! Sales opportunities arise from opportunistic purchases by people entering the store!
Different consumption levels lead to different terminal grades. Different consumer groups will enter matching terminals for consumption. With stable terminals, matching sales naturally form brands at certain price points.
Sales generated by this logic are closely related to the quantity and quality of terminals, the size and wealth of the territory! This has led to many FMCG brands using deep distribution (co-marketing) as a tool for urban intensive cultivation, then sinking to rural areas with vehicle sales visits and intensive cultivation!
In the old world's sales layout logic, to chase more sales, the sales system or team would lay out more outlets and territories. When expansion reaches a limit, sinking to the edge, and no more territory to expand, not only does sales pressure come, but suddenly you find: you've been robbed from behind!
Wahaha's Zong Qinghou announced at the 2015 annual meeting: "Youth accelerates, the king returns, re-attacking first- and second-tier cities!" How were traditional FMCG giants robbed?
The old world's sales logic is based on a channel dike built by terminals, emphasizing: it is built on terminals that the enterprise's management reach can touch!
Today, the structure of urban and rural terminals has changed greatly: new types of terminals are emerging in various forms. Traditional small and medium terminals represented by mom-and-pop stores have been gradually eroded by new modern terminals such as KA, chain specialty stores, CVS, community terminals, e-commerce, micro-commerce, O2O, etc., especially in urban markets! For example, in many cities, street stores are decreasing, and there are family service stores under every building (or even upstairs) in communities. These come with O2O functionality and cooperate with many city B-end distributed e-commerce! They don't need to stock themselves; the store owner places orders on the platform, and wholesalers deliver directly!
Traditional terminals not only see a decline in sales share, but their contribution to brand image also shrinks!
Another example: beer sales in restaurants once contributed up to 40% of total sales, but now it has dropped to below 35%, and annual sales per store are unpredictable, with the possibility of closing at any time!
These emerging modern terminals often become blind spots in the management perspective of traditional brands, gradually creating ant holes in the channel dike!
- New world (online marketing) FMCG sales basic logic = number of fans (traffic) * activity level! In the new world's sales logic, fans (traffic) are primary! There is no place for terminals (channels) in this logic.
This approach, which penetrates and bypasses terminals to go directly to consumers, sucks away traditional terminal sales while using youthful, cute, and fashionable communication methods to differentiate from old world brands! Many shout online slogans but do offline channels! They use the internet's vest to distinguish themselves from traditional FMCG brands!
The two worlds will give birth to three types of brands: The first is internet original brands, characterized by shouting online and selling online. The second is internet composite brands, characterized by shouting online and doing offline. The third is internet outsider brands, shouting offline and doing offline!
Regardless of which world, from a sales contribution perspective, offline terminals are still the main contributor to FMCG sales! Unless you are a native internet brand, traditional enterprises without strong offline terminal control will also have online popularity but no offline strength!
2. Online gathers popularity, offline competes with strength. How to build a powerful offline channel?
Except for pure native internet brands that rely on online channels for sales, no traditional FMCG enterprise dares to abandon their existing terminals to directly transform online!
1. Build two teams!
Traditional FMCG success is mostly built on channel terminal teams constructed through deep distribution or deep co-marketing models. For large brands, this team is often tens of thousands or even hundreds of thousands, guarding mainstream sales! Transforming this group is a huge project, and directly moving to the new world's incremental competition is extremely difficult! Can traditional FMCG enterprises divide their forces into two worlds: one to capture mainstream sales, and one to lay out future trend brands?
One team uses human wave tactics for channel terminals; one special forces team for fans and mouse clicks! From a brand perspective, the marketing department has a team to guide online fan aggregation. From a sales perspective, one team captures mainstream sales, and one team captures trend sales! From a channel layout perspective, incremental brands (varieties) re-lay out distributors!
Online gathers fans, offline captures terminals (channels)! Online can shout, offline can do! Trends attract attention, mainstream repairs the earth! Update your channel classification standards: offline sweep streets, online sweep networks! Offline terminals still rely on deep distribution (co-marketing) street-sweeping iron army support; online terminals need to make up lessons and sweep networks, with another team working on new types of terminals like platform e-commerce, urban distributed e-commerce, community e-commerce, micro-supermarkets, etc.
Quickly update your traditional play methods and equip new tools! For example, many FMCG enterprises run "open lid and win" promotions, often struggling with prize ratios, redemption processes, uneven distribution, etc. Now, QR code-based redemption not only enables instant redemption but can also add entertainment functions like group red envelopes and shaking for prizes in drinking venues, while still controlling the redemption ratio for products already shipped...
And many enterprises still use paper visit forms, POP, traditional merchandising props, etc.
Products or brands can be activated, and terminal operations or performance achievement will be helped! But the dream of an ultimate product for the FMCG industry (non-technical industry) is often unattainable or cannot be achieved immediately, especially for frontline salespeople who have to face the curse of cursing the brand department while doing the sales department's hard work!
2. Execution often becomes a means to compensate for brand shortcomings!
From the frontline execution perspective, the three key factors affecting sell-through are share of market, control rate, and visit rate. Share of market is usually calculated by region; a brand's share is the ratio of its sales to the regional category market capacity. The higher the share and control rate, the easier sell-through becomes. Among these three factors, visit rate is the most important. In the hot summer, even salespeople hope to work in a cool and comfortable environment. But after product distribution, maintenance is needed. Under such conditions, process management and incentive measures need to be implemented for salespeople. If salespeople neglect terminal visits, their products will inevitably be suppressed or covered by competitors.
In the red ocean of terminal hand-to-hand combat, there is often no escape. When you're not looking, competitors' salespeople have already damaged your terminal image and curbed product sell-through. Losing these makes sell-through even harder. Visit customers, maintain relationships. Fully implementing these three factors is not easy, but if all can reach above 80%, the sell-through problem will definitely be solved. "Our product is more expensive than competitors, has no advertising, and few market policies, so terminal owners don't want the goods." When a product encounters sell-through difficulties, distributors often hear their salespeople complain like this. This situation requires strong push from salespeople, adhering to the four principles.
3. Four principles: To achieve sell-through, you must persist
The primary principle is the "point-line-plane" principle. First, do a good job with one terminal store, an image store, then expand to a street, then radiate to a region, and finally build a national brand.
Second is the 80/20 principle. We usually think that 80% of sales come from 20% of outlets, but in fact, large supermarkets emphasize pull, while mom-and-pop stores emphasize push. These 20% of outlets only play a role in radiating the business circle, affecting 80% of sales and profits.
Third is the matching principle (circle capture). Channel layout should match product positioning. Products positioned as high-end should appear in high-end venues to show their identity. Evergrande Spring Water had sell-through problems because it was distributed in circulation and convenience store channels.
Finally, the "mushroom strategy" principle. All strong brands have followed this principle: first choose and occupy the most attractive target regional market, then choose and occupy relatively attractive regional markets, and then gradually radiate nationwide. Wahaha, Master Kong, and Wanglaoji all developed along the route from advantageous markets to balanced markets to disadvantageous markets.
Today's sharing guest: Fang Gang: Currently marketing director of a well-known beer company, with years of sales management experience, has repeatedly directed regional marketing battles such as "small to big, channel kill." He is a special contributor to several well-known media outlets.
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