What kind of relationship exists between manufacturers and distributors? Only insiders can truly explain the nuances. Although objectively and superficially, manufacturers and distributors are partners, in reality, many find it difficult to align, with each side calculating from their own interests. Consequently, many manufacturers try various ways to coordinate the details but often fail, finally realizing that the initial mistake was recruiting the wrong distributor. From the terminal feedback in the building materials industry, when manufacturers build their marketing networks, developing distributors should be a serious, principled issue. If manufacturers fail to properly vet distributors, their marketing network will be a mere formality, or worse, bring great harm. From many failed distributor cases, the following eight types of people should never be recruited as distributors:
Those without ambition. Such distributors focus on immediate gains and are easily satisfied with small profits. They are content as long as income covers expenses and yields a slight profit, having no higher aspirations than being slightly better off than working for someone else. Manufacturers cannot achieve significant regional success through such distributors.
Those with limited financial strength. Both manufacturers and distributors should have considerable economic strength, but in reality, it's often a combination of large manufacturers and small distributors. Distributors with poor financial strength cannot implement any terminal policies from the manufacturer. For example, many manufacturers provide subsidies for terminal promotions, where distributors can receive compensation for advertising proportional to sales, or in some cases, direct cash compensation. Regardless of the method, distributors lacking economic strength will not consider the manufacturer's compensation to engage in brand promotion; they simply wait in their stores for customers. Such distributors prevent manufacturers from expanding their network and building brand influence, potentially hindering the manufacturer's strategic goals.
Those lacking industry experience. Although miracles happen in business, the saying "different trades are separated by mountains" explains why success is often called a miracle. When developing distributors, manufacturers must evaluate potential distributors on multiple fronts, and novices are a group that requires extreme caution. Many people have ideas that sound reasonable, but they lack concrete, feasible methods in execution. When novices enter a new industry, they lack understanding of the product and competitors, and reality often diverges greatly from their expectations. Such distributors will inevitably pay tuition fees, making it a gamble for the manufacturer, with risks far outweighing the chances of success.
Those who are poor at managing a business. Many distributors are merely small-time traders, not even qualified businesspeople, only calculating price differences and profits. In distributing a product, a distributor must be adept at managing people, finances, goods, supply, and sales to ensure their business operates smoothly. Distributors who are poor managers cannot achieve internal perfection and external healthy development.
Those in regions with poor conditions. Many manufacturers are eager to expand their networks but give little thought to regional requirements. For example, areas with small market capacity and limited reach create objective difficulties for distributor performance and inconvenience for manufacturer management.
Those who disregard manufacturer policies. Many manufacturers establish policies to regulate and manage distributors at the outset of recruitment. However, during recruitment, sales managers often prioritize their own performance and accept anyone willing to distribute the product, making unprincipled concessions on company policies, even embellishing distributors in reports to the manufacturer. In fact, it's acceptable for distributors to suggest changes to policies before signing, but those who make concessions on policies a condition will be difficult to manage later. Distributors who believe they can arbitrarily change manufacturer policies are also the most harmful to the manufacturer's brand.
Those who are purely profit-driven. As businesspeople, distributors seeking to maximize profit is not inherently wrong, but some pursue profit at the expense of the manufacturer's interests. Many good products in various industries are counterfeited in the market, and it's not uncommon for manufacturers to be counterfeited by their own distributors, especially in apparel and building materials, where few distributors do not counterfeit. Such distributors may superficially meet the manufacturer's targets, but they won't excel because the profits from producing or commissioning counterfeit goods are astonishingly high. The manufacturer's brand is just a front for these distributors to make money.
Those lacking good social connections. A distributor is crucial for a product to capture a market in a region. The time and cost of developing a market depend on the distributor's social network. A distributor with good social connections can gain support from all sides when promoting a new brand. Conversely, a distributor lacking good interpersonal relationships will face great difficulty in promoting a new brand in the short term. Time is critical for manufacturers; failure to achieve quick results can lead to a rapid decline in brand image.
Manufacturers often focus on post-recruitment management, which is necessary, but how many see significant results? In fact, many problems stem not from poor later management but from the poor quality of distributors chosen at the outset. The eight types listed above certainly cannot become good distributors. How to select distributors is a challenge for manufacturers, not only because of the limited ability of recruitment managers to judge people but also because it's objectively difficult to make a completely correct assessment of a distributor in a short time. To find good distributors, the key is to institutionalize selection criteria. I admire the approach of some Hong Kong companies in recruiting employees: from tests to interviews, their written tests are not general cultural exams but clever ways to understand a candidate's abilities and mindset. The test questions are subtle, and through a single answer sheet, the company can discern various aspects of a person's capabilities. This method is well worth adopting in the process of finding distributors.
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