---
title: "Escaping the Quagmire of Distributors Demanding Concessions"
description: "In a previous role as vice president of marketing, two things caused headaches: most memos were requests for promotional or price concessions for primary distributors, and visits with them often involved complaints and demands rather than market growth discussions. The author argues that while policy support is necessary, it must be strategically applied, not simply given as benefits, and offers guidance on handling distributor demands."
author: "孙斌"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-05-16"
language: "en"
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# Escaping the Quagmire of Distributors Demanding Concessions

> In a previous role as vice president of marketing, two things caused headaches: most memos were requests for promotional or price concessions for primary distributors, and visits with them often involved complaints and demands rather than market growth discussions. The author argues that while policy support is necessary, it must be strategically applied, not simply given as benefits, and offers guidance on handling distributor demands.

In a previous role as vice president of marketing at a company, two things caused headaches: first, seeing the memos on my desk, because over 80% were requests for promotional or price concessions for primary distributors; second, visiting primary distributors, because most of them did not discuss how to grow the market, but complained about the company's shortcomings, negotiated terms, and demanded concessions. I am not unwilling to provide policy support to distributors, but I want to use it where it counts, fully leveraging its effectiveness, rather than simply turning it into a benefit for primary distributors.

Every manufacturer faces daily demands and conditions from primary distributors, which is indeed a thorny issue for marketing executives. If you agree casually, company expenses and costs increase, and other distributors will make similar demands once they learn of it. If you refuse, distributors complain, fail to cooperate with marketing activities, and even reduce sales of your products. As a marketing executive, when faced with various demands and conditions from primary distributors, you should calmly analyze them and handle and respond strategically, turning the manufacturer's policy support into a powerful marketing weapon.

What demands and conditions do primary distributors often make?
Primary distributors sometimes directly, and sometimes through sales representatives, make various demands and conditions to the manufacturer:
1. Price reductions. Distributors often claim prices are too high, products don't sell, business is bad, or that another manufacturer has cut prices, or that your products are more expensive than competitors, or that there is no profit in distributing your products, to demand price cuts.
2. Monthly discount promotional support. Distributors often claim that secondary distributors and retailers have thin margins, low enthusiasm, or that the sales peak is coming and they need to stimulate inventory, or that your product is newly launched and needs to stabilize new outlets, or that a competitor is running a promotion, to demand monthly discount support.
3. Gift promotional support. Distributors often claim that a competitor is running a buy-X-get-Y promotion that impacts the market, or that your product is new and lacks awareness, or that consumers won't buy without gifts, to demand gift promotions.
4. Advertising support. Distributors often claim that a competitor's ads on certain media are effective, or that your product lacks awareness and needs to expand, or that competitors' advertising is strong and affects their outlets and sales, to request advertising support.
5. New product additions. Distributors often claim that a competitor's product sells well, or that many consumers repeatedly ask for a certain product, or that old products have low margins and don't sell, or that you lack a certain product and they need to distribute a competitor's, to demand new product additions.
6. Freight subsidies. Distributors often claim that competitors offer freight subsidies, or that they are too far from the factory and freight costs are too high, to demand freight subsidies.
7. Working capital support. Distributors often claim that competitors provide working capital, or that they have extended credit to secondary distributors and retailers and funds haven't returned, causing cash flow difficulties, to demand working capital support.
8. Additional manpower. Distributors often claim that competitors have many salespeople and expand markets quickly, or that they need help developing secondary distributors and retail outlets, to demand additional manpower.
9. Exclusive sales awards. Distributors often claim that competitors offer exclusive sales awards, or that they are close to exclusive sales, to demand such awards.
10. Vehicle support. Distributors often claim that competitors provide small trucks or a dedicated delivery vehicle, to demand vehicle support.
11. Store rent support. Distributors often claim that competitors help pay store rent, or that their stores primarily sell your products, to demand rent support.
12. Reimbursement for inspection and PR expenses. Distributors often claim that due to product defects, government inspections (industry and commerce, technical supervision) required them to spend money to smooth things over, to demand reimbursement.
13. Expanded sales territory. Distributors often claim that the designated territory is too small and restricts their growth, to demand expansion.

Why do distributors demand more and more, with growing appetites?
The demands and conditions listed above are far from exhaustive. Distributors are making more demands with bigger appetites. Why? Key reasons include:
1. Competitive manufacturers induce them. To survive intense competition, manufacturers use various tactics to please, attract, and retain distributors and consumers. Frequent promotions and diverse strategies put pressure on distributors; if their manufacturer doesn't respond, they risk losing customers and market share. So distributors seek manufacturer support to survive and protect their markets.
2. Distributor margins are thinning. Thinning margins are an inevitable trend of competition. The era of huge distributor profits is history. Many distributors demand various policy supports to gain more benefits.
3. Distributors have evolved. Through years of experience, they have become smarter and more business-savvy. With stronger network control and financial resources, their negotiation power and conditions have increased.
4. Consumers have changed. Consumers are more mature, with diverse, segmented, and complex demands, making it harder for manufacturers and distributors to understand them. To survive, distributors leverage manufacturer resources to run promotions that attract and stimulate consumers.

Can distributor demands be casually satisfied?
Mr. Wang, a friend of mine, was once marketing director at A Beverage Company. Later, he started his own beverage factory. When developing the market, he targeted A Beverage's primary distributors with a combination strategy of "low prices + working capital + promotional policies + personal relationships," quickly winning over over 60% of them, and his sales soared. His rapid success went to his head: he gave distributors whatever they asked for—promotions, price cuts, funds, entertainment. Later, when raw material prices soared, distributors held large amounts of his capital, preventing him from purchasing cheap materials, increasing costs, and causing severe losses on many products. Raising prices was natural, but distributors resisted. Due to insufficient capital flow, prices couldn't rise, the company suffered heavy losses, and his factory eventually went bankrupt, with unpaid debts from distributors still unrecovered.

This case teaches us: success comes from distributors, and failure also comes from distributors. Mr. Wang's success was due to satisfying distributor needs, making them eager to sell his products. His failure was due to overindulging and catering to distributor demands. Constrained by distributors' control of capital and the market, squeezed by both raw material and product markets, his company collapsed.

Therefore, the conclusion is: distributor demands cannot be casually satisfied. They must be weighed against the company's capital, margins, brand awareness, market share, market control, and market stage, and support should be given according to capability.

How to handle distributor demands and conditions?
1. Clarify responsibilities and rights, delegate authority, and train sales representatives to improve their judgment and adaptability.
Frequent distributor demands often stem from sales managers. They may not clarify sales reps' responsibilities or delegate authority, keeping all power to themselves, or they may not train reps adequately, leaving them unable to handle distributor demands. Reps, fearing trouble or offending distributors, may not dare to respond, and instead push distributors to go directly to the company or submit memos for leadership decisions. Sales managers should free themselves from trivial tasks, delegate authority to reps based on their quality and ability—such as regional operations, customer decisions, promotional activities and expenses, and pricing—allowing reps to make preliminary decisions within their authority. Managers should check, evaluate, and adjust the delegated authority, and train reps on how to strategically handle distributor demands within their authority. This motivates reps, allows them to refuse unreasonable demands, and submit necessary policy requests via memos for approval.

2. Sales reps should thoroughly understand the market and clarify distributors' true intentions.
Sometimes distributors exploit the company's lack of market knowledge, exaggerating problems, such as claiming a competitor's promotion offers a cash discount of X yuan per case, impacting the market, to obtain promotional concessions. Of course, sometimes the information is accurate. Therefore, manufacturers should neither fully accept nor fully reject distributor policy demands. Sales reps should stay close to the market, monitor competitors and market dynamics, objectively analyze demands, clarify true intentions, and then decide whether to support. Sales managers, when approving policy memos, should weigh the distributor's market conditions, product sales, attitude, development potential, and the policy's likely effect and feasibility.

3. Sales reps should dare to say "NO" to unreasonable demands.
When a demand is clearly unreasonable, reps may react in four ways:
- First: Cater to the distributor, immediately exaggerate the situation to get policy support.
- Second: Directly say "NO" and refuse.
- Third: Play hide-and-seek, giving no clear answer.
- Fourth: Verbally agree but never implement.

For unreasonable demands, use the second or third strategy to refuse directly or indirectly. The second suits strong brands, where distributors won't easily give up the brand, as it would mean losing their livelihood. Reps can boldly state the company won't support such a policy. The third suits weaker brands, where distributors are important and relationships shouldn't be strained; use evasion or topic changes without clear answers.

Avoid the first and fourth strategies. The first pleases the distributor but deceives the manufacturer, causing unnecessary expenses. The fourth deceives the distributor, and broken promises increase complaints.

4. For reasonable policy demands, manufacturers should consider and provide appropriate support.
If analysis shows the demand aims to expand product awareness and market share, stabilize products and markets, and the policy benefits competition, manufacturers can provide support. However, support should come with conditions, such as sales targets or the share of your products in the distributor's total sales.

How to make distributors understand and accept these conditions? Sales managers can include conditions in the memo approval. Then salespeople can present the memo, slightly exaggerating that the policy was hard-won, that many distributors applied but only this one was approved, showing the company's high regard. They should also explain the conditions, convincing the distributor they are not a problem. Finally, provide a copy of the approved memo as the basis for execution, or if the memo is not specific, sign a contract to clarify details.

5. Develop perfect policy plans to ensure implementation.
Often good policies fail due to lack of safeguards. First, prepare thoroughly: implementation plans, schedules, budget allocation, media and personnel coordination. Second, sales reps should implement alongside distributors to ensure effectiveness and prevent fraud, such as misappropriating activity funds or gifts. Finally, objectively evaluate the implementation, including results, successes, and failures.

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