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The baijiu industry has long been manufacturer-dominated, with price control, price adjustments, and maximum price limits all dictated by the manufacturer. Baijiu producers have long implemented terminal 'disc-in-disc' policies, demonstrating exceptional control over various retail terminals, making dealers heavily dependent on the company.

The advent of the consumer sovereignty era has improved this situation, but it has not fundamentally changed. Dealers remain 'subordinates' of the company, not 'Chinese partners.'

This inequality in status means that companies rarely recognize that their frequent policy changes or certain behaviors harm dealers. When problems arise, the manufacturer-dealer relationship often becomes irreparable, damaging both parties' interests. So, what exactly causes this harm? And what good strategies can we adopt to avoid it?

01 Blindly Replacing Staff Is Not a Good Move; Scientific Performance Assessment Is the Right Strategy Salespeople's performance is tied to the market, so it's common for manufacturers to change sales staff. Some companies even think that replacing people is the best way to solve problems.

If business isn't going well, it's not just the salesperson's personal issue; changing people may not necessarily improve performance!

Blindly replacing staff is not a good strategy; it even causes trouble for both the company and dealers because personnel changes bring negative effects, such as unfamiliarity with the business leading to declining sales, broken customer relationships requiring re-cultivation, and supply chain disruptions causing stockouts. These negative phenomena significantly impact performance, especially in newly developed markets!

The correct approach is to establish a scientific performance assessment system, setting different evaluation criteria by quarter and by product, thereby motivating sales staff.

02 Frequent Product Changes Dampen Dealer Enthusiasm Some dealers have reported that a company's personnel and policies are fine, but the biggest problem is frequent product changes.

Just as a product starts selling well in the market, the manufacturer immediately makes changes, degrading quality, reducing weight, or altering packaging. Many bosses like this trick of passing off inferior goods as superior, using it to make quick money! Making quick money is understandable, but deceiving consumers and dealers in this way is self-deception.

03 Promotions Are a Double-Edged Sword Manufacturers' channel promotions are often designed from the manufacturer's perspective, typically based on production-sales balance and product profit. For example, if a manufacturer wants to launch a new profit product, it might use bundled promotions, tying the new product with bestsellers. To quickly push the new product to market, the manufacturer may increase rebate points several times, leading to several outcomes:

First, some dealers, because rebate points are transparent, may engage in low-price dumping;

Second, when the manufacturer suddenly raises promotional policies, large dealers seize the opportunity to stockpile, and sales volume suddenly increases several times over the original. Most small and medium dealers, due to limited markets and funds, can only sigh at the goods. This distorts market sales data and affects the cooperative relationship of most small dealers;

Third, it increases the likelihood of large dealers engaging in cross-regional selling (diversion), which is a threat and blow to most dealers, and also causes small dealers to gradually lose confidence in the manufacturer.

Regardless of the reason, channel promotions should not fluctuate too much in a short period; otherwise, they will harm dealers. Frequent promotional changes lead to wait-and-see attitudes among dealers, secondary wholesalers, supermarkets, and even consumers, who expect the manufacturer to lower prices again, causing a vicious cycle of product blockage.

04 Poor Channel Control Leads to Price Chaos and Many Problems We often hear dealer friends complain: "The hypermarket's selling price is lower than my purchase price from the manufacturer. How can I do business?"

From the hypermarket's perspective, low-price selling can bring three benefits:

First, it pressures the manufacturer's price, establishing its own low-price brand;

Second, it creates a 'sensation effect' with ultra-low prices to attract consumers, gather foot traffic, and increase sales;

Third, it aims to suppress weaker competitors. Clearly, from the hypermarket's standpoint, low-price selling is beneficial and harmless.

However, low-price selling has a huge impact on dealers. On one hand, dealers may lose their voice in other local retail terminals; on the other hand, dealers lose their rightful profit margins, and the originally stable price system is disrupted by the hypermarket. Price chaos is the most sensitive and feared issue for dealers, and also the most detested.

Besides the hypermarket's own actions, a major reason for low-price selling is that when signing contracts with hypermarkets, manufacturers fail to clearly include the clause 'no low-price selling' and do not implement the relevant price system. Hypermarkets generally adopt low-price strategies during major holidays, new store openings, anniversaries, and other large events, but they usually don't decide on such activities rashly; they inform suppliers in advance and hope for cooperation. Ultimately, the root cause lies with the manufacturer: first, poor manufacturer-dealer relations; second, lack of 'price warning'; third, the supply system is not strictly enforced.

05 Keep Promises and Act with Integrity Manufacturers' commitments to dealers typically include expense support, rebate support, personnel support, advertising and promotion support, and distribution support. There may be three reasons why manufacturers fail to honor commitments:

First, salespeople make casual promises without signing specific contracts;

Second, manufacturers deliberately default on promises for various reasons;

Third, manufacturers fail to reconcile accounts in a timely manner.

Regardless of the reason, commitments to dealers must be honored; otherwise, it may trigger conflicts and even cause market sales to decline and become chaotic.

For these habitual harms to dealers, I think if a manufacturer reduces them, that manufacturer will gain more dealer loyalty, and the manufacturer-dealer relationship will become closer. Loyalty is priceless; please, bosses of manufacturers, think twice!

Source: Food & Beverage Wine -END-