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Choosing new products is not only related to short-term sales performance for distributors, but also to their long-term development. Many successful distributors started by successfully representing a product. For example, Shanghai Meibao Food Co., Ltd. began its rapid development path by representing Laoganma chili sauce. Often, it's not that distributors don't work hard, but that they struggle to find products that suit them. So how should distributors choose new products?
Choose New Products After Understanding Yourself
Choosing new products can indeed bring huge profits to distributors, but for distributors, only products that match their own situation are the best. Therefore, before choosing a product, distributors must first carefully examine their current situation.
Integrate Your Product Structure
One thing distributors should do before choosing a product is to improve their product portfolio, discover what products they truly need, and then select with purpose. Surveys show that each distributor has a unique product portfolio, and they generally cut out "chicken rib" products (those that are tasteless but a pity to discard) and seek new products that fit the portfolio.
Distributors use their sales network, market services, storage and transportation, and capital resources to cooperate with manufacturers for profit. Before choosing a product, distributors should improve their profit model.
Many distributors blindly represent a large number of first-tier products. In fact, two or three first-tier products are enough; otherwise, the pressure is too great. Moreover, the profit margins of first-tier products are getting lower and lower, and growth space is limited. Therefore, it is necessary to look for new products with potential. This requires distributors to integrate their product structure and choose key cultivation targets based on their actual situation.
Improve Your Profit Model
The ultimate goal for distributors in choosing new products is to use their own resources to earn profits by cooperating with manufacturers.
For distributors, products with high profit margins but no sales volume are not selectable. The guarantee of overall sales volume comes from product maturity and adaptability to the local market. When choosing new products, distributors must pay attention to three points: first, whether the product itself is mature; second, whether the manufacturer's market promotion ideas are mature; third, whether the product fits local consumers.
For products that cannot be fully operated independently, distributors with insufficient strength should choose carefully. After all, most distributors rely solely on agency as their profit model and lack the strength to independently operate products. Some distributors have relatively rich profit models, such as OEM (original equipment manufacturing) or repackaging sales. This requires distributors to choose products based on their profit model.
Think About an Exit Strategy
The current basic situation in the food industry is that profit per product is generally declining, and distributors are constantly introducing new products, but the survival rate of new products is getting lower and lower. Therefore, distributors should plan carefully before choosing new products and think about an exit strategy.
If product sales encounter problems and normal operations cannot continue, distributors should quickly and proactively terminate cooperation with the manufacturer. This requires advance prevention and post-event compensation. When signing contracts with manufacturers, it must be clearly stated that if the distributor makes major operational mistakes, causing bankruptcy or other events, the manufacturer should actively recover existing goods. Responsible manufacturers generally do this because it eliminates the potential threat of cross-regional selling (diversion).
Afterwards, distributors should actively take countermeasures to reduce the manufacturer's losses. For example, contact downstream secondary distributors who perform well to replace their position and coordinate the relationship between the two. This leaves a responsible impression on the manufacturer and may lead to continued cooperation opportunities.
Look for Products with "Money" Potential
After understanding your actual situation, distributors should choose new products that can bring benefits based on their needs. Such products should have the following characteristics.
Products with Accurate Selling Points
Product selling points include five aspects: selling points originate from the product and its advantageous resources; selling points are unique and differentiated; selling points are a proposition, advice, or promise that can move customers; selling points must meet the existing or potential needs of target customers; selling points must be clear, simple, creative, and attractive.
The above points are also principles to follow when refining product selling points: uniqueness, first-mover advantage, concentration, communicability, attractiveness, and dynamism. When choosing products, distributors should undoubtedly give first choice to products with accurate selling point positioning. No matter how good the concept, if the product cannot be sold and lacks accurate selling points, it will be a fatal blow to distributors.
Products that Cater to Development Trends
The category of promising products is the prerequisite for a good market. Product categories that are easy to operate should have the following characteristics: first, large market capacity; second, the product is currently being hotly promoted in the market, and timely follow-up can share a piece of the pie regardless of operation quality; third, the product's development aligns with the overall trend of the category. For distributor friends, when choosing products, they must recognize whether the product category conforms to development trends.
In today's food industry, products that combine mainstream and differentiation are the most popular. The mainstream attribute of a product determines whether it can quickly increase sales volume and be accepted by consumers at the first moment during market promotion. Differentiated products sell more slowly, but once they can grow in the market, their prospects are broader.
For example, in recent years, the leisure food industry has been highly competitive. Traditional biscuits, potato chips, etc., can no longer satisfy young people's pursuit of fashion trends. This led to the popularity of Paoba Xiaocui products, attracting many leisure food manufacturers to imitate, and also making many distributors who represented Xiaocui products successful.
Whether the Product Fits Existing Channels
Channels are the foundation for distributors to survive. If distributors want to develop rapidly, they must strengthen their control over channels. Therefore, it is crucial to recognize whether the product is suitable for the channels they operate. Based on the characteristics and current situation of the channels, choose new products that complement each other and pull each other, thereby occupying channels and establishing good relationships with terminals.
The wider the product portfolio of a distributor, the stronger their ability to control channels and the more resources they have. Therefore, when choosing new products, distributors should select based on the product categories missing from each channel. At the same time, some products can also help distributors quickly open up channels.
Several Issues Distributors Should Pay Attention to When Choosing New Products
After distributors clarify their requirements for new products, how to choose new products becomes a key step in determining whether the selection is successful. Distributors should pay attention to the following issues when choosing new products:
Look at the Market First, Then the Product
It is very necessary for distributors to inspect the market and then choose products. They should not be overly obsessed with the model markets provided by manufacturers. Model markets are not all replicable. Because there are regional differences in the market, differences in consumption concepts and consumption attitudes determine whether the product can be accepted in the local market.
Moreover, the market size varies, requiring distributors to have corresponding strength and scale. Although super-large cities like Beijing, Shanghai, and Guangzhou have huge market capacity, the entry barriers are also high, requiring distributors with corresponding strength to operate. If the market is underestimated, failure is likely.
Therefore, in market operations, the competitive environment and the distribution of competing products are important factors that must be considered. The situation in the model market may be vastly different from the market in your region. At this time, you must be cautious, and if competitors are too strong, the risk of entering rashly will be high.
Examine the Product's Price System
A good product must have a stable price system, which is the basis for ensuring a win-win situation for both the enterprise and the distributor. A stable price system includes reasonable profit margins between ex-factory price, wholesale price, and retail price, and must ensure the basic consistency of the final retail price.
Some manufacturers offer certain preferential policies to large supermarkets or group purchase customers. Distributors must understand whether such preferential policies will affect the market price system, and if so, how the manufacturer balances it.
Many manufacturers promise to provide lower supply prices than other distributors when negotiating with distributors. At this time, distributors should be vigilant because if you get a lower purchase price, it will inevitably lead to lower wholesale prices downstream, and retail prices will also drop accordingly. This may cause small and medium-sized wholesalers in adjacent regions to purchase goods from your region, making you unknowingly wear the hat of cross-regional selling and be complained about by distributors in neighboring regions.
Examine the Manufacturer's Strength
Examining the manufacturer's strength is a key step for distributors in choosing new products. When distributors act as agents, they certainly want to cooperate with strong manufacturers, believing that products from richer manufacturers should be safer. But this is not necessarily true. Manufacturer strength is a comprehensive concept, not only looking at whether the boss of the manufacturer has money, but also the competitiveness of the manufacturer's products, its experience in operating products, its investment in new products, and its operation and management.
As a distributor, the value of examining the manufacturer's strength and credibility lies in whether you can observe some detailed situations and analyze the manufacturer's strength and credibility from different angles. When examining the manufacturer's strength, distributors should "look at the big picture and start with small details," not missing any detail they see.
Pay Attention to Contract Details
To protect the legitimate rights and interests of both manufacturers and distributors, distributors and manufacturers must sign a complete, standardized, and legally effective contract, and the contract between the two parties is protected by law. Most manufacturers will emphasize legal clauses "favorable" to themselves in the contract, while distributors are relatively lacking in this regard.
A standardized and complete manufacturer-distributor cooperation agreement is very beneficial to distributors, especially when conflicts between the two parties intensify, distributors can rely on it. In addition, oral promises from manufacturers that affect the vital interests of distributors should not be easily believed. Distributors must implement them in writing by signing contract appendices.
Text: Sugar, Tobacco, and Alcohol Weekly
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