---
title: "From Deep Distribution to Precision Distribution: A Strategy for Incremental Change in Brand Channel Models"
description: "Brand executives face three common challenges: difficulty recruiting quality personnel, managing teams effectively, and maintaining high service quality at retail outlets. This article explores shifting from traditional deep distribution to a precision distribution model, using Nongfu Spring's channel reform as a case study, and outlines a four-step approach for channel model transformation."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-05-22"
language: "en"
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# From Deep Distribution to Precision Distribution: A Strategy for Incremental Change in Brand Channel Models

> Brand executives face three common challenges: difficulty recruiting quality personnel, managing teams effectively, and maintaining high service quality at retail outlets. This article explores shifting from traditional deep distribution to a precision distribution model, using Nongfu Spring's channel reform as a case study, and outlines a four-step approach for channel model transformation.

In conversations with several brand executives, they all shared three common puzzles:
* Why do many recent college graduates face employment difficulties, yet are reluctant to join the FMCG industry? Can I offer higher salaries to attract a better-quality field team?
* Why does Meituan's delivery fleet of hundreds of thousands of couriers appear to be managed seamlessly, while our company's few thousand sales reps are not managed well? What model do I need for more effective management?
* Why do couriers and delivery riders have very low complaint rates, while the quality of retail outlets served by our sales reps varies widely, with frequent customer complaints? What model can improve service quality at retail outlets?
In summary, these are the three major challenges facing FMCG brands:
* **Recruiting is hard, and recruiting quality personnel is even harder;**
* **Team management is hard, and managing well is even harder;**
* **Maintaining current customer service quality is hard, and improving it is even harder.**
Many brands try to improve by continuously raising salaries to optimize teams, refining management granularity, and developing service evaluation systems for channel partners, but the results are minimal. Let's think about these issues from a different dimension:
1. If you can't recruit quality employees, can you recruit quality "small bosses" or "partners"? Data suggests that the post-90s and post-95s, with their rebellious traits, are more willing to start businesses and become bosses.
2. If team management is difficult, then stimulate the team's self-management awareness. We know that every "entrepreneurial boss" can achieve self-management.
3. The core factor hindering service quality improvement is mindset. We need to clarify: Am I serving customers for the boss, or am I serving my own customers?
**Thinking from a different dimension essentially means changing the model.** This involves redefining and redistributing rights and responsibilities among brands (brand, product, supply chain, etc.), channel partners (distributors, sub-distributors, wholesalers, retail outlets, etc.), and frontline operations and management teams (manufacturer sales reps, supervisors, etc.). It's a big topic. Today, let's first discuss why brands need to plan their channel coverage model. I'll explore further in subsequent articles.
**When should brands start planning channel transformation?** This is a diagram shared at the New Distribution Conference on channel model transformation.
For brands, when is it time to upgrade the channel model? Suppose we want to get from Chengdu to Beijing as quickly as possible. We have a horse-drawn carriage. To shorten travel time, we must make the carriage go faster. The method is to "add horses." Assume one horse runs at 20 km/h. Invest to add another horse, speed becomes 30 km/h. Invest again to add another, speed becomes 40 km/h. At this point, the cost-effectiveness is optimistic, and the return on investment is acceptable. But we need to go faster, so we add more horses. However, horses have a speed limit. After adding one more, speed becomes 45 km/h; after another, 47 km/h. After adding the last two horses, fixed costs remain the same, but speed improvement is not ideal. Now cost-effectiveness is not optimistic, and the return on investment becomes unacceptable. At this point, we should consider not "adding more horses" because excessive investment only increases costs without substantial speed gains. We should consider whether to abandon the carriage and switch to a high-speed train. The analogy of carriage speed improvement to the operational efficiency of FMCG channel models is apt. As mentioned at the beginning, many brands try to improve by raising salaries, refining management granularity, and developing service evaluation systems, but with minimal effect. Should we consider eliminating the old business model?
**What are the most urgent issues to address in channel model transformation?**
Having provided digital transformation consulting and training to many companies, I've found that the core focus never changes: **All transformations must revolve around two dimensions: performance growth for the manufacturer and organizational efficiency improvement.** Channel model transformation is no exception. Let's look at the case of Nongfu Spring's channel coverage model transformation, which led to performance growth and organizational efficiency gains. In 2013, I was an office manager at Nongfu Spring. That year, the company faced a huge bottleneck in sales growth. Mr. Zhong's speech after visiting the Jiangxi market left a deep impression on me. After the market visit, Mr. Zhong proposed: Why do our employees seem hardworking and doing things, and some urban areas are okay, but our market share has been declining for months? The key issue is the distributor structure in third- and fourth-tier cities. In urban areas, Coca-Cola is strong; they focus on control and intensive cultivation. Pepsi is strong in peripheral areas, doing channels, wholesale, and promotions one after another. We need to think about how to handle distributors in these regions. Thus, Nongfu Spring's channel coverage model transformation began in earnest. After a series of iterations, the channel coverage model we see today emerged. Its core aspects include:
**1. Distributors shift from followers to market operators.** Previously, Nongfu Spring's sales reps belonged to the brand (market expenses, channel costs, channel pricing, gross margin space, etc., were all defined by the brand). Distributors mainly played supporting roles like warehousing and delivery (besides payment, shipping, storage, and timely delivery, they had almost no say in market operations; at that time, many people without FMCG experience became Nongfu Spring distributors because it was easy and profitable without much effort). Later, the market was returned to capable distributors, with distribution rights, market leadership, and business advice rights delegated to the distributor level, giving them full room to operate. At the same time, distributors assumed their obligations, including achieving targets, price maintenance, brand building, market expansion, etc., and accepted Nongfu Spring's systematic assessments, including performance achievement rates and basic market work execution.
**2. The brand becomes a behind-the-scenes coach and referee.** Its main responsibilities become: service and support for distributors (communicating policies and information, providing market and execution data, offering distributor training, mentoring sales reps, helping potential distributors), performance management (high performance: priority for awards, creating model markets, setting benchmark distributors; low performance: support and rectification, closure warnings), audit supervision, and penalty enforcement. This redistribution of rights and responsibilities between the manufacturer and distributor effectively stimulates distributors' initiative. Previously, the brand spent great effort managing distributors; now distributors manage the market autonomously, improving organizational efficiency. Meanwhile, as service quality improves, sales also steadily increase with the model change. So, back to the question at the start of this section: What are the most urgent issues to address in channel model transformation? Macroscopically, we can understand it as: **Raise your perspective on market bottlenecks, step out of the narrow alley thinking, and think from a higher dimension about the definition of rights and responsibilities between the manufacturer and distributor.**
**Precautions for channel coverage model transformation**
Channel model transformation should be done in at least four steps.
**Step one: In-depth research**, including:
> 1. Selection criteria for target markets and market diagnosis planning; 2. Field visits and research on market channel partners (distributors, wholesalers, retail outlets); 3. Product competitive landscape (analysis of major competitors' sales, distribution, and sell-through); 4. Identification of market growth opportunities.
**Step two: Model market creation**, including:
> 1. Determining selection criteria for model markets; 2. Confirming seven operational strategies (product strategy, channel strategy, consumer strategy, expense strategy, organization strategy, distributor strategy, and time progression strategy); 3. Implementation of the seven strategies; 4. PDCA closed-loop operation for each strategy.
**Step three: Empowering mid-to-senior management efficiency**, including:
> 1. Systematic review of the channel coverage model; 2. Extraction of model cases; 3. Compilation of market training programs for mid-to-senior management; 4. Replication, correction, and summarization.
**Step four: Rapid replication across all regions.** Model creation must not be rushed, but regional replication must not be delayed. Finally, always pay attention to six key points in channel coverage model operation: _1. Gradually enhance distributors' operational capabilities; the enterprise team transitions from product sellers to brand promoters and distributor coaches;_ _2. Channel coverage enterprises must consider how to bear the pressure of market management and brand promotion;_ _3. Channel coverage must ensure orderly interaction and clear responsibilities across every link of the marketing channel, and strengthen the enterprise's ability to maintain market order;_ _4. The quality of channel coverage is reflected not only in the guidance and control of channel resources but also in terminal maintenance;_ _5. The advancement of channel coverage should focus on rhythm and stage-specific priorities, establishing a marketing network and management model that matches the market development stage;_ _6. The promotion of the coverage model should be based on the objective needs of market development, but also on internal management capabilities and market control capabilities._
**Summary:** Enterprise channel model transformation typically takes about two years to take shape; it cannot be achieved overnight. Each step must be correct to unleash its power. One wrong step may not lead to total failure, but it will certainly lengthen the transformation cycle and multiply time costs.
**Recommended Reading**


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