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Key Points on Product Issues

We will now share insights on product issues, as products are crucial for distributors. We divide this topic into three key points: first, 'finding gold among old products'; second, 'selecting new products'; and third, 'promoting new products.' Due to time constraints, we will focus on 'finding gold among old products.'

As a distributor, what determines your social status locally? It's your brands. If you have a good brand, your sales will be good, you'll gain more social status, and more people will recognize you. Many secondary wholesalers have worked with you for years without knowing your name or face, but they know you as the distributor for Yili, Mengniu, Master Kong, or Uni-President. The bigger and more well-known the brand, the higher your profile. Brands are extremely important; without good brands, it's hard to be a successful distributor. Your level of respect in the market and your scale of development depend on your products. Products are critical; if you don't have good products, it's hard to achieve good development.

We believe: People are the same, but the products they represent differ, and ultimately, products determine how people differ. Ten years ago, you started at the same time; one of you represented a well-known brand, the other a lesser-known brand. Ten years later, your positions are vastly different. Products determine your social status. Choice is greater than effort; make a deliberate choice rather than a random one and then work hard! When selecting products, you must be careful. Don't casually pick a product and then try to make it work later; that's very difficult. Always remember: your status is reflected by the products you represent. The stage determines your value.

Product selection is very important. Some distributors choose products very casually. They already have many brands but feel they have nothing to sell and sales aren't growing, so they spend a lot of effort looking for more products. Many companies do the same. A few days ago, a distributor from Yuxian, Henan, called me. He was handling Yinlu, and originally, that brand alone generated over 11 million yuan a year. Last year, he added another product, but found that Yinlu declined, and the new product rose, yet the combined sales were still around 11 million. So, more products don't necessarily mean higher sales.

Regarding product selection, I believe there are three key points. First: find gold among old products. More products aren't necessarily better. Many distributors have good products in their portfolio but have artificially killed them. Many of us have had this experience: when you're distributing products, the secondary wholesaler agrees to take a few boxes to try. You say, 'Wait, I have another product,' and they take it. Then you say, 'Wait, I have another one,' and so on. Does this happen? Isn't the secondary wholesaler annoyed? They are. A truck carries many products, and during distribution, the salesperson doesn't know what to sell, and the secondary wholesaler doesn't know what to take. Finding gold among old products: If a distributor wants to break through 10 million yuan, one good product is enough! We've seen many distributors for Yili, Mengniu, or JDB who have made their company exceed 100 million with a single product. One brand can bring in over 100 million.

There's a Wahaha distributor in Henan, operating in a county-level city, with annual sales of 220 million yuan, handling only Wahaha and nothing else. A Heika distributor in Zhengzhou had sales of over 50 million last year. What was his profit margin? 40% in the first year, 30% in the second year. I'm talking about net profit. It's not about having many products; find gold among old products. That's the first key point. The second key point: how to select new products. The third key point: how to promote new products.

How to Find Gold Among Old Products?

Given our limited time, let's share the method for finding gold among old products. There are five methods: First, the unique product determination method; second, the trend determination method; third, the profit margin determination method; fourth, the category space determination method; fifth, the growth cycle determination method. Use these five methods to pick one product from your existing portfolio that has high growth potential and can make you money. Explaining all five methods would take a full day. Today, I'll share one method for you to try: the 'unique product determination method.'

Before I begin, let me ask: In the current market, do branded products sell better than non-branded ones? Do products with distinctive features sell better than those without? So, there's a rule: Products that sell well have two characteristics: 'first' and 'unique.' 'First' refers to brands; the number one brand in each category has the highest sales and is the best-selling. 'Unique' doesn't necessarily mean a brand, but if the product has a very distinctive feature, it can also sell well.

Women don't change cosmetics every day; they usually stick with one brand for a long time. That's called consumer loyalty. Where does consumer loyalty come from? It comes from 'first' and 'unique.' You won't be interested in a product without a brand or distinctive features for no reason. So, when selecting products, look for uniqueness and distinctiveness. Ask yourself two questions: First, does the product you represent have unique characteristics? Second, can it make consumers remember you among many similar products? When choosing a product from your old portfolio, ask yourself these two questions. It's not enough that you think it's distinctive; the feature must be easily memorable to consumers.

So, how do you determine if a product has distinctive features? We've listed a few criteria: First, uniqueness of raw materials or function. If the product has very unique raw materials or functions, consumers will remember it at a glance. Examples: The first is Liuwei Dihuang Wan, whose ad says 'Good herbs, good medicine.' My raw materials are good, so my medicine is good. This is something that can't be replicated. The second is Lulu Apricot Kernel Milk. Since Chengde is the hometown of apricots, Lulu sells the best among apricot kernel drinks. Many companies produce apricot kernel drinks, but almost all consumers say 'Lulu' when they think of apricot kernel drinks. This is called consumer mind share. The third is coconut juice. Among the five major plant protein categories, I can conclude that coconut juice will have a huge market in the future. Coconut juice is extracted directly from coconuts, with few additives, and is natural. The poor performance in the north is due to companies' marketing not keeping up, not because the product is bad. The last example is Devil Ramen, a very spicy instant noodle that uses Indian ghost peppers, the hottest chili in the world. This product sells very well in Hubei, Hunan, Sichuan, and Chongqing. This is the uniqueness of raw materials or function.

Second, uniqueness of core technology. If the product has advanced technology that others can't replicate, like Apple phones, Gree air conditioners, or Boeing airplanes. Many people use iPhone 5 or 5s, and now iPhone 6 is coming out. It's not just a phone; it has changed our lifestyle. Previously, phones were for calls and texts; now they can access the internet, send emails, watch videos, play games, and take photos. It's all-encompassing. Take Gree air conditioners: In 1997-98, Gree's sales were 2 billion yuan, while Haier's were 5.6 billion. The gap between these two companies is interesting now. Last year, Gree reached 130 billion yuan, ranking first in the world. Air conditioning relies on core technology, and Gree has it. Now, air conditioners use electricity, but Gree has a model that doesn't use electricity—it uses solar power. Would you want it? Everyone would, because it costs nothing to run. Gree also has another impressive technology: traditional air conditioners stop heating at -30°C, but Gree's can still heat at -40°C. Only Gree has broken through this technology globally. That's core technology. And Boeing airplanes, the large aircraft project. This is the role of core technology: if you have something others don't, you should confidently promote such a product; it will definitely succeed.

Third, standard color differentiation in packaging. Have you noticed that all excellent, large-scale companies have consistent product colors that never change? Has Coca-Cola's red changed? Has Master Kong's braised beef noodles changed? Has Uni-President's old pickle noodles changed? Has Red Bull changed? Some second- and third-tier brands change their packaging every so often, and in the process of changing, they head toward death.

Brands need to accumulate over time. This product may have no other distinctive features, but its color is its feature. Braised beef noodles have been in mainland China for 24 years without changing. Red Bull has been in China for 19 years, and its can hasn't changed. And Heika—its rise is a miracle, selling over a billion yuan. Its bottle has become a standard color, and many companies now imitate Heika. This is called standard color, which can be sold as a feature. So, check if your product has a standard color.

Fourth, product shape differentiation. Can shape differentiate? Yes. When you see Moutai, you know it's worth the price because of what's inside the bottle. Guijiu, Yanghe Blue Classic, Jingjiu, Fenjiu—these bottle shapes have remained unchanged for a long time, becoming a product feature. This is product shape differentiation. See if you have such products in your portfolio.

When Oriental Leaf first came out, everyone laughed, because Nongfu Spring spent 2 million pounds (about 20 million yuan) on the packaging design. At the time, people said the boss of Nongfu Spring was crazy. But they priced it at 4 yuan per bottle when Chinese tea was selling for 2.5 yuan. In the first two years, it did very well, and now it sells excellently in first-tier cities. It's one yuan more expensive per bottle; how many bottles does it need to sell to recoup the design cost? Easily. Its bottle is very unique and patented, so others can't imitate it. This is product shape differentiation. Like cars, you can tell the brand by the shape.

Beware of falling into the trap of 'unique products.' There's also the issue of misconceptions about unique products. Many distributors go to trade fairs, or salespeople approach you, saying their product is very distinctive. You might think it's truly unique, but there are pitfalls. If you put a BMW logo on a tractor, is it a BMW or a tractor? It's still a tractor. So, be careful: Many category selling points are fake. You need real substance, which is crucial.

Second, the selling point doesn't connect with the product itself. The slogan they use doesn't relate to the product. For example, 'Afraid of getting heaty? Drink Wanglaoji.' This creates a connection in consumers' minds, and the ad shows fire and chili, making you think it reduces heat. So, your product's selling point must be associated with the product itself.

Third, copying the selling points of leading brands. Are there many companies that copy? Yes, many! When old pickle noodles came out, the market was flooded with them, all claiming to be authentic and sour. How can you compete? Consumers see you as imitating Uni-President, so it's meaningless.

Fourth, quality is not your selling point. The raw materials you use determine the price. Quality determines your price. Is there such a thing as good quality and low price? No. Good quality means good product and good price. Understand this clearly.

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About us: WeChat ID: FMCG Distributor Professional Consulting Account intro: 20 years of FMCG distributor operation and management experience, specializing in distributor internal management.

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