---
title: "How Distributors Can Operate the Market and Make Steady Profits"
description: "Market stability and sustained growth are more important than anything else. As agents for manufacturers in regional markets, distributors need sales, market share, and profits, but they need them to be stable. They do not need fleeting market booms; they need stable, continuously growing markets. The evolution from new product development to a stable market typically goes through three stages."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2015-11-15"
language: "en"
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# How Distributors Can Operate the Market and Make Steady Profits

> Market stability and sustained growth are more important than anything else. As agents for manufacturers in regional markets, distributors need sales, market share, and profits, but they need them to be stable. They do not need fleeting market booms; they need stable, continuously growing markets. The evolution from new product development to a stable market typically goes through three stages.

Market stability and sustained growth are more important than anything else. As agents for manufacturers in regional markets, what is the goal of distributors in operating the market? Some say it is sales volume, some say market share, and some say profit.
Distributors need sales volume, but they need stable sales volume.
Distributors need market share, but they need stable market share.
Distributors need profit, but they need stable profit.
Distributors do not need fleeting market prosperity; what they need most is market stability and sustained growth.
The evolution from developing new markets with new products to forming a stable market generally goes through three stages:
Stage One: Single Product Breakthrough
Generally, in the early stages of market development, manufacturers and distributors cannot simultaneously promote multiple products, so they must rely on the momentum of a single product to create a good start in the market. A single product breakthrough requires the following:
First, select a mass-market product that can generate volume. The purpose of a single product breakthrough is, first, to form a sales network—only products that can generate volume can form a complete sales network; second, to build brand awareness—only products that can generate volume have brand influence.
Second, explosive distribution to achieve market coverage. Explosive distribution requires speed, large distribution volume, and high market coverage. It can achieve the following effects: first, catch competitors off guard and complete distribution quickly before they can react; second, rapid distribution to terminals creates momentum, giving confidence to secondary distributors, terminals, and consumers.
Third, maintain high profit margins for secondary distributors to induce their support. In markets where secondary distributors dominate, especially in townships and below, secondary distributors play a crucial role. The only motivation for secondary distributors to promote an unknown new product is profit margin. If the new product does not offer higher profit margins than other products, it will not pass the secondary distributor level, and the product will not reach the terminal, thus missing the opportunity to meet consumers.
Fourth, strong in-store promotion at the terminal. Old and well-known products can "sell themselves," and consumers often buy them habitually. How can a new product that consumers are unfamiliar with be sold? It mainly relies on strong recommendations at the terminal. If retail terminal staff do not recommend it, the manufacturer or distributor must send personnel to the terminal for in-store promotion.
Fifth, short-term high-density advertising in regional markets (such as county-level markets). A common strategy for second- and third-tier brands is to become a strong brand in a regional market, giving consumers in that region the image of a first-tier brand. Since advertising costs in regional markets (such as county-level markets) are extremely low, a few tens of thousands of yuan in advertising can activate a market. Therefore, while distributing, high-density advertising should be used to "push" and "pull" the market simultaneously.
Sixth, conduct no fewer than three waves of strong promotional activities within six months. Do not expect a single large-scale promotional event to fully activate the market. Many new markets fail to launch due to insufficient push. Therefore, three consecutive waves of strong promotion are essential.
Stage Two: Forming a Product Group
First, extend new products around the main brand that has achieved a single product breakthrough to share the pressure of the dominant product's high proportion. A single product is vulnerable to competitor attacks, and when attacked, there is no effective strategy to counter—if you ignore the attack, the market will be affected; if you counter, profit margins will decline. After forming a product group, you can use the group for strategic counterattacks. For example, use one product to compete with competitors while other products generate profit.
Second, new products should enter the market with a "high open, low walk" strategy. Remember, according to the demands of most salespeople and distributors (higher quality, better packaging, lower price, better policies), new product promotion is doomed to fail. To extend the product life cycle, you must leave enough room for retreat—price space. Therefore, new products should enter the market with a higher price.
Third, use the "product group" to form a "well-known brand" rather than a "well-known variety." If a single product is too strong, it can lead to a situation where "the brand equals the variety," which is an obstacle to promoting new products. Multiple varieties under one brand umbrella can enjoy the protection of the umbrella while providing consumers with choices—if they are not satisfied with one variety, they can choose another.
Fourth, a "product group" also makes it difficult for competitors to launch targeted policies. Competitors generally do not attack the entire product line; they usually choose the variety with the largest sales volume or the greatest threat. If the product is single, all attack power is concentrated on one product, and that product may become a sacrifice. Under a "product group," the sacrifice of any product will not lead to a total collapse.
Stage Three: Forming a Product Structure
A "product group" is generally an extension of products at the same level, while a "product structure" is an extension of levels.
Although many companies have succeeded by sticking to a single product level, especially for high-end products such as high-end clothing, this strategy may be effective. However, in the mass consumer goods field, a single-level product structure is still problematic.
First, only with a structure can there be a strategy. Companies should regularly make strategic combinations of products to cater to the needs of consumers at different levels.
Low-end products can generate volume, but their profitability is limited. Their roles are: first, to open up the network and achieve market coverage; second, to build brand influence because low-end products have many consumers; third, to share sales expenses; fourth, to create economies of scale; fifth, to support personnel.
Mid-end products have both sales volume and profit, and their role is to form stable cash flow and stable profit.
High-end products have limited sales volume but high profit margins, and they can shape the corporate image.
Second, a market with a single product or product group is unstable. The outcome of single-product competition is either losing money or exiting the market.
Third, the key to winning price wars (policy wars) is an effective product structure.
In the Chinese market, price wars in low-end products are inevitable, determined by consumer demand characteristics and market competition—unless you exit the low-end competition. Companies must not avoid price wars; they should proactively initiate or accept them. At the same time, they should use price wars to defeat competitors and make money in the process. The only way to achieve both goals simultaneously is to use profits from mid- and high-end products to support low-end products in the price war.
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