---
title: "How Distributors Can Support New Products"
description: "When companies launch new products, they often find that despite distributors' willingness to promote them, sales remain sluggish. The problem often lies in misidentifying target customer groups, improper distribution strategies, and inadequate market promotion and incentive plans."
author: "毛小民"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-11-19"
language: "en"
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# How Distributors Can Support New Products

> When companies launch new products, they often find that despite distributors' willingness to promote them, sales remain sluggish. The problem often lies in misidentifying target customer groups, improper distribution strategies, and inadequate market promotion and incentive plans.

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When companies painstakingly launch new products for the market, they often find that despite distributors' willingness to promote them, sales remain lackluster. Where exactly does the problem lie?

**Misidentifying Target Customer Groups**

Distributors are accustomed to distributing products broadly through their existing networks, but often overlook that new products may target different customer groups than before. For example, mid-to-high-end instant noodles primarily target customers in urban areas and economically developed townships, yet distributors might distribute them to impoverished townships; certain small-pack dry noodles target primary and secondary school students, but distributors might place them in large supermarkets far from schools. As a result, some target customer groups never encounter the new product, while unnecessary channels are overwhelmed with inventory.

This is often unintentional on the distributor's part, as they lack the habit of carefully analyzing product characteristics and target customer groups, letting products flow naturally downward. This not only delays the new product's growth period but also causes significant channel returns, dampening distributor confidence, and can even lead to product failure.

**Countermeasures:**

As soon as a new product launches, first clarify its positioning and target customer groups, and identify which channels they typically use for purchases. Then lock onto those channels for targeted distribution and promotion. For instance, for small-pack dry noodles, the ideal channels would be small retail stores near schools.

**Common Mistakes in New Product Distribution**

Improper distribution of new products by distributors is often the culprit behind products "dying before they succeed." Key issues include:

**1. Directly Confronting Strong Brands.**

Many companies launch new products based on competitive strategies, making them similar to competing products in positioning, specifications, quality, and price. However, many competitors are already strong local brands with established consumption habits and product pull. Directly distributing new products in the competitor's stronghold will inevitably face fierce suppression and difficulty.

**Countermeasures:**

"Attack where the enemy is weak, retreat where they are strong." In the competitor's weak areas and channels, concentrate superior resources, cultivate key secondary distributors, intensify distribution efforts, and turn these into your own strongholds. Simultaneously, conduct on-site sales and promotional activities in areas where target customers concentrate, and prioritize providing excellent service.

When attacking a mature brand's strong channels, companies should concentrate resources for a single-point breakthrough, intensify competition for outlets where target customers gather, divide and encircle, and exploit competitor weaknesses (such as low channel profits or poor service) to gradually penetrate and dismantle their position. Companies and distributors must concentrate resources several times greater than the competitor's and prepare for a prolonged battle.

In the early stages, you can disrupt the competitor's strong areas and channels to divert their attention and affect their deployment, for example, by spreading rumors of "preparing to attack that area" or selectively increasing promotions for the competitor's key secondary distributors.

**2. Using Old Product Strategies for New Product Distribution.**

Many distributors prefer convenience when distributing new products, immediately using existing channels and relationships to push new products to a few large secondary distributors alongside old products. Worse, they use credit sales for new products. Large secondary distributors typically have good business and are busy selling; mature old products sell effortlessly, while new products require explanation and yield little early sales. Although new products offer slightly higher margins, distributors don't care about these profits—since they already have business. After a while, when companies call to inquire about new product sales, distributors often declare the product dead, citing "it doesn't sell well" or "people don't want it."

**Countermeasures:**

New product distribution should follow the pyramid principle: focus on the middle and bottom of the pyramid, increasing distribution intensity and breadth as you go lower, and aim for cash sales whenever possible.

For example, require distributors to avoid distributing to large secondary distributors and instead focus on small secondary distributors and terminals (especially those near target customers). Small secondary distributors generally have poorer business and more free time, making the relatively higher price difference of new products attractive; distributing to more terminals increases direct customer contact. Although downstream channel distribution incurs higher upfront costs for companies and distributors, the market becomes more solid. Once terminals and small secondary distributors reorder, it will pull large secondary distributors to proactively stock up.

**3. "Flowering Everywhere" with Secondary Distributors.**

Some distributors have extensive and well-developed networks and hope for a blockbuster launch, wanting to "catch all secondary distributors in one net." Combined with manufacturers' blind pursuit of distribution rates, new products appear everywhere within days, truly "visible everywhere."

This approach carries significant risk. Secondary distributors want to earn higher margins during the early period when prices are opaque, but once they see the product everywhere, their enthusiasm wanes. If one secondary distributor undercuts prices early, others will abandon the new product due to premature price transparency. Thus, the new product exits the market before establishing a foothold.

**Countermeasures:**

When launching a new product, distributors should use their accumulated experience to identify which secondary distributors are willing to try new products and which are stubborn and only stock up when customers specifically request. Selectively find secondary distributors in townships and wholesale markets who enjoy promoting new products, encourage them to actively promote, and once pull is created, expand the number of secondary distributors.

**Severely Lacking Market Promotion Capabilities**

Many companies, upon launching a new product, immediately assign quotas to the sales system: each department must sell a certain number of cases, further broken down to each sales representative and distributor. Sales reps then hype the product like a flower, while distributors inexplicably haul the goods home.

Promoting new products differs from old ones; it requires distributors to develop and execute a reasonable promotion plan, such as how to train sales staff, which vehicles and personnel to allocate for new product promotion, which channels to distribute to, how to set prices, how to design promotions, and how to assess performance. However, many distributors fail to do this, leading to highly arbitrary market operations: prices set randomly, promotions given based on personal relationships, plans abandoned when they seem unprofitable, and even misappropriation of manufacturer support for new product launches. These all make new product promotion passive.

**Countermeasures:**

Clearly explain the new product's features, positioning, and target customer groups to distributors, help them identify target groups and channels in their regions, and assist in developing a feasible new product promotion plan. If possible, provide centralized training for distributor sales staff and supervise distributors and their staff in executing the plan.

Distributors who misappropriate new product promotion funds should receive stern warnings and necessary penalties. The best preventive measure is for manufacturer sales reps to write down the agreed plan, print it, and personally hand it to secondary distributors or terminals, or supervise distributors in doing so.

**Ineffective Sales Staff Incentive Plans**

Many distributors set sales staff salaries as fixed wages or, when setting sales commissions, fail to differentiate between new and old products or high- and low-margin products. Consequently, sales staff focus on selling best-selling old products that don't require persuasion. For new products, they may promote them half-heartedly or even advise distributors not to carry them.

**Countermeasures:**

When launching new products, companies typically provide distributors with much larger profit margins than old products (unless it's a sacrificial blocking product). Use part of these profits to incentivize sales staff to actively promote. Manufacturers can also directly offer incentives to distributor sales staff, such as sales commissions, special new product promotion awards, or opportunities to become manufacturer sales reps.

The commission rate for new product sales can be determined based on the profit difference between new and old products and the average industry profit for distributors, typically 10% to 50% of the difference, which is significant in the industry. For example, if a distributor takes on a new instant noodle product with a profit difference of 0.5 yuan per case compared to old products, a commission of 0.05 to 0.2 yuan per case would be appropriate.

Originally published in "Sales and Marketing" Channel Edition, Issue 12.


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