---
title: "How Markets Get Killed: For Those Years of Turmoil"
description: "In 2015, many FMCG companies saw poor sales performance, with some experiencing sharp declines and others barely maintaining sales but facing losses. The overall retail growth slowed, intensifying pressure on sales staff. Despite the e-commerce boom, offline channels still account for about 80% of consumer goods sales, prompting companies to seek ways to boost physical channel sales."
author: "老挺实评"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-07-09"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/how-markets-get-killed-for-those-years-of-turmoil-23bc5195.md"
original_source: "https://mp.weixin.qq.com/s/39Ts_Uk5hxrMJqMD7TZfDw"
translation: "https://xinjignxiao.com/zh/articles/%E5%B8%82%E5%9C%BA%E6%98%AF%E6%80%8E%E6%A0%B7%E8%A2%AB%E5%81%9A%E6%AD%BB%E7%9A%84-%E8%87%B4%E9%82%A3%E4%BA%9B%E5%B9%B4%E9%A5%B1%E7%BB%8F%E6%8A%98%E8%85%BE%E7%9A%84%E5%B8%82%E5%9C%BA-23bc5195.md"
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---

# How Markets Get Killed: For Those Years of Turmoil

> In 2015, many FMCG companies saw poor sales performance, with some experiencing sharp declines and others barely maintaining sales but facing losses. The overall retail growth slowed, intensifying pressure on sales staff. Despite the e-commerce boom, offline channels still account for about 80% of consumer goods sales, prompting companies to seek ways to boost physical channel sales.

> _In 2015, many FMCG companies saw poor sales performance; the worst suffered sharp declines, while the better ones maintained sales but couldn't escape the clutches of losses._

In the sluggish environment, some excellent companies achieved growth, but both growth rates and profit margins dropped significantly. Media began to exclaim that the largest wave of layoffs in history was coming. In 2015, the growth rate of total retail sales of goods slowed dramatically; there were more monks but no more porridge, putting even more pressure on the "surviving" sales personnel.

Although the e-commerce wave has been strongly eroding traditional sales channels in recent years, offline channels still account for about 80% of the consumer goods market. Thus, FMCG companies are still desperately seeking ways to complete sales tasks offline.

**To push or not to push?**

To boost sales in physical channels, most companies focus on increasing coverage and improving per-outlet productivity. Increasing coverage is relatively easier. However, while headquarters repeatedly sounds the call to "go deep into third- and fourth-tier cities" and even townships, regional sales staff are trembling with caution. Some veteran salespeople even tell newcomers, "Don't rush; take it easy, or you'll get hurt badly!"

Why is that?

**A recurring story**

A certain FMCG company decided to aggressively expand coverage to maintain three consecutive years of high growth. They launched generous distributor coverage incentives and organized a strong sales force to help distributors achieve deep coverage. To make newly opened stores generate sales faster, the company proposed the slogan "Occupy the terminal": through heavy investment in displays, they demanded the largest shelf space and largest inventory in stores.

Then came dramatic results:

- **Month 1:** Sales in all regions surged, performance looked great, everyone was jubilant, and the factory even questioned why they hadn't added production lines sooner.
- **Month 2:** Sales growth slowed significantly, performance became harder to achieve, distributor inventory was normal, and inbound and outbound shipments remained busy—everything seemed fine.
- **Month 3:** Distributor shipments began to slow, previous orders arrived, warehouse pressure increased sharply, and performance struggled to reach 100%.
- **Month 4:** Distributor inventory pressure became severe, and they held a pile of unpaid expense claims. Factory shipments dropped sharply, requiring salespeople to "give their all" to eke out a bit of sales. Worse, personnel and display costs remained high! Under the threat of "losses," internal "reflection" began.
- **Month 5:** Adjustments emerged: personnel cuts, policy tightening, and expense reductions. Salespeople deemed "ineffective" were adjusted or laid off from the bottom up, causing widespread anxiety.
- **Month 6:** The nearly emptied channel inventory began to take effect, sales slightly recovered but still below last year's levels. Due to sales personnel changes, legacy issues in some regions surfaced, intensifying conflicts between manufacturers and customers. New salespeople found it increasingly difficult to distribute in newly developed markets, with terminal cooperation worse than six months prior, and persuading distributors to cooperate often ended in arguments.
- **Month 7:** The entire market strategy quietly shifted from "aggressive coverage" to "preserving existing volume"...
- **Month 8:** ...

Regional salespeople continued to be replaced; after all, "poor execution" is the easiest "problem" to "discover" and handle. However, many salespeople said these markets were beyond saving no matter who came...

Sorry, the above story is made up by me. If it seems familiar, that's purely normal!

Because I've seen, heard, or experienced such stories at least four times in the past five years. These stories occur in both small and medium enterprises and industry leaders; in both private and foreign companies. Old salespeople who have weathered these waves often become overly cautious, like "once bitten, twice shy."

**Things are never that simple**

"We never have such problems!"

Perhaps many haven't experienced this ordeal, but they've likely walked through these craters. Why are regional sales staff hard to command? Why are distributors always uncooperative? Why do terminals only care about collecting money and not recommend our products? Not to mention that these "troublemakers" were once passionate. The reasons vary by company and are far more complex than they appear. If you analyze carefully, you'll find many problems are familiar. What are they?

**Wrong direction: Tactical diligence cannot compensate for strategic laziness.**

For some companies, effective coverage (or weighted distribution) is already high, and the marginal contribution of expanding coverage depth and breadth is low. The Chinese market is always tempting: "urban-rural dual structure," "huge township market," "per capita consumption far behind developed countries"—these phrases appear not only in industry reports but also in corporate policy documents for large-scale coverage.

However, these "pies" aren't as tasty as imagined. Some companies don't further examine their actual product distribution, don't study which "blank markets" truly suit their products, or what products and services are needed to satisfy those markets. They simply think, "Put the product in more places, and people will buy it!" This mindset not only prevents companies from carefully considering which markets to cover but also leads them to overlook more important opportunities—product and service improvements—ultimately resulting in wasted effort.

**Right direction, wrong product: You can't force what doesn't work.**

For example, if the product isn't suitable for the local market, spending a fortune won't achieve effective sell-through, leading to massive channel returns and severely damaging channel partners' confidence.

**Right direction, wrong pace: You won't live to see victory.**

The product is good, and there are indeed many blank markets, but the steps are too fast, and under short-term profit pressure, everything collapses. Companies often overestimate sales growth from new markets while underestimating the resources needed.

In many cases, new markets require substantial resources for cultivation. If these markets' share increases rapidly in a short time, profits from mature markets will be eroded, and company profitability will plummet. Without proper pacing, spreading too thin will force the company to abandon expansion plans due to profit or cash flow pressures.

Additionally, new market consumers need time to accept the product. If you keep pressuring distributors and terminals to meet monthly sales targets without allowing enough time for market digestion, you'll drag customers down.

**Right direction, insufficient support: Powerless.**

Why haven't blank markets been captured? Often it's not that our vision is poor, but "I really can't do it." Lack of regional customer base, high distribution costs, insufficient regional management personnel—these issues encompass comprehensive capabilities from production to storage, transportation, and sales. In a rapid market battle, the weaknesses of the entire management system are exposed! If these key capabilities aren't improved in time, the charging sales team will die on the beach.

**Right direction, no sell-through tactics: Half-paralyzed.**

Almost all regional salespeople have told me, "What we worry about most isn't distribution, but how to generate sell-through!" While launching large-scale coverage campaigns, companies are very conflicted about investing in terminal sell-through. It's not that they don't know they need to focus on sell-through, but they lack good methods.

After 30+ years of development, most marketing decision-makers are familiar with terminal factors. However, many "successful experiences" are applied dogmatically. A typical example is "stack goods like a mountain": many believe that as long as you place the product in the best position and stock the most, it will sell. So regardless of store type, they grab the largest display and the biggest shelf space.

But then, after paying huge display fees, the company can't afford promotional activities or personnel incentives. The result is that products sit "quietly" at the terminal, while stores care more about how much fees they receive and return unsold stale goods to the company. Due to slow sell-through, terminals gradually lose confidence in the product, and eventually, the in-store position and display are lost. The product either gets removed or barely survives in a corner.

**Channels hold grudges**

After the vigorous distribution campaign, company policies often undergo major adjustments, and channel customers' trust in the company drops significantly. Worse, the company's reputation spreads quickly in a region; not only are old customers offended, but new customers are also reluctant to cooperate. So when a new regional manager arrives at such a market, it feels like stepping onto a lifeless saline-alkali land where nothing grows!

That's how markets get killed.

...

**The key is people—the right people**

Facing such difficulties, the accumulating negative emotions in the team are often the company's biggest enemy. A desperate salesperson can leave a company or region with frustration, which does no good for the enterprise.

In reality, many outstanding companies have staged brilliant comebacks. These markets not only revived but often became new model markets. The decisive factors in this process are the entrepreneurs' never-give-up spirit, objective self-reflection, and decisive courage. The entire marketing team also puts in extraordinary effort, especially those bold, meticulous, innovative, and responsible team leaders who become the company's backbone.

It is because of these persistent people, along with scientific methods, strategies, and systems, that companies can find a path to rebirth.

Source: 为之 (Wei Zhi)

-END-

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