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Mature products generally refer to those that, after being launched and going through the introduction and rapid growth stages, enter a relatively stable state. At this point, the product's visibility is relatively high, the price system is relatively stable, and profits among channel members are relatively stable. However, channel prices are relatively transparent, and product turnover and cash flow are relatively fast. This often leads secondary wholesalers (二批) to target these products first to drive sales of other products or increase store traffic. The most effective method is to sell these products at low prices or launch promotional activities not supported by the manufacturer or distributor, or engage in cross-regional selling (channel stuffing). These actions by distributors and secondary wholesalers often result in zero or even negative profits for other distributors and secondary wholesalers selling the product, forcing them to lower prices or run promotions. When distributors or companies are unable to reduce prices or provide financial support, the product, due to lack of profit or losses, leads distributors and more secondary wholesalers to refuse to sell it, accelerating its premature decline or exit from the market. This nullifies the efforts of the company and distributors. Therefore, stabilizing secondary wholesaler profits for mature products is crucial for extending the product's market life. So how should mature products stabilize channel profits?
Strictly Combat Cross-Regional Selling. Cross-regional selling has always been a major factor causing chaos in the market price system, so companies regard strict crackdowns on cross-regional selling as an important means to stabilize the price system. In combating cross-regional selling, companies should first establish regulations for managing cross-regional selling and inform all distributors and sales personnel, ensuring there are rules to follow. When formulating these regulations, first, they must be enforceable. In practice in China, we often find that many companies have regulations but they are not actually implemented or fail to deter. Second, there must be corresponding procedures and responsible entities for handling cross-regional selling. Without proper procedures, many companies end up with disputes or let incidents slide. Third, once regulations are in place, any cross-regional selling must be dealt with strictly according to the rules. A key reason many companies fail to effectively stop cross-regional selling is the lack of timely handling, or even due to internal interpersonal relationships, making the regulations a dead letter, which emboldens distributors.
Use Rebate Cards or Agreements to Control Secondary Wholesalers. Many distributors give secondary wholesalers a one-time price, which is disadvantageous because once the product enters maturity, secondary wholesalers may cut prices or undercut, and the distributor has no leverage, leading to a passive position. Companies can advise distributors not to give a one-time price but instead use a rebate card system: provide a card or sales record book, record each purchase quantity, and settle rebates periodically, with the condition that they cannot lower prices or engage in cross-regional selling, otherwise rebates are forfeited. Additionally, for secondary wholesalers that significantly impact the price system or do not respect rules, distributors can sign agreements with them, offering extra policies after a certain period if they operate according to the required price system.
"Kill Without Mercy" for Those Intentionally Disrupting Market Prices. In market operations, some secondary wholesalers may hold grudges against distributors or be supported by competitors, intentionally disrupting the product's price system. If discovered, distributors should immediately stop supplying them and inform the manufacturer to notify distributors in neighboring markets not to supply these secondary wholesalers. If the secondary wholesaler has a large quantity of product, it can be recovered through certain channels. Additionally, in practice, if distributors notice that certain secondary wholesalers suddenly purchase abnormally large quantities beyond their sales capacity, they should be alert and appropriately control supply, as this is often a sign of impending price cuts or cross-regional selling.
Decompose Large Regional and High-Volume Secondary Wholesalers. In actual market operations, due to limited energy or resources, some distributors may initially delegate market development to strong secondary wholesalers, giving them larger sales areas and price or policy advantages not available to others. To some extent, if these secondary wholesalers are not managed properly, they become major risks for price undercutting and cross-regional selling. Therefore, once the product enters maturity, distributors should consider decomposing these secondary wholesalers, further sinking the channel, and strengthening market control.
Add New Products to Mitigate Market Risks. Besides stabilizing the price system, to avoid market risks, companies can introduce new products at appropriate times. On one hand, new products provide secondary wholesalers with relatively stable profits, preventing them from switching to competitors. On the other hand, they prevent the situation where the original mature product ages and there is no product to support market sales. Additionally, if the mature product's price system encounters problems, there is a substitute product.
Set Unified Prices and Synchronize Promotions or Implement Notification Systems in Neighboring Markets. Another cause of cross-regional selling is inconsistent pricing between different markets, leading to natural flow from lower to higher price areas. Also, when promotional policies are implemented in some markets but not others, products from markets with promotions flow to those without. Therefore, companies should strive for price consistency in neighboring markets when setting prices, and when formulating promotional policies, try to synchronize or notify neighboring markets, so that markets without promotions can strengthen management to prevent cross-regional selling.
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