In today's environment where manufacturer promotional resources are relatively scarce, how to cleverly 'obtain' distributor promotional resources to boost market sales and brand enhancement is a testament to the competence and excellence of regional managers, who are like 'frontier officials'. It also serves as a strong guarantee for regional managers to 'leverage force' and better establish a 'win-win, shared, and common' market. So, how should regional managers 'wisely obtain' distributor promotional resources for their own use? The following four methods may inspire you.
The Pretend Posture Method
To cleverly 'extract' distributor promotional resources, regional managers sometimes must pretend to be 'reserved' and take the initiative, using their own methods to 'lure the target into the trap' and achieve predetermined goals. Let's look at a case where a regional manager 'wisely obtained' distributor resources:
Background: X-brand instant noodles was the number one brand in Xinzheng. In recent years, under the 'relentless bombardment' of competitors, prices have been declining, almost to the point of 'selling at a loss for publicity'. Before the Spring Festival of 2006, Y brand, also from Henan, launched a large-scale attack on the Xinzheng market. Since Xinzheng was a mature market, X brand was in a defensive position, but prices were close to the bottom, making it impossible for X manufacturer to invest excessive promotional costs. In this situation, to protect the 'peace' of the market, the regional manager Xiao Li, in charge of the area, and the distributor Qiao Boss in Xinzheng engaged in a 'showdown' over promotions:
Xiao Li: Brother Qiao, look, it's almost Spring Festival, and Y-brand instant noodles want to take a share of our market during this peak season. They're offering a barrel of salad oil for every 50 boxes purchased, which is a big push. What should we do? (Promotions are inevitable, but it's best if the customer suggests it)
Qiao Boss: Xiao Li, I know about this situation. I've been thinking about it these days. In previous years, I would have stocked up about 500,000 yuan by now, but with Y's attack, it's been hit hard, and I've only sold over 300,000 yuan. Maybe we should also do some promotions... (When the distributor proposes promotions, it's completely different from when the manufacturer proposes)
Xiao Li: Promotions? How? You know that our company's products have no room for operation in our market. What the company can do is help you promote new products and do market planning, but you'll have to cover the promotional costs yourself. Besides, you've made a lot of money selling X products this year, so it's time to 'bleed a little', haha. (First, complain: no support space for products; then, tease and point the way: take a portion from profits for promotions)
Qiao Boss: I know the company's products have no profit margin, but at this critical moment, we can't just sit and wait. The company should also think long-term. Let's discuss... (The customer turns the tables)
Xiao Li: How to discuss? Even if we discuss, the company can't come up with promotional costs. Most of the company's products are sold at a loss in our market. For example, the main product in 1*40 packs loses 0.2 yuan per box. You know this best. (Present facts and reason)
Qiao Boss: I understand what you're saying, but no matter what, the market is our common market. So, the cost of promotions can't be borne by me alone. How about this: the company contributes a little, and I contribute more, and together we beat Y? (The distributor begins to fall into the 'trap')
Xiao Li: The company contributing promotional costs? I'm afraid it's hard to explain to the company leaders. How about this: tell me your promotional plan? Based on your investment, I'll apply to the company to see if we can get a little promotional cost. But don't get your hopes up, haha. (Retreat to advance)
Qiao Boss: I'll take 0.5 yuan per box from my profits, and the company contributes 0.3 yuan, totaling 0.8 yuan per box for promotions. We'll do a big customer incentive with more intensity than Y. Also, I'll allocate 2 more vehicles for instant noodles and add 2 more sales reps... (Getting to the point, extracting resources)
Xiao Li: According to the current product structure, the company can't approve a 0.3 yuan per box promotional intensity. How about this: this month, if you sell over 3,000 boxes of the company's newly launched Dagu Noodles (high-end product), I can take this opportunity to report to the company. For new products, you and the sub-distributors all make money. Then, as you said, I'll apply for 0.3 yuan per box promotional cost from the company, you contribute 0.5 yuan, add 2 vehicles and 2 sales reps, and we'll make a promotional plan. What do you think? (Confirm and affirm)
Qiao Boss: Promoting new products with 0.3 yuan per box, well, that's about right. Let's do it. In times of crisis, we must act when necessary, haha... (Agreement reached)
In the case, Xiao Li was always at ease and unhurried. Through the opening market analysis, he made the distributor voluntarily propose promotions and provide methods and intensity, finally revealing his 'trump card' and winning the promotional tug-of-war.
From the case, we can understand: 1. When negotiating promotional resource allocation with distributors, regional managers should not be overly 'eager' or impatient, but must be strategic, especially for mature markets. 2. The market is a mutual market, but it's more the distributor's market. Many distributors rely on the profitability of a product for survival and development. Therefore, when applying for promotions in these markets, it's necessary to maintain a proper 'pretend posture'. The more reserved you are, the less promotional costs you might pay. 3. Maintain a 'playful' and 'teasing' atmosphere during negotiations to avoid deadlock and create a relaxed environment for reaching consensus.
The Threat and Intimidation Method
For strong brands or strong markets of small and medium brands, sometimes using the 'threat and intimidation method' can also achieve the effect of 'borrowing a boat to cross the sea' by cleverly obtaining distributor promotional resources. Let's look at the following case:
Background: Zhao, the general agent for Z liquor in Zhengzhou, Henan, was a cunning businessman. After Z liquor manufacturer invested heavily in KA store entry fees, barcode fees, display fees, etc., Zhao still acted like a 'tightwad' and wouldn't spend a cent. Previous sales reps, due to fear, persuasion, or lack of negotiation skills, failed to activate the market terminals. As the Mid-Autumn Festival approached, KA stores and catering terminals urgently needed promotional staff for terminal pull, but Zhao remained 'lukewarm'. What to do? Z liquor manufacturer decided to send the newly appointed, assertive Manager Wang to negotiate directly. Here's a snippet:
Wang: Hello, Boss Zhao, I'm Wang XX, newly transferred to take charge of this area. Nice to meet you! (Small talk)
Zhao: Oh, really? Why does your manufacturer keep changing people? Since I started selling this product, several have come and gone. It seems the market is tough, and the job is tough too? (Dissatisfaction with a hint of sarcasm)
Wang: You're right. The market is tough, and the job is tough. If the market doesn't do well, you at most don't make money, but if the job doesn't do well, the company will fire us. Your place is almost like the 'front line' where business martyrs 'sacrifice', haha. How's business now? I came to talk to you about something... (Double entendre, laying groundwork)
Zhao: Business is not good. The market is lifeless. Business is hard these days. Your manufacturer's support is not strong. The hotel and store sales haven't picked up. I'm worried to death. (Starts complaining)
Wang: Oh, that's exactly why I'm here. Mid-Autumn Festival is coming, and the company values promotions at hotel terminals and stores. What do you plan to do? (Follow up and ask proactively)
Zhao: What can I do? I'm waiting for your manufacturer to decide. If you provide support for 50 promotional staff, I can recruit people here. It's only a few thousand yuan a month, which is a drop in the bucket for your company, right? (Based on market status, making demands)
Wang: You have a point. The company is considering that. But you also know that the company has invested over 100,000 yuan in terminal entry fees in Zhengzhou, but these channels haven't improved because of lack of terminal merchandising and promotion. The company plans to invest in a promotional team of no less than 50 people in Zhengzhou, with unified recruitment and training... (Reveal plan, lure the enemy in)
Zhao: Oh, really? That's great! The company leaders are wise! (Whet the distributor's appetite)
Wang: Yes, you're right. However, the company can't afford these promotional staff costs again; the product profit margin doesn't allow it. And you're unwilling to take out some price difference for promotions. Coincidentally, a distributor of C-brand liquor in Zhengzhou Huazhong Food City approached the company. This distributor is strong, has a good network, and promised that if the company gives him even the liquor distribution channels, like stores and catering terminals, he would invest at least 50 promotional staff costs to jointly make the market bigger during Mid-Autumn Festival... My main purpose this time is to inform you of this. But given your long relationship with the company, you can still operate the circulation channels... (After saying this, Wang deliberately showed Zhao the business card of the Huazhong Food City distributor) (Start threatening)
Zhao: Oh, really? ... (Silent for a while), the company shouldn't do this. I've been distributing this brand for over 3 years, and sales are good. It's just that catering terminals and KA stores lack promotional staff and terminal pull. We can discuss this further... (Falling for it, reflecting)
Wang: Yes, Boss Zhao, you're right. You've been distributing Z liquor for over 3 years, cooperating well with the manufacturer, and with deep feelings. But the company had no choice; I'm helpless too... (Pretend to be helpless)
Zhao: How about this: we jointly fund the recruitment of promotional staff, with a 6:4 split. I pay the larger share, and the company pays the smaller. But your manufacturer should be responsible for training and daily management, which is your strength... (Start to compromise)
Wang: That won't work. The company can contribute at most 3, and you contribute 7. Even then, the company might not agree. But I can try. Think about it... (Take a step back for a broader view)
Zhao: Oh, 7:3... Well, let's do it as you say. Let's discuss the details... (Finally gives in, strategy succeeds)
The above case is a typical 'threat and intimidation' case. Manager Wang succeeded because he clearly knew Zhao's 'weak spot': Zhao had been distributing Z products for over 3 years with substantial profits and wouldn't give up the brand. So, by slightly 'touching his cheese', he triggered reflection and remorse, undermining his confidence and forcing him to comply and contribute his share of promotional costs.
When using the 'threat and intimidation method' to obtain distributor promotional resources, note the following: 1. Must grasp the opponent's 'weak spot' and 'vital point', then attack indirectly to wake them up. Waking them up is the premise and key. 2. The 'carrier' used must be the distributor's competitor, to expose their 'scars' and 'pain points', making them cherish what they have and 'treat the manufacturer better', providing better cooperation. 3. When using this method, pay attention to the degree and scale, be good at 'turning the tables' and 'reading the situation', and 'quit while ahead' to avoid escalating conflicts and 'losing the bait' leading to irreparable deadlock.
The Bait and Switch Method
The 'bait and switch' method can also be called the 'comparison method'. That is, regional managers can influence distributors by showcasing successful promotional cases from neighboring areas, guiding them to develop in the direction and method set by the regional manager. That is, the manufacturer uses smaller promotional resources to 'pull' more distributor promotional resources, quickly 'leveraging' the market.
Background: Distributor Kong in a county in southern Henan for M seasoning manufacturer, after receiving the first shipment, began negotiating promotions with Manager Zhang. Here's their negotiation transcript:
Kong: Manager Zhang, the products are here. Let's talk about promotions. I think to better activate the new market, your company should increase promotional intensity, right? (Starting with promotion requests is a common distributor tactic)
Zhang: You're absolutely right. The company has already considered this. We've placed promotional items inside the product boxes, like a pure cotton towel per box, to stimulate terminal consumption. Are you referring to channel promotions, i.e., promotions for second-tier distributors? (Don't refute the customer, but guide)
Kong: Yes, the company has in-box promotions, but no channel promotions. Can the company provide promotional items? (Making a request)
Zhang: Indeed, the company doesn't have trade promotions, but you know our operation model: one-step pricing, i.e., bottom price, lowest price, leaving more operating space for you to control, which is more flexible. Look at Boss Wu in the neighboring county. He's been distributing our products for over 5 years and made over a million yuan, all through this model. (First explain the company model, then highlight the case)
Kong: Oh, really? How does it work? Can you tell me? (Arouse interest)
Zhang: Of course. The key is 'high price, high promotion, product differentiation'. Where do channel profits and promotional costs come from? From the higher price difference. So, although Boss Wu invests nearly 200,000 yuan in promotions annually, 'the wool comes from the sheep's back'. In the end, it's not Boss Wu who pays, but the consumers. Boss Wu just advances the promotional costs. So, in our operation, promotional costs are neither paid by the manufacturer nor by you, but by the market. Of course, when choosing promotional items, insist on 'new, novel, different', stand out, and attract the attention of second-tier distributors... (Explain the tricks)
Kong: Oh, you make sense. Let's do it like Boss Wu in the neighboring county. I'll buy the promotional items, and you provide planning and guidance... (Model accepted)
Zhang: Great, I'll fully support you... (Mission accomplished)
In the case, Manager Zhang remained calm, didn't argue with the distributor, but simply used the 'bait and switch' method by presenting the successful case of the neighboring county's distributor, easily 'settling' the distributor. This achieved the good effect of using distributor resources to 'drive' the market without any additional promotional costs from the manufacturer.
When using the 'bait and switch' method, regional managers should clarify the following: 1. The sample market or successful case must be objective and real, though it can be slightly embellished, but must be true, otherwise it will backfire. 2. Focus on instilling the 'high price, high promotion' operation concept, and make sure they understand that promotional costs are not from the distributor's pocket but from the product price difference. 3. Use this 'two highs and one difference' model to paint a bright future and 'money' prospects for the distributor, making them 'moved' and more compliant with the manufacturer's operation ideas.
The Goal Setting Method
The goal setting method involves regional managers and distributors negotiating friendly and equally to set reasonable sales targets within a certain period (usually a natural month). If the target is achieved, the manufacturer pays the promotional costs; if not, the distributor bears them. This method is also an effective way for manufacturers to indirectly extract distributor resources such as manpower, distribution, and capital.
Background: When Henan F vinegar beverage company expanded into Shijiazhuang market, its manager Sun signed an agreement with the general agent Ding of W Trading Company regarding developing high-end hotel terminals and stores:
Within one month, if W Company develops 20 A-class hotels, 50 B-class hotels, and 100 C-class hotels, and they pass the manufacturer's inspection, F Company will provide a total of 12,000 yuan in promotional gift costs.
If the total development quantity is completed but individual items are not, only 70% of the promotional gift costs will be paid. If the development ratio is below 60%, the promotional gift costs will be borne by W Company. The last clause also stipulated that any breach would be penalized according to the agreement.
A month later, the head of F vinegar beverage company went to Shijiazhuang for inspection and found that various terminal hotels and stores in the city had displayed F brand apple cider vinegar, with sales reaching nearly 400,000 yuan. After fulfilling the promotional gift payment, F Company gained a lot: 1. Although it paid 12,000 yuan in promotional gift costs, it obtained display and exhibition in nearly 500 terminals, enhancing its image, which is an intangible 'resource' for F Company. 2. Although F Company paid some promotional costs, W Trading Company paid more 'promotional' resources: negotiations for catering terminals and stores, terminal personnel promotion, distribution, public relations 'promotion' costs, etc.
By setting reasonable sales targets (indicators), F Company reduced the overall promotional cost investment ratio, aligning with the principle of scale cost sharing. To achieve the sales target, W Trading Company invested personnel, capital, warehousing, logistics, and other 'promotional' resources, allowing the manufacturer to fully benefit from 'leveraging force without effort', increasing sales and coverage while reducing and expanding product promotional investment.
Notes for the 'goal setting method': 1. Sales targets or indicators must be scientific and reasonable, i.e., not too easy to achieve, nor 'out of reach even with a jump'. 2. Purposefully guide distributors to fully utilize their existing resources, including human, financial, and material, to promote product and market sales, i.e., cleverly use and activate distributor promotional resources. 3. Manufacturers should adopt a consultative sales approach, guiding distributor operations to attract larger resource investment, providing more intellectual support and less promotional cost support. Provide extended products and maximized added value for market operations. 4. Can also use the 'provocation method' to stimulate distributors' sensitive nerves, prompting promotional investment decisions favorable to the manufacturer and market operations.
'To take, one must first give.' Regional managers must adhere to this principle, adopt corresponding 'psychological' strategies based on distributor characteristics, and in 'engagements' with distributors, they can strategize and win decisively, spending the least money to achieve the most, reducing promotional costs, and leveraging market and distributor resources to jointly grow the market, ultimately achieving a win-win outcome.
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