---
title: "How Should Distributors Manage Their Products?"
description: "Products are the lifeline of distributors, and strategic, skillful product management is essential for sustained profitability. However, many distributors lack effective product management, leading to high sales but low profits. This article outlines six key aspects of product management for distributors to escape the dilemma of scale without profitability."
author: "崔自三"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2014-11-07"
language: "en"
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# How Should Distributors Manage Their Products?

> Products are the lifeline of distributors, and strategic, skillful product management is essential for sustained profitability. However, many distributors lack effective product management, leading to high sales but low profits. This article outlines six key aspects of product management for distributors to escape the dilemma of scale without profitability.

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Products are the lifeline of distributors. Strategic and skillful product management is a sufficient guarantee for distributors to continuously generate profits. However, in reality, some distributors, due to a lack of understanding or proficiency in product management, end up selling a lot but with very low actual profits. In the new situation of increasingly fierce market competition and rampant homogenized marketing, how should distributors manage their products to escape the predicament of scale without profitability?

**Strictly speaking, distributor product management begins with product introduction.**

In my article "Six Key Points for Distributors Selecting New Products," I elaborated that the choice of which products to distribute should be based on one's own actual situation. The products you represent must be of high quality, meet your own needs, align with market demand, and complement your current product portfolio. This can be considered the first step in product management. The practice of blindly introducing products without being practical or merely for face-saving reasons will inevitably lead to distributors being "burdened with excess," increasing unnecessary losses, wasting human, financial, and material resources, and causing explicit or implicit losses. For example, a food distributor had a good relationship with a salesperson from a convenience food company. Later, this salesperson left to take charge of sales at a beverage company and approached this boss, promising some special policies. Out of a sense of obligation, the boss bought a large truckload of products. However, unexpectedly, these products did not sell well locally and also had quality issues such as leakage. After finally dealing with the products and calculating the accounts, not only did he not make money, but he also lost a lot. The boss was deeply regretful.

**Second, product management must clearly define the functional positioning of the product portfolio.**

This positioning, in my view, should be divided into two types: First, externally, that is, the role played in the market. For example, as we often say: low-end products grab market share, mid-range products seek sales volume, and high-end products build brand image. In fact, whether it's brands from different manufacturers or different product lines from the same manufacturer, whether they play the role of "market disruptor," "cannon fodder," or long-term products to cultivate the market and build the brand for long-term interests, there must be a clear product role positioning, and confusion should be avoided as much as possible. Second, internally, that is, which brands or products are for diluting costs, and which are for seeking profits. High-end products may not necessarily yield huge profits, and low-end products do not mean they have no potential. All decisions should be made after comparison. For example, a distributor categorized his products into four types: high volume but low profit, high volume and high profit, low volume but high profit, and low volume and low profit. He eliminated the low-volume, low-profit products and bundled the fast-moving, high-volume but low-profit products with the latter two categories, thereby improving the product structure and driving the sales of the entire product portfolio, building a sound profit platform.

**The third aspect of product management is product promotion implementation or sales.**

This is the focus of product management, but it must be managed throughout the process. Managing the process includes the following aspects: First, whether it is accepted by downstream channels, such as distributors and retailers. If not, what are the reasons? Is it a brand or product quality defect, or is the price too high with insufficient cost-performance, or are promotions inadequate or lacking innovation? If accepted, what are the reasons? Can the factors that make these products popular be replicated and promoted? Second, what is consumer acceptance? Consumers are the touchstone of whether a brand or product can stand firm in the market. The taste or effect of the product, its packaging, its price, customer return rate, and whether customers pay attention to brand, product, origin, purchase channel, price, or promotion when buying, and in what order—these all need careful observation by distributors and their staff to communicate with manufacturers in a timely manner for improvement or adjustment of operational plans. Third, compared with competitors, conduct SWOT analysis: What are the product's strengths or weaknesses? What about threats and opportunities? How is the actual market performance, and what needs adjustment or improvement? Fourth, product sell-through work, such as product display and visual merchandising, promotion design and execution effectiveness, and terminal customer relationship building. How effective are these efforts? Have they been done well or ahead of competitors? These all require distributors to inspect and summarize.

**Fourth is product flow management, including inventory and inventory turnover.**

For product inventory, we can adopt the 1.5 times safety stock rule commonly used in the FMCG field to maintain a reasonable inventory level, avoiding losses due to stockouts or shortages, while also avoiding unnecessary risks caused by excessive inventory or overstocking, which can tie up capital or stall capital turnover. Here, I need to remind distributor friends: do not covet attractive manufacturer policies that far exceed your actual digestion capacity, ultimately leading to products reaching their shelf-life deadline, approaching expiration, or even expiring. Whether you pay for disposal yourself or make the manufacturer "bleed," it is a tricky situation that results in double losses, and if not handled well, could lead to a falling out or even a split. As for inventory turnover, it means that when terminal patrol personnel are organizing goods, they should promptly apply the first-in, first-out principle to move products from the downstream channel warehouse to the shelves for customer selection. This is a key work requirement that distributors should clearly specify in their terminal patrol standards.

**Fifth is product assessment and elimination.**

Distributors should regularly, for example, quarterly, semi-annually, or annually, review the products they represent and set certain sales or profit standards for assessment. Those that meet the standards are retained, while those that do not meet the standards—the "chicken ribs" products—should be eliminated in a timely manner, with an elimination plan. For retained products, according to the 80/20 rule, determine which products are key sales or investment priorities, and which need cultivation or promotion and require manufacturer support. The purpose of product assessment and elimination is to allow distributors to optimize resource allocation, ensuring that "good steel is used on the blade," rather than spreading efforts evenly with investment but no return.

**Sixth, product lifecycle management.**

This includes: During the introduction stage of new products, distributors should offer downstream distributors higher profit levels than competitors, conduct product research and forecasting, and maintain timely and good communication with manufacturers. During the growth stage, distributors should vigorously expand sales channels, increase sales outlets, improve coverage density, and provide good sales service. During the maturity stage, distributors should cooperate with manufacturers to adopt more forms of promotional activities to stimulate demand, achieve seamless sales network integration, suggest product improvements and upgrades, and pay attention to cultivating new products. During the saturation stage, distributors should continuously explore new channels, such as group purchase channels and internet channels, and also focus on promoting improved and replacement products to compensate for the sales decline caused by product aging. During the decline or death stage, distributors can adopt a natural sales approach to reduce operating costs, or they can make a decisive move to exit early and proactively promote new brands or products to maintain normal market operation and growth.

Products are the foundation of sales and the source of profit. Only by doing product management well and fully leveraging the different functions of each product group can distributors truly grasp the overall business situation, know what to do and what not to do, become more proactive, and put their sales on a virtuous cycle, continuously creating a larger development platform.

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