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This morning I received a phone call from General Manager Zhang of a trading company in a county-level city. He said: "Last night we just held a mobilization meeting, loaded twelve vehicles overnight, and rushed to prepare materials. We planned to start a week-long market distribution push today, but this morning we got the news that due to the epidemic, we need to implement closed management. It's really frustrating. For beverages, time is money. With the new beverage brand we just took on, if we don't distribute now, we won't even get a sip by June or July. What should we do?"
My answer was: Considering the epidemic prevention and control situation in Zhengzhou during the May Day holiday, first of all, you should be prepared to be locked down at any time. In the post-epidemic era, treat "lockdown measures" as a normal state of mind. Of course, accept the current "emergency situation" but don't lie flat. You can sort out your current business situation, and after the lockdown ends, your business will be clearer.
This phone call lasted more than an hour. Now I'll share the content with everyone.
Data Review: Behind every number is a story Today we won't talk about digital transformation, just the story behind the numbers. After exporting the data, we found some issues.
1. From 2019 to 2021, General Manager Zhang's annual sales were growing, and the data shows the epidemic had little impact. As everyone knows, the COVID-19 outbreak in Wuhan during the Spring Festival of 2020 put the whole country into epidemic prevention mode. For FMCG distributors, the impact was self-evident, especially for products with gift attributes for visiting relatives and friends, such as milk, which suffered a huge blow.
General Manager Zhang's business was not affected. He should consider three reasons:
** First, he did not focus on gift products. For major consumption festivals like Mid-Autumn Festival and Spring Festival, should he adjust his product structure to get a share of the pie?**
Second, his channel control is strong. Before the lockdown, products were basically sold out, leaving few leftover issues?
Third, the brands he operates have a trade-off situation. Overall growth may actually hide a serious decline in a specific brand product?
So General Manager Zhang should think: Should I represent another holiday product? What are my advantages and disadvantages during the epidemic? Are any of the brands I represent "chicken ribs" products? Or are there problems with the operation of some brands?
2. The regional per capita annual consumption indicator is important, but it should be calculated by brand. No two leaves are the same, and no two markets are the same. Different population and per capita disposable income in each market mean that you cannot simply use total sales to measure performance. Distributors need to treat each brand separately and rationally view their market position.
For General Manager Zhang's Brand A, the regional per capita annual consumption has reached 21 yuan/person/year, which is three times the brand owner's national average. At this point, the strategy for this brand is a defensive war. The core operation is: maintain the status quo, move when the enemy moves, always pay attention to the market actions of the first and second competitors, and if you notice anything abnormal, focus your strength to eliminate it in the bud.
For example: If a certain milk brand's annual sales in the market are 50 million yuan, and the first competitor is 20 million, then the product should grow healthily and accumulate strength. When the first competitor launches heavy promotions or buys stores with fees, you should introduce matching countermeasures.
For General Manager Zhang's Brand B, the regional per capita annual consumption has reached 2 yuan/person/year. At this point, the strategy for this brand can only be guerrilla warfare. The core operation is: aim for profitability, select target areas, target channels, or target outlets, and build your own fortress area.
There are three requirements for selection:
1) The target should be small enough to control;
2) The target should be easy enough to take, avoiding prolonged battles;
3) The target should have sufficient sales volume and profit, being a "fat piece of meat."
Then quickly lay out points, quickly connect lines, and quickly connect areas to prepare for establishing a base. A simple reminder here: General Manager Zhang can leverage Brand A's channels for distribution, but real sell-through still requires guerrilla tactics. If you distribute now and it doesn't sell, that's the norm for weak brands.
The regional per capita annual consumption indicator determines the distributor's tactical decisions, and it should be taken seriously.
3. The sales composition ratio is very important; it is a mirror of the sales structure. Macroscopically, we can divide distributors into three categories: brand distributors, category distributors, and channel distributors.
Brand distributors should analyze the sales proportion of each SKU within each brand, which can be broken down to individual products. For example, if you handle Nongfu Spring, analyze the proportion of water sales and non-water sales (Oriental Leaf proportion, Tea π proportion, etc.).
Category distributors should analyze the sales proportion of each brand within each category, which can be broken down to categories. For example, if you mainly deal in snacks, analyze the proportion of each brand in puffed food, dried fruits, candies, etc.
Channel distributors should analyze the sales proportion of all brands within each channel, which can be broken down to channels. For example, if you mainly do special channels, analyze the sales proportion of each brand in leisure bathing, internet cafes, cinemas, bars, nightclubs, etc.
The sales composition ratio can tell you the actual situation of your business: which areas need investment? Which are inefficient? Which can be abandoned directly? Many times, distributors fall into "point thinking" mode, acting on experience, and only realize the truth when they see the results.
Outlet Review: Every outlet is a micro-market Using the industry's prediction method for the number of beverage outlets, there is one outlet per 400 people, meaning an outlet can serve or influence an average of 400 people. Isn't 400 people enough to form a micro-market? Many villages and towns don't even have 400 people.
Regarding outlets, four things need attention: theoretical outlets, differences in actual outlets, number of outlets, and outlet quality
Sowing and harvesting are not in the same season. Today's sales are the result of yesterday's market actions. The greatest contribution of grassroots operators to the enterprise is a series of sell-through actions around market outlets.
General Manager Zhang and I spent about half an hour communicating about eight basic tasks related to outlets. These tasks don't require going to the market, but they do require quiet study of data. This also involves issues such as how grassroots operators can achieve more pay for more work, and the focus of grassroots managers' work. I have mentioned many aspects of outlets in previous articles, so I won't elaborate too much here.
Team Review: Integrate resources to create maximum value When it came to team staffing, how to integrate the team has always been a confusing issue for General Manager Zhang. He is also a microcosm of Chinese FMCG distributors. Among the brands he represents, one brand has the brand owner's own team taking orders (full package: the brand owner bears all personnel costs), and he only acts as a distributor, rarely participating in other market work and team management;
Another brand has the brand owner paying the base salary (half package: the brand owner bears half of the personnel costs, including base salary and commission), and he pays the commission, with dual management of the team;
There is also the traditional distribution model (no package: he bears the personnel costs), where the brand owner gives up high gross margins, and there is a liaison manager for several regions, with all grassroots execution team costs and management borne by him.
FMCG manufacturers' business team staffing support is nothing more than three types: full package, half package, and no package. How to integrate?
You can classify and manage based on the characteristics of "one general, three divisions." "One general" means that both brand owners and distributor salespeople have an urgent desire to make money; this is the general principle.
The "three divisions" are:
"Full package" generally means that the brand owner's business team, which is intensively cultivated, has many reports and online meetings in addition to market operations, so they are stretched thin. Moreover, brand owners explicitly prohibit part-time work. Brand owners focus on process, so they don't require their salespeople to sell and maintain other brands. This is the first division principle.
"Half package" generally means that brand owners with strong brand penetration or those unable to bear full costs assess the salesperson's base salary based on task completion (e.g., monthly target of 200,000 yuan; if 80% is achieved, all base salary is supported; below 80%, deductions are made). Brand owners focus on results, so they can require salespeople to sell and maintain other brands. This is the second division principle.
"No package" generally means that brand owners of new brands or categories with limited market capacity or profit margins give up profit space and rely on the distributor's team to complete market operations. This is the third division principle.
My suggestion is to start human resource integration from these aspects: For "full package" salespeople, guide them to expand outlets. The biggest resource of intensively cultivated brand owners' salespeople is outlet relationships. Use incentives to guide them to bring other brands to their outlets.
For "half package" salespeople, guide them to work as part-time drivers. Delivery has many benefits: they can earn delivery commissions, enhance relationships to sell more of their own products, and also save some of the distributor's labor costs.
Finally, I suggest that General Manager Zhang always pay attention to the number of non-productive personnel, such as drivers, clerks, finance, and warehouse keepers. Observe whether they are fully occupied. Times have changed; FMCG can't afford to support a bloated team. It's best to have part-time roles: finance also works as a clerk, warehouse keeper also works as a backup driver. Pay 1.5 times the salary to support one person doing the work of two.
Hardware Review: Fixed investments are the habitual profit killers In this area, General Manager Zhang and I only discussed two points: First, products have peak and off seasons, but your warehouse doesn't. Learn to balance warehouse usage. You can build an aerial office inside the warehouse: the first floor can continue to store goods, and the second floor can be the office area. You can also adjust the product structure between peak and off seasons to make full use of the warehouse.
Second, regarding vehicles, check the annual cost of a vehicle (maintenance, fuel, etc.) and see if you can reduce costs through a contract system. These are habitual things, but unknowingly you lose tens of thousands of yuan in profit a year.
In Conclusion: 2022 is destined to be an unusual year. After the "little spring" of consumption in January and February, almost everyone thought COVID-19 had left China. But in mid-March, a new round of multi-point outbreaks began, breaking the marketing rhythm of most FMCG manufacturers and distributors.
The epidemic can restrict the movement of people, but it cannot restrict market thinking. This is precisely what distributors lack the most. During the lockdown, let yourself calm down and engage in "armchair strategy." Review your business situation over the past few years. You need to both pull the cart with your head down and look up at the road. Strive to have a clear plan for your business layout and be prepared for the impact after the lockdown ends.