Many companies, as sales volumes increase, find that in some long-established base markets, product prices become transparent, channel profits continue to decline, and once-popular main products are relegated to "under-the-counter" status, suffering severe declines. How can these markets be activated?
P City in H Province is a medium-sized city with great consumption potential. It is an old base market for S Liquor Company's mid-to-low-end products, which once sold over 50 million yuan annually, firmly holding the position of the second local brand (the first brand is a local liquor selling over 80 million yuan annually). In the past two years, product prices have been inverted, channel enthusiasm has declined, and sales in 2006 were less than 20 million yuan. Meanwhile, F Liquor from another province took advantage of the situation and entered the market, achieving sales of over 60 million yuan in 2006. The general manager and regional manager of S Company are well aware of the current situation: 1. Brand aging and lack of vitality; 2. Price inversion and declining channel enthusiasm; 3. Weak channel control.
The author has visited many liquor companies and regional markets and found that most old companies and old products face problems after their peak: price chaos, cross-regional selling, price inversion, profit erosion, declining channel enthusiasm, and even brand neglect. Introducing new products often proves difficult or leads to repeating the same mistakes within a period.
How to quickly activate the market by introducing new products to upgrade old ones is a challenge facing every company's general manager and regional manager!
In response to this issue, the author has compiled a set of strategies titled "How to Activate an Old Market? - The 'Three Talents Sword Technique'" for reference.
To use the "Three Talents Sword Technique," the primary task is to cultivate internal strength and basic skills.
Just like practicing martial arts, only with solid internal strength and basic skills can moves be integrated seamlessly, achieving unity of person and sword. Otherwise, even the best moves are just fancy footwork, pleasing to the eye but useless in practice.
Internal strength cultivation mainly involves building the marketing system, known as the "Nine Yin Manual" of internal management systems, which includes organizational management, brand communication, product development management, price management, promotion and marketing, distributor management, branch office management, performance appraisal, and budget management systems.
Basic skills cultivation is about persistent hard work, like training in the coldest and hottest days, and serves as the landing point for all systems, just like the wheels of an airplane. Business operations must also be like aircraft takeoff and landing, checking every time whether the wheels can open smoothly; otherwise, even the best aircraft will be destroyed due to wheel failure.
Basic skills cultivation mainly involves five standard operating procedures: route visit process, visual merchandising management process, promotion management process, information management process, and advertising usage management process.
Without further ado, let's return to the main topic.
Analysis of the Three Talents Sword Technique Moves:
- "Sticking" Technique of "Following Like a Shadow"
Upgraded products are, in a sense, new products and challenging products. At this stage, product visibility and distribution coverage are the first issues to solve. Therefore, the "Sticking" technique should be used: closely follow the current first brand in the regional market for distribution, placing products in the immediate right-hand position of all its display and sales points, with prices 10% higher than its selling price.
Notes:
The first brand usually has better distribution coverage and display positions due to brand influence and natural market performance, so following and sticking can increase efficiency and effectiveness.
During the new product introduction period, the price must be higher than the main competitor's, not lower or equal. When sales naturally increase, the market will adjust to the mainstream price.
"Thrusting" Technique of "Sword Moves Unconventionally"
After solving product visibility and distribution coverage, channel digestion becomes the second major issue. There are generally two ways to increase channel digestion: 1. Channel members actively promote; 2. Consumers actively purchase. Consumer active purchase is premature for challenging products and cannot form scale in the short term. So we must seek a breakthrough from the first point: "channel members actively promote."
Price transparency is definitely a headache for the first brand. Challenging products should slightly raise the selling price during introduction, then use the "Thrusting" technique to attack this weakness of the first brand and quickly increase channel enthusiasm. As channel members' enthusiasm increases, sales will correspondingly increase. Specifically:
Channel profit retention should be the same as the first brand, but add fuzzy rewards to make the channel's total profit 10% higher than the first brand.
Conduct 12 channel and end-consumer promotional activities throughout the year, using a combination of new and old products to avoid being calculated and targeted.
Each activity should be controlled within 15 days, with intervals of 15-20 days between activities, to avoid policy accumulation and price system exposure. Activity formats should combine on-site prizes and lottery prizes. The intensity of on-site prizes should refer to the first brand's intensity, generally around 80% of its usual intensity during normal periods, and 10-15% higher during important consumption periods or when it also conducts activities. The number of activities should be clearly communicated to channel members, but the intensity should be kept confidential.
Notes:
Generally, the weakness of the first brand is price transparency and small channel space. Without proactively starting a price war, increasing fuzzy profits can quickly seize excellent channel resources.
The first brand, due to its brand influence advantage and price transparency disadvantage, finds it difficult to conduct consumer promotions, which also becomes a weakness.
"Sealing" Technique of "Pointing at the Map"
After completing the first two steps, some channel members and terminal retailers with significant sales contributions will inevitably stand out. At this time, use the "Sealing" technique to package and manage the top 20% of channel members and terminal retailers, making them "our own people" to further strengthen their loyalty and enthusiasm. However, evaluations must be conducted every 3 months, with continuous reinforcement for steady growth and individual adjustments for those who are stagnant.
At the same time, disrupt the top 20% of channel members and terminal retailers contributing to the first brand, taking the opportunity to divide and win them over, causing chaos in the opponent's backyard and making it difficult for them to organize a large-scale counterattack.
Notes:
- According to the 20/80 rule, investing significant resources in channel members and terminal retailers with hematopoietic function, within controllable costs, can effectively set competitive barriers, extend product life cycle, and steadily increase market share.
- Membership management must be clear in organization, effective in content, timely, and beneficial.
Annual systematic promotional activities can make consumers feel the brand is full of vitality; fuzzy reward methods make policy intensity flexible, increasing or decreasing at our discretion, with prices fully controllable, ensuring channel profits and greatly increasing enthusiasm; membership management can effectively control channel members and terminal retailers.
The core idea of the "Three Talents Sword Technique" is the "asymmetric marketing strategy." That is, as a challenging product, in a symmetric competitive landscape, you do not have advantages over the opponent and are at a disadvantage (such as brand loyalty, channel control, etc.). This requires the challenging company to carefully analyze its effective resources and optimize their combination, combined with the inevitable weaknesses of the opponent as the first brand, to carry out asymmetric marketing layout and adopt asymmetric competitive strategies in every marketing link, thereby striking the opponent and achieving a breakthrough.
The ideas and moves of the "Three Talents Sword Technique" are easy to understand and learn, but the key to success lies in: A. Whether you can know yourself and your enemy, and whether each specific strategy is based on real data analysis; B. Whether the company's internal strength is cultivated in place, and whether each specific strategy can gain response and support from most channel members and terminal retailers; C. How the company's basic skills are, and whether each specific strategy can be effectively and unswervingly executed.
So this article is more about thinking than methods. Every company's general manager and regional manager should think: What is the real cause of this market problem? Can some activation methods work under the current mechanism and model of the company?
If these two questions are clarified, the old market can definitely be quickly activated, and the effectiveness of the "Three Talents Sword Technique" will multiply! Otherwise, those general managers and regional managers who dream of turning the tide with a few moves or gaining power through occasional encounters should quickly splash cold water on their faces to wake up.
Postscript: Currently, S Company's new product L has been using the "Three Talents Sword Technique" in P City for 4 months, achieving phased results in channel enthusiasm, terminal promotion performance, and old consumer awakening. Through the new product's drive, total sales of all items have reached over 10 million yuan, with an expected annual total of over 50 million yuan.
Further Postscript: S Company's new product L, positioned as an 18-yuan bare bottle liquor, has become the first brand in P City's mid-to-low-end liquor market, fully achieving and surpassing the goal of reactivating the old market.
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