Introduction Every distributor goes through a process of growth from small to large and from weak to strong. As brands increase, channels expand, and teams grow, the business organizational structure must be adjusted timely to reduce operating costs and maximize sales and profit contribution. Distributors generally establish their business organizational structure based on how they divide the market. There are four common market division methods: first, by market region; second, by product represented; third, by channel operated; fourth, by a combination of the three. In other words, a distributor's business organizational structure is determined by the regions, products, and channels they operate. Therefore, it must be adapted to local conditions. Keeping it unchanged is not acceptable, and blindly copying others is even worse. So, how should distributors design their business organizational structure according to different development stages and operating conditions? "Regional" Business Organizational Structure Model 1 Organizational Characteristics: The market is divided by region, and all products and channels are managed by the regional salesperson. However, due to limitations in energy and ability, salespeople often tend to "sell old products rather than new ones, and sell fast-moving products rather than slow-moving ones." Applicable Scope: Distributors with a single product, single channel, and small scale. For distributors, under what circumstances is business simplest and easiest? Of course, when the product line is most streamlined and the channel is most singular. Many distributors have this experience: at the start, due to limited scale, they can only represent one or two products and operate only one type of channel, such as circulation, supermarkets, or catering. Dividing the market by region, salespeople can basically manage. But if another channel or several products are added, salespeople find it difficult to handle. Why does this happen? Because different channels require different operational methods and different skills for salespeople. Similarly, each product has different promotion methods and market acceptance. With more products, salespeople inevitably neglect one thing while attending to another. Of course, distributors cannot expect their salespeople to be able to promote all products and handle all channels, because "all-round" salespeople are either hard to recruit or hard to retain. Therefore, in a regional organizational structure, salespeople tend to rely on past experience and habits, only selling old products and focusing on main channels. The mindset of "selling old not new, selling fast not slow" is deeply ingrained, making it difficult to effectively solve the problem of expanding new products and new channels. In summary, the regional organizational structure is only suitable for distributors with a single product, single channel, and small area. If they attempt to promote new products or expand new channels under this structure, it will be difficult to succeed. Therefore, as the scale of products and types of channels increase, distributors must adjust and expand their existing business organizational structure to meet further development needs. "Product-Based" Business Organizational Structure Model 2 Organizational Characteristics: The business team is divided by product, such as one team for Product A, one for Product B, and one for Product C. Several teams serve the same customer simultaneously, resulting in high sales volume per product but high operating costs. Applicable Scope: Distributors with a single channel, multiple products, and a certain scale. After entering the growth phase, distributors will inevitably add products or expand channels. If they aim to increase business scale through multi-brand operations based on existing channel customers, they can refer to the product-based business organizational structure. As mentioned earlier, a single salesperson does not have enough energy to successfully promote multiple products. Under the product-based organizational structure, each brand or product has a dedicated business team for maintenance, which can maximize the market sales potential and effectively solve the problem of poor promotion of new products. However, this also brings two drawbacks: first, several teams serve the same customer, making resource sharing impossible; second, the number of sales personnel increases sharply, leading to a significant rise in operating costs and expenses. Therefore, many distributors adopt this structure and see a significant increase in product sales, but overall profits decline. In fact, the product-based business organizational structure is based on large-scale operations. If product sales cannot support expenses, it can only be at the expense of profits. Therefore, before deciding to form a new product business team, distributors must fully assess potential cost risks and strive to balance profit while pursuing rapid volume growth. To this end, a phased operation approach can be adopted. During the expansion period of new products, special activities can be organized. One method is personnel adjustment, such as mobilizing salespeople from five regions to focus on one area within two days, and then repeating this pattern. Another method is shifting focus, such as requiring all salespeople to promote old products for two days and new products for three days. The significance of special activities is to maximize the concentration of existing personnel's energy, quickly increase the distribution rate of new products, and solve the problem of standardized display. When the sales scale of new products reaches a certain level, a dedicated business team can be formed, gradually transitioning from a regional to a product-based organizational structure. "Channel-Based" Business Organizational Structure Model 3 Organizational Characteristics: The business team is divided by channel type, such as one group for supermarkets, one for distribution, and one for group buying. All products and related affairs are handled by one salesperson, with strong channel control but high operating costs. Applicable Scope: Distributors with a single product, multiple channels, and a certain scale. The channel-based business organizational structure is similar to the product-based one, both aiming to solve the problem of distributor scale development. The difference is that the latter starts from products, while the former starts from channels, ultimately establishing the entire business team organizational structure. Distributors adopting the channel-based structure usually represent only one or two products but are involved in multiple channels, such as supermarkets, distribution, catering, and group buying. Since a single salesperson does not have enough ability to maintain multiple channels simultaneously, dedicated business teams are formed for each channel, effectively improving service and control over channel customers. The drawbacks of this model are: First, it still cannot effectively solve the problem of promoting new products; second, it bears the dual pressure of channel costs and personnel costs. The issue of new product promotion has been mentioned earlier. As for how to alleviate the cost pressure of full-channel operations, the key is still scale support. However, in the early stage of channel expansion, what if scale advantages have not yet formed? Slow down; it is not necessary to achieve all channels at once. Instead, based on the existing team's operational characteristics, gradually penetrate other channels. For example, if the current focus is on distribution, then first open catering outlets, then enter hypermarkets, and finally do group buying, step by step. Additionally, for distributors with a single product and multiple channels, the brands they hold must be strong enough and have products suitable for various channels such as distribution, supermarkets, and catering. If the products represented by the distributor are only suitable for distribution, then do not enter supermarkets; otherwise, the mismatch between product and channel will make it difficult to sell, let alone form a certain scale. In short, establishing a channel-based business organizational structure also has prerequisites. Distributors must find corresponding target customers based on their products and choose suitable channel types. "Combination" Business Organizational Structure Model 4 Organizational Characteristics: The business team is divided by brand. Brand managers are responsible for the overall operation of the brand, then channel supervisors for supermarkets and distribution are responsible for channel sales and promotion, and finally, salespeople in various regions and systems execute the implementation. This organizational structure is very large, solving the problem of scale and large-scale operations for trading companies, but the corresponding management difficulty and costs are also considerable. Applicable Scope: Distributors with multiple products, multiple channels, and a certain scale. When a distributor's scale develops to a certain level, it becomes difficult to achieve higher business goals by organizing the business structure solely by region, product, or channel. For example, some distributors have made a single product very mature with good sales in every channel, so they will inevitably introduce other products to enrich their product mix. Others are very strong in the distribution channel and have successfully operated multiple brands, so they naturally do not want manufacturers to give other channels to others. At this point, it is necessary for distributors to adopt a "product + channel + region" combination organizational structure to establish a multi-product, multi-channel operation model. In reality, distributors with business scales of tens of millions or even hundreds of millions of yuan more often adopt this organizational structure. They are generally located in provincial capitals or prefecture-level cities, holding several strong brands that are top in their categories, such as Shuanghui, Haitian, and Master Kong. Each brand has considerable sales volume. Specifically, in various regions, each county's monthly sales can exceed one million yuan, and urban sales may approach ten million yuan, enough to support an independent business team for multi-channel development and management. Another situation is when distributors have enough products but no particularly prominent brand. In that case, they should not divide departments by brand but rather by product series combinations, establishing departments such as Snack Food Division, Beverage Division, and Dairy Division, which can also maximize the market potential of products and increase sales scale. The "product + channel + region" business organizational structure model effectively solves the problem of scale and large-scale operations for trading companies. However, it must be noted that due to the overly large organizational structure, management difficulty will inevitably increase. Whether the business team can form strong execution often depends on the abilities of professional managers and middle-level supervisors, and the role of the boss in the management system must also be adjusted accordingly. Additionally, operating costs and expenses become quite tricky. Imagine if a distributor has 5 brand divisions and 5 independent business and distribution teams, serving the same channels and customers, it will inevitably cause huge resource waste. Therefore, it is recommended that distributors, based on the "product + channel + region" business organizational structure, introduce a marketing department for brand planning and market promotion, while integrating terminal management and logistics distribution teams to effectively reduce personnel costs and channel expenses, and improve overall operational efficiency. Wang Huanzhi, a renowned FMCG marketing expert, currently COO of Henan Piduoduo E-commerce Co., Ltd., and CEO of Henan Huatang Electronic Technology Co., Ltd. -END- The best domestic FMCG distributor learning platform Focusing on providing professional, practical, and actionable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent Article Selection | 002 Distributor Market Operations | 003 Terminal Visit Management | 004 Sales Supervisor Skills | 005 Sales Improvement Techniques | 006 Channel Expansion | 007 Managing Distributors | 008 Distributor Development | 009 Distributor Internal Operations Management | 010 Team Management | 011 Efficient Distribution Techniques | 012 Sales Manager's Eighteen Skills | 013 KA Operation Methods and Strategies | 014 First Lesson for New Salespeople | 015 Internet, Brands | [Long press QR code to follow] To join QQ/WeChat groups, please click: Read the original text