---
title: "How to Manage Secondary Distributors"
description: "Secondary distributors in mature markets are both loved and hated: loved for their cash and distribution power, hated for their potential to disrupt price systems and markets. This article offers five strategies to manage them effectively, including stabilizing prices, forming core clubs, launching new products regularly, controlling promotions, and continuous brand building."
author: "New Distribution"
publisher: "New Distribution"
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published: "2014-06-15"
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# How to Manage Secondary Distributors

> Secondary distributors in mature markets are both loved and hated: loved for their cash and distribution power, hated for their potential to disrupt price systems and markets. This article offers five strategies to manage them effectively, including stabilizing prices, forming core clubs, launching new products regularly, controlling promotions, and continuous brand building.

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Secondary distributors in mature markets are a double-edged sword: on one hand, their cash and strong distribution capabilities are invaluable—any promotional activity, if actively supported by secondary distributors, is sure to meet targets, and you need not worry about product placement in every corner; on the other hand, if they turn against you, not only does your price system collapse, but either external goods flood in or local goods quietly end up in other markets, causing your hard-built market to plummet back into chaos. There are many ways to manage secondary distributors in mature markets, and different enterprises must adopt methods based on their actual situation and market influence, rather than blindly copying others.

**(1) Stabilize the Product Price System**
Secondary distributors are even more profit-driven than primary distributors; they push whichever product sells well and makes money. In their minds, there is no concept of brand loyalty. Given this, the key to satisfying them is to continuously provide brands (products) that move quickly and generate profit. In mature markets, quick turnover is already visible, but sustained profit requires a firm price system for your brand. Therefore, stabilizing the price system in mature markets is crucial to managing secondary distributor loyalty.

In 2001, the four-star products of Liuyanghe and Kaikouxiao were both priced around 100 yuan per bottle in S City. Four years later, by 2005, Liuyanghe had dropped to about 25 yuan per bottle, while Kaikouxiao remained around 100 yuan. Of the two mature four-star products, Liuyanghe had exited S City, while Kaikouxiao remains one of the fastest-moving baijiu products among secondary distributors. A stable price system not only provides secondary distributors with a continuous profit-making product but also instills confidence. They don't worry about being trapped by the manufacturer, and continuous distribution ensures their inventory doesn't depreciate. Under such conditions, secondary distributors will remain loyal to you.

**(2) Establish a Core Club**
Every market has large secondary distributors whose actions significantly influence smaller clients. The more mature the market, the greater their influence, much like hypermarkets affect smaller supermarkets. However, managing core secondary distributors is often the most challenging because they have large sales volumes and broad information, giving them the power to challenge primary distributors and manufacturers. How to win them over?

Our approach is to establish a core secondary distributor club, acknowledging their difference from mid- and small-sized distributors and providing greater support. But this support is not through increased rebates that encourage price-cutting; rather, it's through non-monetary benefits. For example, offering free travel opportunities; providing entry fees or buyout support for direct-supply hotels or hypermarkets; supplying additional promotional items; assigning dedicated sales representatives to help with product distribution; providing delivery vehicles after reaching certain sales volumes; offering year-end fuzzy rewards; and organizing regular gatherings and dinners. Of course, joining the club requires not only substantial sales volume but also a certain deposit.

Some may find it unbelievable—who would listen to such schemes these days? You're wrong! In a mature market, your product (brand) should be highly influential locally, whether it's the first, second, or third brand. If you don't have that appeal, who does? All you need to do is clearly explain the benefits of membership to those core secondary distributors.

**(3) Regularly Launch New Products**
The more mature the market and product, the higher the price transparency and the lower the profit margin for secondary distributors, especially in FMCG. Therefore, regularly launching new products, leveraging the strong push of secondary distributors to create successful new products (brands), can provide secondary distributors with new profit growth points and also rejuvenate the mature market, preventing decline.

Ensure that each year, one or two new products become absolute bestsellers in the local market. In mature markets, there are many advantages for launching new products, and the success rate is higher. In such cases, pay attention to the speed and quantity of new product launches, and avoid the trap of purely using new products to make money.

Wuliangye, the leader in the baijiu industry, is both a lesson (the flood of buyout brands in previous years) and a role model (the recent "1+8+9" project summarizing its approach).

**(4) Strictly Control Promotional Intensity**
In mature markets, promotional intensity must be controlled; anything over 10% is considered aggressive. Secondary distributors in mature markets rely on rapid turnover to make money, which essentially means small profits and quick sales. Thinking that increasing promotional intensity will win their favor is a big mistake—it only makes them think the brand is declining or about to exit the market. Then, no matter how capable you are, you can't stop them from cutting prices.

Controlling secondary distributors through promotional intensity is a way to shift from "I want to sell" to "you want to buy." The best ways to motivate secondary distributors through controlled promotions are irregular price increases and controlled shipping strategies. Each year, in mature markets, select one or two products for price-increase promotions or intentionally control shipment volumes to create market tension, which best stimulates secondary distributor enthusiasm and loyalty. In such a tense market environment, if you think for them and secure a few extra cases of scarce goods, helping them earn more, they'll appreciate it.

**(5) Never Stop Brand Rebuilding**
Secondary distributors continue to support us because consumers consistently use and specify our brand. The sustained pull makes us flexible and allows us to lead secondary distributors forward. Therefore, focusing on consumer-oriented pull activities and public welfare events, continuously enriching the brand's connotation, is far more effective than purely profit-driven promotions aimed at secondary distributors.

Jinliufu, after eight years on the market, went from nationwide popularity to stagnation and even severe decline in some markets, and then to recent resurgence and rapid growth. This was achieved by firmly grasping brand rebuilding, finding the emotional resonance between the brand and consumers, and thus playing the pipa in reverse, once again uniting secondary distributors around it and continuing the Jinliufu myth in the baijiu industry.

Also, Zong Qinghou's Wahaha and international giants like Coca-Cola and Pepsi are masters of managing secondary distributors through continuous brand rebuilding.

Managing secondary distributors in mature markets requires not only grand strategic guidance but also meticulous attention to details. Caring about the interests and concerns of secondary distributors is the fundamental principle guiding our success.

Source: "Baijiu Distributor Academy"

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