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II. Contract Signing and Negotiation

(1) Comparative Analysis of Major Domestic KA Stores: covering procurement models, key cooperation terms, promotion models, logistics models, financial status, etc.

No. Customer Name Procurement Model Key Cooperation Terms Promotion Model Logistics Financial Status
1 Walmart Nationwide unified procurement, unified ordering, unified display, basically decided by headquarters. Free distribution terms have been cancelled; mainly annual rebates and logistics costs. Price reduction compensation, elimination of underperformers, clearance goods Unified distribution with additional distribution costs. Good
2 Trust-Mart (acquired by Walmart) Has regional divisions, can also do nationwide unified procurement, need to follow up to each store. Entry fees exist, but now moving closer to Walmart's model. Negotiated by region, need to follow up to each store. Can use Walmart's logistics Reputation not very good. Generally settle based on actual sales.
3 China Resources Vanguard Regional and system-based procurement Training fees, system fees, barcode fees Price reductions, buy X get Y Unified distribution Average reputation. Generally settle based on actual sales.
4 Tesco Procurement by large region, need to follow up to each store's display New product fees Frequent promotions, discounts, price reductions. DC in East China, other regions use store delivery Settlement period starts when invoice is entered into system. Average reputation.
5 RT-Mart (formerly Da Fu Yuan in Northeast) Procurement by large region, need to follow up to each store's display New product fees Frequent promotions, discounts, price reductions. DC in Suzhou, responsible for East China. Other regions use store delivery Settlement period starts when invoice is entered into system. Good reputation.
6 Lotus (Easy Carrefour) Procurement by large region, unified ordering, unified display Entry fees Discounts, price reduction compensation. Unified logistics distribution Divided into goods arrival and invoice arrival. Average reputation.
7 Carrefour Procurement by large region, can also do nationwide unified procurement. Entry fees Frequent price reductions and discounts Store delivery Average reputation
8 Metro Can procure by country or by large region Entry fees Membership system Good
9 B&Q Nationwide unified procurement Entry fees exist Unified logistics distribution Good
10 Jusco Unified procurement in South China, need to follow up to each store's display Entry fees exist Has unified distribution center, two logistics centers Good
11 Auchan Unified or regional procurement Entry fees exist Frequent promotions, discounts, price reductions Has regional logistics distribution Good

Note 1:

  • Auchan stores can "decide ordering, sales price, promotional purchase price, display (including visual merchandising), and end caps;"
  • Carrefour stores can "decide ordering, sales price, promotional purchase price, display (including visual merchandising), and end caps;"
  • RT-Mart stores can "decide display and end caps."

These three stores have greater authority, and some even have procurement rights for certain products (RT-Mart stores do not have procurement rights). Other systems have greater authority at headquarters or regional level. Pay attention during contract negotiation and market operations. (Walmart and Lotus represent a decentralized system; Walmart stores have competitive or near-expiry price adjustment rights but must report weekly to headquarters, while other aspects like display and promotional purchase price follow unified policies from procurement.)

Appendix: Some operational characteristics of RT-Mart (excerpted from Baidu): In store management, RT-Mart is a paradox. On one hand, stores do not have the right to adjust prices for normal products, nor do they have procurement rights. However, for sensitive products, store managers enjoy the most autonomous power in the industry—adjusting categories and making competitive price adjustments for sensitive products, which they internally call "fortress products." "RT-Mart's market strategy is very aggressive and offensive, because foreign store managers have limited pricing power, so at this stage, the ultimate winner in price wars is only RT-Mart."

RT-Mart's fortress products include: daily necessities, products directly supplied by manufacturers, high-volume products (daily sales >300 units), lowest-priced products (that others cannot easily break), products with good display positions (promotional areas with daily cheap POP), and seasonal products. Huang Mingduan demands that fortress products be secured; each store has a market research team of 6-7 people that daily collects prices of thousands of frequently purchased items from competitors within a 5-kilometer radius. In terms of pricing, RT-Mart is quite aggressive, adjusting prices for sensitive products daily, even at a loss. When a product's price changes, the IT system automatically updates the gross margin. Gross margin is directly linked to procurement staff performance to incentivize low-cost purchasing.

Huang Mingduan gives stores ample freedom. For example, with meat products, there are significant differences between mainland China and Taiwan. In Taiwan, pork, beef, and other meat products in hypermarkets are mostly pre-cut and packaged by processing plants before being delivered to stores. But mainland China prefers in-store cutting. There are also differences among regions in mainland China. For instance, consumers in the Northeast prefer large chunks, while consumers in Guangdong prefer slices.

Note 2: RT-Mart initially learned from Makro's warehouse model, then from Carrefour, and finally partnered with Auchan to learn from Auchan, so it is similar to Carrefour and Auchan. During price research, if a store finds its prices higher than other stores, RT-Mart stores have the right to directly adjust prices, and the loss from the adjustment is deducted from the customer's payment.

Operational Precautions: In practice, pay attention to the operational methods of the two types of stores mentioned above. Common problems include: after negotiating new product entry or DM special prices with Carrefour or Auchan headquarters, stores refuse to execute, even if headquarters calls; or sales staff forget to follow up, resulting in new products not entering stores or DM specials not being implemented. But centralized systems like Walmart do not have such issues.

A method to determine if a KA is centralized: If a frequently out-of-stock position is left empty without restocking, and only shows "out of stock," it indicates centralization. For example, at Walmart, when out of stock, other manufacturers' products cannot be placed there (moving displays without permission results in penalties for suppliers), so it is left empty. But decentralized systems like Auchan, Carrefour, and RT-Mart are different; if another manufacturer is out of stock, the empty position is quickly filled with other products.

(2) 2013 Revenue Comparison of Well-Known Domestic Stores

2013 Rank 2012 Rank Company Name Sales Scale (10,000 yuan) Sales Growth % 2013 Store Count Store Growth %
1 1 China Resources Vanguard Co., Ltd. 10,040,000 6.7% 4,637 4.8%
2 2 Kangcheng Investment (China) Co., Ltd. (RT-Mart) 8,072,000 11.4% 264 20.5%
3 4 Walmart (China) Investment Co., Ltd. 7,221,464 24.5% 407 3.0%
4 3 Lianhua Supermarket Co., Ltd. 6,881,838 0.2% 4,600 -3.4%
5 5 Carrefour (China) Management Consulting Services Co., Ltd. 4,670,588 3.2% 236 8.3%
6 7 Yonghui Superstores Co., Ltd. 3,506,000 25.5% 292 17.3%
7 6 Nonggongshang Supermarket (Group) Co., Ltd. 3,000,119 -1.0% 2,644 -3.3%
8 - HNA Commercial Co., Ltd. 2,640,000 10% 482 3.0%
9 16 Beijing Wumart Commercial Group Co., Ltd. 2,171,488 7.3% 547 1.7%
10 30 Better Life Group 2,119,149 18.3% 445 54.0%
11 8 Tesco (China) Investment Co., Ltd. 2,050,000 2.5% 144 29.7%
12 9 Shandong Jiajiayue Investment Holding Co., Ltd. 1,900,650 4.5% 601 1.0%
13 10 Xinyijia Supermarket Co., Ltd. 1,800,000 0% 116 0.00%
14 11 Jinjiang Metro Cash & Carry Co., Ltd. 1,750,000 14.4% 75 19.0%
15 12 Lotte Mart 1,550,000 -5.0% 110 11.1%
16 13 Auchan (China) Investment Co., Ltd. 1,509,074 7.0% 59 9.3%
17 15 Beijing Hualian Comprehensive Supermarket Co., Ltd. 1,470,000 1.4% 140 7.7%
18 18 CP Lotus 1,374,982 0.5% 77 2.7%
19 19 Beijing Jingkelong Commercial Group Co., Ltd. 1,374,430 7.3% 234 -2.9%
20 17 New Hua Du Shopping Plaza Co., Ltd. 1,365,204 6.1% 118 -4.8%

(3) Operational Models

Model 1: Manufacturer signs a large contract directly with KA for direct operation (KA deals directly with manufacturer), with all costs borne by the manufacturer. Distribution: Manufacturer sets up a company for distribution, or entrusts distributors or third-party logistics. Advantages: Stronger terminal control; if professionally trained staff are used, execution is relatively strong. Disadvantages: Higher costs, especially personnel, public relations, and distribution costs. Due to lack of financial knowledge among sales staff and high operating costs, losses are likely. Also, credit risk is higher.

Model 2: Manufacturer signs a framework contract with the supermarket, with specific cooperation methods signed between the distributor and the store. The distributor bears its own profits and losses, while the manufacturer bears part of the costs. Public relations costs are hard to budget and control, which can breed corruption. Advantages: Manufacturer only needs to assign KA management or coordination staff, bearing part of the distributor's operating costs. Operating costs and credit risk are lower. For example, resources can be utilized comprehensively; in distribution, the distributor delivers many products to the supermarket, which is more economical than delivering only one manufacturer's products. Public relations and personnel costs are similar. Disadvantages: Some distributors are not general taxpayers, requiring invoicing through third parties, which carries risk; some regions have historical issues and cannot find suitable distributors; requires distributors with strong KA experience; execution is relatively weak.

Note: If a distributor operates KA, the sales support system must be in place. Specialized KA order handling and independent KA inventory management are essential.

(4) Cooperation Methods with Supermarkets

Generally, cooperation models with KA include: joint operation, consignment, and distribution. However, different KA stores use different terms.

Joint operation: The store provides space for selling products, but does not need to provide funds to purchase the products. For example, most fresh food, fruit, bulk goods, and cooked food sections in KA stores use this model.

Consignment: Taking goods without cash payment, no ownership of the products, only earning commission from sales (sometimes called agency distribution). Payment is usually made after the goods are sold.

Distribution: Also called "purchase and sale," KA places orders and pays after the settlement period. Generally, the KA system bears the loss (though some contracts require the supplier to bear it).

Precautions: Regardless of the model, it is necessary to forecast gross profit, costs, and expenses, and calculate the break-even point. Know how much to spend, how much to sell, and how much to earn. Otherwise, long-term cooperation is impossible.

(5) Contract Negotiation with Supermarkets

Note: Generally, when negotiating with KA buyers:

  1. Conduct cost-volume-profit analysis: predict how much investment is needed to enter the store, the length of the payment period (calculate how much capital will be tied up), expected sales revenue per store, gross profit, various costs, net profit, and ultimately the break-even point, which is our bottom line.
  2. Know your negotiation variables and conditions. Which conditions can be exchanged for buyer support?
  3. Maintain a good attitude, understand the buyer's psychology, and know yourself and the enemy.

Appendix: "Carrefour Buyer Training Content":

  1. Never try to like a salesperson, but say he is your partner. (Position, comrades!)
  2. Treat salespeople as our number one enemy. (Never make buyers friends!)
  3. Never accept the first offer; make the salesperson beg, which will provide us with a better opportunity. (We prepare multiple offers, with strategy, gradually reducing concessions...)
  4. Always use the slogan: You can do better! (Just listen!)
  5. Always keep records of lowest prices and demand more until the salesperson stops offering discounts. (Ignore!)
  6. Always consider yourself as someone's subordinate, and think the salesperson always has a superior who might offer extra discounts. (Don't easily let them see you asking superiors)
  7. When a salesperson easily accepts conditions or goes to the restroom to call for approval, consider that the concession was easily obtained and demand more. (Use the opposite strategy)
  8. Be smart, pretend to be wise but foolish. (I also play dumb!)
  9. Do not concede before the other party raises objections. (Always object! Even if there is no objection, say there is!)
  10. Remember: When a salesperson comes to ask for something, he will surely have prepared some conditions to give. (This...)
  11. Remember that salespeople always wait for buyers to make demands. (Actually, buyers are also waiting for us to make demands, hehe)
  12. Salespeople who ask for something in return are usually more organized and informed. Spend time with unconditional salespeople. (Scary, I'd better prepare more!)
  13. Don't feel sorry for playing bad-boy games with salespeople. (We can play too! But don't overdo it)
  14. Use conclusions without hesitation, even if they are false, e.g., competitors always give us the best quotes, best turnover, and payment terms. (Just don't believe!)
  15. Repeat objections constantly, even if they are absurd; the more you repeat, the more the salesperson will believe. (Don't believe anything they say!)
  16. Don't forget you will get 80% of the conditions in the final round of negotiation. (We also give conditions at the end!)
  17. Don't forget to learn as much as possible about the personality and needs of salespeople who visit us daily. (We can also learn about you!)
  18. Always ask salespeople to participate in promotions. Get as many discounts as possible, conduct quick promotions, and use volume sales to earn profits. (We have conditions)
  19. In negotiations, demand impossible things to annoy the salesperson; threaten him by delaying the agreement, make him wait; set a meeting time but don't show up; have another salesperson replace him; threaten to remove his product; reduce his display space; clear out promotional staff, etc. Don't give him time to decide. (This is just strategy)
  20. Note that the discounts we ask for can have other names: bonuses, gifts, souvenirs, sponsorships, tabloids, insert ads, compensation, promotions, launches, listing fees, festival fees, anniversary fees, international anniversary fees, etc. (Same medicine, different bottle!)
  21. Don't let negotiations reach a dead end; that's the worst. (This also applies to us!)
  22. If a salesperson says it will take a long time to give you an answer, it means he is about to close a deal with your competitor. (Usually false!)
  23. Don't allow salespeople to read data on the screen; the less they know, the more they trust us. (Don't easily trust any data shown by buyers; the latest trick: showing you agreements with competitors, don't believe them even if they are real—because most are not; there are many such buyers!)
  24. Don't be intimidated by the salesperson's new equipment; that doesn't mean they are ready to negotiate. (We have new equipment too, and we are not afraid of buyers' new weapons!)
  25. Don't worry about whether the sales representative is old or young; they are all easy to concede. The older ones think they know everything, and the younger ones lack experience. (The same applies to buyers. Also, don't be nervous whether the buyer is Chinese or foreign; Chinese think they know us well, and foreigners think we are easy to concede.)
  26. If the sales representative comes with his boss, demand more discounts and threaten to remove his product. The boss usually concedes to avoid losing a client in front of a subordinate. (Countermeasure: The negotiating sales representative should have sufficient authority to make it clear that the boss's participation is unnecessary. Even if the boss is present, make it clear it is only for courtesy and has no substantive effect.)
  27. Whenever a promotion is running at another supermarket, ask the sales representative: What did you do there? And demand the same conditions. (Countermeasure: If a supermarket requests an exclusive promotion, it is best to use models not available in other supermarkets of the same level; otherwise, consider running the promotion in all supermarkets together.)
  28. Always remember: You sell and I buy, but I don't always buy what I sell. (Always remember: The strongest brands always have buyers and sellers, even in the best hypermarkets.)
  29. Behind a great brand, you can find a sales representative with no experience who relies solely on the brand. (We should all remember this classic saying. Of course, behind a great supermarket, we often find a buyer with no experience who relies solely on the store's name.)
  30. Forgive minor mistakes of the sales representative, but make him feel uneasy and sorry, and try to make him always think he owes you. (This negotiation technique is added by me for hypermarkets. Countermeasure: Try not to make any mistakes, but don't worry about small ones.)

Now, let's enter the formal negotiation stage:

Currently, supermarket contracts are generally divided into nationwide unified procurement and regional local procurement. Depending on the system, negotiate with different buyers.

Pre-negotiation considerations: (1) Understand the number, distribution, and area of KA stores. (2) Understand contract items (payment period, fees, deductions, settlement, etc.). (3) Understand competitor prices, sales, and investment. This helps predict product sales and gross profit, and strengthens negotiation position. (4) Understand the store's organizational structure, buyer authority, and negotiation procedures. Why? (5) Understand the buyer's personal background, hobbies, performance metrics, and evaluations from superiors and colleagues. Why?

Personal background case: For example, a buyer is from out of town, a dual-income family, and has trouble picking up children from school. Boss Li arranged a dedicated car to pick up the buyer's children, saving an annual cost of 150,000 yuan.

Performance metrics cases:

  1. Use help to speak. A buyer had poor performance for half a year, mainly due to profit factors. After communication, we learned that the milk industry has low gross margins. So we ran promotions on high-margin products in advance, and the buyer provided us with free end caps for milk, achieving a win-win.
  2. Use performance to speak. (Case from Baidu) A friend of mine operates in multiple malls and rarely gives gifts when entering new malls. Once, a Japanese-funded mall opened, and my friend wanted to enter but was rejected for various reasons. Later, my friend sincerely asked the Chinese leader: "Give me three days, and I will prove my sales ability. I believe I can bring more 'turnover' to the mall." After the Chinese leader consulted the Japanese leader, they agreed. As a result, my friend generated turnover of 10,000, 12,000, and 18,000 yuan in three days, even in the worst position, a temporary counter without even a logo. The Chinese and Japanese leaders were impressed, thinking that if he could achieve such results under such conditions, he would do even better in a good location. As a result, my friend not only entered the mall but also got a good location, and now guarantees annual turnover of over 3 million yuan.

(6) Understand the store's requirements for suppliers (supplier nature, strength, professionalism, such as product knowledge, operational processes, market operations, etc.).

Main negotiation content: (1) Product line: variety, specifications, packaging, price, quality, etc. Not afraid of not making money, but afraid of incomplete assortment! (2) Rebates or deductions: fixed rebates, floating rebates, conditional rebates, unconditional rebates.

Note: All deductions in KA are calculated as reverse deductions: Purchase price = Retail price * (1 - x%). For example, a product with a retail price of 10 yuan, a 20% reverse deduction gives 8 yuan; a factory price of 8 yuan with a 20% forward addition gives 9.6 yuan (8*(1+20%)). In the example, the difference between "reverse deduction" and "forward addition" is 5 percentage points.

(3) Entry fees: Different KA stores have different names. For example, China Resources Vanguard has barcode fees, Walmart calls it free goods (no barcode fee, now abolished), and Carrefour can negotiate single-store entry fees.

(4) Payment terms: Generally four types: "days after goods arrival," "month-end settlement days," "cash on delivery," and "advance payment." Also consider invoicing time, system entry time, and other contract terms that may delay payment. (Since each KA contract differs, clarify the payment terms and their meanings with the buyer during negotiation. For example, Dennis has five types: "payment before delivery," "cash on delivery," "half-month settlement," "monthly settlement days," and "cost consignment." Some stores have weekly, half-monthly, monthly, or rolling settlements.)

Note: Monthly settlement: Unlike the literal meaning, the settlement period is from the 1st to the 30th or 31st of each month, and payment is due from the 1st of the next month, with the previous month's payment settled by the 30th. For example, "monthly settlement 15 days" usually means a payment period of "30+15=45 days"; "monthly settlement 30 days" usually means "30+30=60 days."

(5) Cooperation method: joint operation, consignment, or distribution. (Dennis calls them distribution, cost consignment, and other types.)

(6) After-sales service: exchange, return, repair, installation, etc.

(7) Delivery and returns: Delivery includes time, frequency, location, maximum and minimum delivery quantities. Most critically, penalties for late or missed deliveries and lock-code clauses. Returns include conditions (e.g., Walmart has different return methods for items under and over 500 yuan), time, location, method, quantity, and cost sharing.

(8) Minimum order quantity: total purchase volume and batch size (maximum and minimum per order).

Note: Minimum order quantity should not be too low, but higher is not always better. Why? If order quantity is too low, distribution costs are too high. Therefore, based on the industry's actual situation, first determine a minimum order quantity that fits reality; second, agree on an ordering time; some stores require a specific order day in the contract.

Order types: manual orders, promotional orders, DM orders, and temporary orders.

When operating with a KA, understand whether the system uses computer-generated orders or a combination of computer and manual orders, and the pros and cons of each.

Computer-generated orders: If order fulfillment rate is poor, store sales will decline, so promotions are needed to boost delivery volume. In practice, work around the KA system's store orders. For manual orders, you need to communicate with each store individually; if communication skills are weak, order volume cannot be increased.

Countermeasures:

  • For computer-generated orders, require distributors to track store orders promptly and manage store shelves and backroom inventory to improve sales forecasting.
  • For manual orders, city supervisors and promoters must ensure order fulfillment rates.

Walmart order precautions: ※ Orders have three dates: order date, start date, and cancellation date. Suppliers can deliver from the start date until the cancellation date; a single order can be delivered in multiple shipments. ※ Orders must be 100% fulfilled; otherwise, a fine of 100% of the undelivered amount is imposed, and if a product is not fully delivered three consecutive times, it will be locked. ※ Orders are exclusive of tax.

Precautions during contract negotiation and signing:

  1. Supermarkets initially set high conditions, and negotiations take time. We must understand their psychology, use collected information, and present solid facts to persuade them to get the most favorable terms.
  2. Read every clause carefully and negotiate to redefine disputed terms. For example, some KA systems require maintaining gross margin during promotions.
  3. In other contract terms, specify: If the supermarket fails to pay on time, we have the right to stop supply, and the supermarket bears all resulting responsibilities.
  4. Clearly define terms for returns, exchanges, or handling damaged goods. This is a common source of friction. Suppliers should set return conditions and deadlines in advance, requiring returns at least 2 months before expiry for processing; otherwise, no returns. Products damaged by rodents or breakage due to poor store management are not returnable. (Generally, "consignment" models do not have such items.)

Low-cost entry methods for small brands into KA stores (excerpted from Baidu):

How should small brands enter KA stores?

Single display pressure method: This method involves a company entering one large, most influential store in a city. The company focuses on product display and promotion, maintains the product image in that store, and then distributes through other channels to increase sales. When your product's visibility rises, negotiating with other stores becomes easier. For example, a medium-sized food company entering a provincial capital market only entered one influential KA store, where they did displays and promotions, while deliberately not entering other stores. Because entering multiple stores simultaneously requires significant funds and may not achieve expected results. This tactic is called "concentrate firepower on one point, take it and occupy it, and more importantly, hold it." It means effective long-term occupation and significant impact on competitors. Once, this company held an event at this store, creating a lively atmosphere and winning consumer favor. Among the consumers were executives from other stores who came to learn. Seeing this, they returned and asked their KA buyers why this product wasn't in their stores. When the buyer said there was no stock, the executives immediately ordered the product to be brought in, and the company smoothly entered other stores.

Curve approach method: This is a common method of getting close to KA buyers through relationships. However, due to the special and sensitive nature of KA buyers, it is hard for manufacturers to approach them. Eating, drinking, and giving red envelopes don't work. How to communicate emotionally? Consider this example: A small food company developed a new product but was troubled by high entry fees. Several attempts failed because the KA buyer was tough and refused: too many products, no shelf space. Money, meals, and gifts were all rejected. Finally, the boss had to go personally. After investigation, the boss found a breakthrough: the buyer had an excellent daughter in third grade who loved calligraphy and had won a provincial competition first prize. The company decided to hold a "XX Cup Primary School Calligraphy Competition" at the school. The champion was predictable, and the champion's father was invited to share how he cultivated a calligraphy champion. The father, surrounded by flowers and applause, was deeply moved. At that moment, he felt closer to the brand. Soon, the company's products quietly appeared on the store's shelves.

Top-down method: This method is harder to use. Through acquaintances in the KA's superior department, you can avoid many detours. But the product and company must have a competitive advantage in the market; otherwise, even if you enter the store, sales will be poor.

Small store encirclement method: When entering a regional market, a company with a clear strategy directly targets small terminal stores to control the frontline market. Their slogan is: "We refuse to enter KA due to huge terminal fees." In fact, they encircle KA stores with numerous small stores. When the product is available everywhere, KA will also lower its head. For example, a company in a prefecture-level city operated 3,000 small terminal stores and developed 40 second-tier distributors, competing with hypermarkets by not entering them. Although hypermarket sales are considerable, various fees are high. Small companies don't refuse to enter KA; they enter after increasing their bargaining power, which saves a lot of money compared to rushing in.

Borrowing arrows method: Companies want to directly control terminal channels, but Chinese distributors have advantages in regional economic environment, customs, and social background. Using distributors to enter KA is an effective way; they understand KA's financial credibility and are better at handling tricky sales problems. When companies encounter sales difficulties, local distributors often take the lead, as they have lived in the area for decades. As the saying goes: "Acquaintances make things easy."

(6) KA Cost Categories

  1. Contract costs: mainly include entry fees, rebates (unconditional and conditional, monthly and annual), new store opening sponsorship fees, festival sponsorship fees, new product listing fees, contract renewal fees, consulting management fees, advertising and promotion fees, display fees, product structure adjustment fees, single product deposits, and other fees in the contract.

  2. Other costs: costs incurred during operations and promotions, including DM poster fees, TG (end cap) fees, stack base fees, promoter management fees, tasting area fees, and centralized display fees.

  3. Which fees are mandatory? Which can be avoided? Entry fees and commissions are mandatory; new product fees, stack base fees, DM fees, and promotion fees are optional.

Although supermarket fees have certain standards, they are flexible. Each fee standard varies with market competition, brand influence, product sales, negotiation skills, product variety, quantity, position, relationships, and the supermarket's scale, operating conditions, and region.

Note: In practice, we can convert fees that do not generate sales into fees that do. For example, opening sponsorship fees, festival fees, and anniversary fees do not directly generate sales. During negotiation, we can exchange these for stack bases, end caps, DM, etc., which generate sales.

(7) Contract Negotiation Techniques

General principle: Know your bottom line and exchange at the right time. Regardless of the contract items and fees, clarify "what are costs, what are expenses (including VAT), expected sales and profits, and the break-even point." Hold your bottom line and skillfully exchange conditions to achieve ideal results.

  1. Liven the atmosphere: Maintain a positive mental state, show enthusiasm, understanding, and respect to create a good atmosphere.
  2. Tension and relaxation: Use conditional phrases like "if," "suppose," "however" to increase negotiation space, and keep a relaxed expression.
  3. Test the waters: Before entering the main topic, use body language to test if the other party has dropped their guard, e.g., changing sitting posture, angle, or position.
  4. Be patient: Show patience, don't appear eager to close, and dare to make demands.
  5. Apply pressure: Use your advantages and company policies to increase bargaining power and protect your interests.
  6. Know your authority: Don't make promises beyond your authority to avoid deadlock.
  7. Advance at the right time: Add topics and expand agreement items (e.g., shelf space, payment dates) to gain the best interests.
  8. Retreat to advance: Use concession techniques skillfully; make few concessions, slowly, and don't reveal your bottom line at once. Also, reasonably propose your demands. (Concession method from large to small, case:)
  9. Be flexible: If you cannot accept the other party's demands, say "no" at the right time, but leave room for future talks.
  10. Be resourceful: Use various negotiation techniques comprehensively.

※ What to do when the buyer makes unreasonable demands? Know your bottom line, know their negotiation strategies, and be mentally strong. Know that we can also make demands; after each question, the buyer is waiting for us to make demands and counteroffers.

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