Choosing a distributor is a required course for every market manager, and finding a suitable, ideal one is a dream goal for every manager.
The selection options for distributors are often proportional to brand strength. Companies with strong brand power set high standards for distributor selection, just as the standard for a tall, rich, and handsome man is often a fair, rich, and beautiful woman. Weak brands often have very low thresholds, or even no choice at all. How to choose an ideal distributor and which type of distributor is most suitable is one of the basic skills that tests a manager's market operations.
For the classification of distributors, there are different ways to divide them from different perspectives. For example, traditionally, we can divide distributors into first-tier distributors, second-tier distributors, regional agents, brand-specific agents, exclusive distributors, large distributors, small distributors, and so on.
Category 1
1. Professional Type
Distributors in the same industry as the company are professional distributors. The advantage of professional distributors is that they have stable networks and customer relationships, and they can be used immediately with ease; the disadvantage is that they are mostly distributors of competing products.
When a weak brand enters a blank market, it lacks market-level support. Therefore, when developing distributors, if there is no strong professional distributor support, it will be difficult to conduct business. If you can borrow the way and use the competitor's channels to distribute goods, it is a shortcut and yields twice the result with half the effort!
How to use professional distributors to borrow the way, and how to use competitor networks to achieve product distribution?
Seven Tactics for Channel Defection and Distribution
1: Find. Look for target distributors, establish detailed information on target distributors in the area, and provide a map index for channel defection.
2: Analyze. Analyze the operational capabilities and characteristics of these target distributors, including capital, warehousing, transportation, personnel, social relations, specialty channels, and price levels of products they operate. Classify these customers and find target channels that match this product.
3: Negotiate. Negotiations with target distributors should follow the principle of difficult first, easy later, and do not give up after one refusal. Prepare enough scripts before negotiation.
4: Tempt. Distributors' desire for profit is innate and unlimited, but they crave stable and safe ways to profit! For professional distributors, the high price difference of new products is clearly a beautiful trap. Therefore, simply tempting target distributors with price, price difference, and other "money prospects" is often futile.
Therefore, in a blank market, the promotion actions are largely aimed at channels, not bypassing channels to target consumers. The maturity of the consumer market must be preceded by channel maturity. What can make an ideal distributor's heart move is perceiving various information that this product is about to become popular. For example, the increase in distribution rate in core urban outlets, the establishment of image stores and image streets, and the strong improvement in local areas.
5: Strike. Distributors' profits are achieved through outlets, so controlling outlets is the key to a distributor. After listing the outlets under the target distributor, carry out planned attacks, negotiating while striking.
6: Lock. Use reverse reasoning to do channels, use personalized terminal policies to lock in terminals with stock pressure, display, volume commitment, exclusive sales, and other policies, thereby increasing the sales share of this product in that distributor, gradually shifting from mixed sales to main sales, exclusive sales, or even exclusive operation.
7: Only. Stabilize customer profits, ensure the price system, and ensure that there is only one supplier in a single store (region), eliminating cross-delivery.
2. Non-Professional Type
Non-professional distributors are unfamiliar with the industry, commonly known as outsiders. These distributors are either rich but ignorant, such as coal bosses who switch to baijiu, with strong financial strength but no understanding of the baijiu market and management; or they are poor and ignorant, such as teachers who do baijiu part-time during holidays, with very little financial strength.
Because these distributors are outsiders, they have a strong desire to find brands and high enthusiasm in the early stages of entrepreneurship. Finding non-professional distributors is less difficult and more likely. Once you find a "rich but ignorant" distributor, managers often feel like they hit the jackpot and shout with joy, because in the early stages of cooperation, the distributor's wealth and boldness make the shipment volume no problem. But after the initial three moves, most of these distributors become dejected, either because distribution is blocked, goods don't move, sales are low, or they can't endure hardship and loneliness.
Finding a non-professional customer is not difficult; the challenge is how to keep these distributors alive.
Category 2
1. Couple Type
Three or two people, one or two vehicles, is the true portrayal of this type of distributor. The entire team is the boss plus the boss's wife, with no finance, no warehouse keeper, and even no accounts. Couple-type distributors are most suitable as second-tier distributors. If they are fortunate enough to become first-tier distributors, they must undergo transformation and tempering from small to large. In this process, the roles of the boss and the boss's wife are often subtle. The moon-type distributor, with the boss's wife as the protagonist, has a much smaller chance of growing strong and big than the sun-type distributor, with the boss as the protagonist. Moon-type distributors only see "money" in front of them, seeking small wealth and safety; sun-type distributors value "the future," dare to invest, are good at seizing opportunities, and are conducive to growing bigger and stronger.
Couple-type customers are convenient for multi-point development and latent cultivation in the early stages of market development, but they often become bottlenecks during market launch, with bottlenecks in vehicle and personnel allocation and service system support.
2. Company-Type Distributors
Company-type distributors are relatively formal in management, with higher fixed costs. The size of such distributors varies greatly, from annual turnover of hundreds of thousands to hundreds of millions, and they are a mixed bag.
Category 3
1. Direct-Sales Type Distributors
Using sales personnel for direct supply and delivery to outlets is a direct-sales distributor. For manufacturers, direct-supply distributors can provide a flat channel, shorten management levels, ensure delivery service, and stabilize prices.
Disadvantage 1: Value market, neglect sales. They can use the customer relationships of direct-supply outlets to quickly distribute goods and generate sell-through; the disadvantage is that they are picky and choosy, making it difficult to achieve high-density full coverage. According to the 80/20 principle in the plate-in-plate theory, this type of distributor can control the 20% small-plate outlets that are conducive to market cultivation, but they are unable to reach the large-plate outlets that drive volume.
Disadvantage 2: Value mid-to-high-end, neglect low-end. For low-end products, such distributors find it difficult to support because the cost of direct supply is much higher than distribution cost. Therefore, they favor mid-to-high-end products with larger price differences.
Disadvantage 3: Value cities, neglect rural areas. The scattered outlets in rural markets, high distribution costs, and low product prices make direct supply difficult. Especially for third- and fourth-tier markets, the three-level structure of county, township, and village poses an insurmountable threshold for distributors who are good at direct supply in urban areas.
2. Distribution-Type Distributors
All sales are achieved through second-tier or even third-tier distributors.
Advantages: Can quickly organize second-tier distribution to amplify sales.
Disadvantages: Value sales over quality, value old products over new products, value old markets over new markets. Most of these customers are aging customers with rough management and unstable price systems. The market rises quickly and falls quickly.
3. Direct-Distribution Type Distributors
Part of the sales is achieved through direct supply by sales personnel, and part through second-tier and third-tier distributors.
The direct-distribution layout is the key point of management for this type of distributor.
Areas controlled by direct sales: core urban outlets, leading stores, and image stores.
Areas controlled by distribution: township and village outlets, urban circulation, small and medium restaurants, special channels, etc.
Direct-distribution customers should adhere to the principle of direct sales for market building and distribution for sales volume, with a proper balance between direct and distribution. The allocation of outlet resources should be in the hands of the manufacturer. Once there is a problem at the distribution level, the direct supply force can temporarily replace the distribution in that area.
Category 4
1. Exclusive-Type Distributors
Distributors who specialize in this product and do not operate any other brands. These distributors can go all out in terms of capital, personnel, and energy, ensuring that there is no "collision" during peak and off-peak seasons. The promotion and achievement of such distributors are suitable for building channel barriers in base markets, and it is the highest state of distributor management.
2. Exclusive-Brand-Type Distributors
Customers operate multiple brands and categories, such as baijiu, beverages, and beer, but only operate this product in the beer category. The promotion and achievement of such distributors are suitable for building channel barriers in base markets.
3. Main-Selling-Type Distributors
Operate multiple brands, but this product is the main force. Such distributors are suitable for channel conversion in offensive markets.
4. Mixed-Selling-Type Distributors
Operate multiple brands and also sell this product.
Newly opened distributors or new markets are mostly of this type.
Category 5
1. Regional-Type Distributors:
Distributors who operate this product within a certain region.
The regional setting for distributors is a necessary condition for channel management; otherwise, it will not only cause price cutting and cross-region selling, but also waste resources with extensive cultivation and poor harvest. Many manufacturers use a checkerboard pattern to configure distributors and sub-distributors in small regions. The advantages are focused development, clear responsibilities, fast development speed, and convenient outlet service and maintenance; the disadvantages are that these distributors must be all-around, capable of handling different types and sizes of outlets. In many cases, the strain on distributors becomes apparent: those good at small outlets cannot support large outlets; those good at hotel channels are not good at supermarket and retail outlets, resulting in strong catering but weak circulation, like walking with a limp.
2. Functional-Type Distributors:
Distributors with agency rights for a sub-brand or category, or customers with agency rights for a specific type of special channel. For example, professional KA distributors, nightclub distributors, and professional night market and food stall distributors.
Functional-type distributors solve the problem of regional distributors being picky, providing professional services for specific channels or consumer segments. However, facing the complex and diverse terminal outlets, not only is a large number of functional distributors needed, but more importantly, the delivery routes of these distributors are intertwined and complex, with overlaps or gaps in coordination, making management difficult as can be imagined.
There is no best choice for distributors, only the most suitable. In different markets and at different times, the purpose of choosing distributors will be different. So from the above classification of distributors, we can see that each type has its advantages and disadvantages. How to activate different types of distributors in different markets and periods, and how to organize or sort out channels, is the most basic skill that tests a manager's market operations.
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