Editor's Note: The continuous decline in offline foot traffic is an indisputable fact. However, this does not mean that offline channels are no longer important, or that we can reduce attention and investment. Compared to embracing the endless stream of new retail formats, holding the basic plate of offline channels is more critical in the current volatile market environment. How to hold it? Only through meticulous cultivation and professional management to increase volume and efficiency.

To this end, New Distribution, in collaboration with Mr. Cao Yang, former Channel General Manager of Coca-Cola China's Key Account Management Group, has launched the "Key Account (KA) Management Practice" series, hoping to provide frontline channel managers with a complete methodology for operating offline key accounts in a "chaotic market." This series consists of about 20 issues in total; this is the twelfth issue, as follows.

In this issue, we discuss how to capture category share in stores. You will gain an in-depth understanding of the following three aspects:

  1. Why customer managers and KA sales representatives do not value share
  2. General operational methods for capturing share
  3. Three key points that must be focused on to improve share

01 Over the years, I have asked many customer managers and KA sales representatives: What constitutes good store performance? Most of them would first mention sales target achievement—good sales mean good performance. If you probe further, they might mention store execution, but they often do not consider store business share as part of good store performance. The business share mentioned here refers to the proportion of a company's product sales in a specific category within a modern trade store. Every company whose products are in the store has its own business share. Aggregating the business share of all retail stores is called market share.

Let's continue with customer managers and KA sales representatives. Although they do not include business share in their minds when evaluating store performance, their promotion applications clearly state that they are applying for low-price promotions to compete for market share... This is a very interesting phenomenon—seemingly contradictory but widespread! So, many people do not ignore share; they use share as a means to achieve sales targets! What's more, some use share as an excuse to apply for low prices, complete tasks, and just get bonuses!

For example, A brand and B brand are competitors in the same category, with A ranking first in share and B second. You will find that when A's customer manager applies for a promotion, they must use B's low-price promotion as a pretext, claiming that B's low prices are "fully rolled out" and "aggressive," causing their products to not sell well, so they apply for low prices to avoid losing market share. Similarly, B's customer manager does the same thing, roughly saying that A's special prices are "fully rolled out" and "aggressive," and to avoid losing market share... The price war eventually becomes a melee, and no one remembers who started it; they only remember that the competitor did low prices last time, so they did low prices too.

Over time, besides the phenomenon where competitors are indeed trying to capture share, we have also discovered two other situations:

  1. There are indeed individual stores where A or B is doing special prices, some to clear near-expiry products, some due to customer behavior, but without notifying the company. However, the information relayed by customer managers makes management feel that competitors are acting across the entire market. Note that both A and B have had this experience.
  2. Finally, one day, a brother who defected from the competitor told the truth: "You have been doing low prices all along, so we were forced to follow..." Oh my! We didn't do low prices; you did, so we did! In the end, it became clear that some price promotions were not initiated by top management!

Why is this?

1. From the perspective of setting assessment indicators: This is related to the fact that companies only assess sales teams on sales volume, or mainly on sales volume. Sales targets are directly linked to bonus assessments. If the sales team can achieve sales targets, they can get bonuses, so they naturally do not pay attention to store business share. In the sales team's view, completing sales is their duty, already engraved in everyone's DNA. Market share is the marketing department's business, the boss's business, in short, the company's business.

2. From the perspective of setting sales targets: When companies set growth targets, they set a growth rate from the perspective of market share in a market, then break it down to the sales team, and then to each individual's sales target. However, winning share in each customer has different growth requirements, which may be consistent with the company's "assigned" growth target, or may conflict, i.e., the target growth is lower than the growth rate needed to win share. For example, A brand's total target is broken down to 18% for the department, and then the growth target set for customer manager Zhang San is 20%, but competitor B's growth in the store is 25%. Even if Zhang San achieves and exceeds the target, even reaching 23%, in terms of share, he is being captured by competitor B, meaning he lost share. In modern trade, if POS data is available, data analysis can be used to revise the company's target of 20% to 26%, exceeding B brand's 25%, so as to truly capture share!

Why is market share important? Many people know the reasons. In the FMCG industry, with share comes voice; with market share comes winning; with market share comes pricing power; otherwise, you can only be passively beaten. Another important point for the sales team: from the level of market share, you can see how customers treat you. If your market share is high, customers value you; if it's low, they give you no support. Because customers want growth rates, and customers also want their own market share. If your growth rate is high, customers naturally like you.

02

General Operational Methods for Capturing Share

1. The underlying logic of capturing store business share

Capturing share means increasing the proportion of sales, which means your growth rate must be faster than competitors. If A brand's growth rate in the store is 20% and B brand is 18%, it means A brand is capturing store business share. When modern trade customers set annual targets, besides the company's mandatory targets, you also need to refer to POS data to revise the company's target. Generally, the revised target should be higher than the company's set target. Therefore, in the key account management system, it is required to do a good job in the customer annual plan, where targets need to be set through POS data analysis and reach consensus with the customer. The logic is the same as above. The ideal state is that the company's target and the customer's target are aligned, which requires strong professionalism, and not all companies can achieve this.

2. First determine whether the store is winning or losing

4. Develop an improvement plan

1) Increase distribution rate: In improving market share, increasing the distribution rate is a very important indicator. For example, if your distribution rate in 1,000 stores is 40% and the competitor's is 80%, you simply cannot capture share because your growth will definitely not be as good as the competitor's. Only with 100% distribution and accelerated turnover can you win share.

There are two ways to increase the distribution rate: one is that the product is not in the customer's system at all, in which case you must get the product in; the other is that the product code exists in the customer's system, but there are frequent out-of-stocks, which also leads to a poor distribution rate.

2) Strong promotions: To capture share, you need to sell more products than usual, which requires stimulating consumers to buy more. The best way is, of course, low prices. The lower the price compared to usual, the easier it is for consumers to pick up, thereby quickly increasing sales.

If the price is not low enough, the consumer pickup rate will not be high, and you will not be able to capture share. Although low prices can generate sales, they also reduce the company's profits, which is something bosses do not want to see. I will elaborate on this later.

3) Increase display share: The amount of display is directly related to turnover speed; more display naturally accelerates turnover. So you need to pay attention to the display ratio between you and competitors. If your display is less, you need to increase the display quantity.

Similarly, increasing display increases capital investment and affects company profits, especially when combined with low prices. Double investment will directly affect profit achievement, but it must be acknowledged that increasing display share can boost sales.

5. Execute well and check data

Execution is very important at this stage. Without execution, even the best plans cannot be realized, nor can share be improved. After execution, you need to use POS data to verify whether share has improved or continued to decline, so as to take the second share capture action.

03

Three Key Points to Focus on When Capturing Share

This point is more important than the previous two, and the operational difficulty is also the greatest. In fact, many people can do low prices; simply put, invest money—who can't spend more? But to be professional, controlled, and balanced is very difficult. Next, I will introduce it in detail.

1. Emphasize professionalism, including three aspects:

  1. Obtaining POS data is key. Retail customers generally are unwilling to share POS data. Without POS data, we cannot correctly assess whether we are winning or losing. After implementing the execution plan, we cannot see results.
  2. Developing the customer annual plan requires using POS data to revise sales targets. As mentioned earlier, the customer's target is obtained by decomposing the company's target. A real customer plan needs to reach consensus with the customer. In reality, customers hope our growth rate is as high as possible, and the most important boundary is to revise the target based on POS data.
  3. Use POS data to find real business opportunities, i.e., which category, which brand, which package has opportunities. Seize these opportunities to formulate targeted plans and ultimately achieve the goal of capturing share.

In short, obtaining POS data, setting targets, and analyzing POS data all require professionalism.

2. Control Control is the most difficult in operation, namely controlling the scope of stores and controlling the price intensity. In some stores, we are winning share and do not need to capture more; share can never be fully captured, and the limiting factor is cost. But human weakness tells us that if all stores do low prices, it is easier to complete monthly targets. Rationality tells us that we need to respond specifically to competitors' low prices, determine which stores have low prices, and not start a full-scale war everywhere. Using the name of attacking competitors to actually complete sales will harm the company's profits. In addition, controlling stores to prevent goods from going out the back door and affecting other channels and customers is even more difficult.

Capturing share requires a reasonable price intensity, i.e., share growth cannot violate objective laws. In fact, share growth is a slow and continuous process. You need to do every link in the key account management system well and persist, which is the kingly way to capture share. A month's share increase of a lot is not necessarily a good thing, because you will have to pay back next year at the same time! For example, in September you captured 2 percentage points of share, with a growth rate of 48%. Next year in September, you need to win share again, with a higher growth rate and higher sales target. Will the company still give you low-price support? Maybe not. Next year's bonus for that month will be ruined. What will you do?

3. Balance Balance includes two aspects: balancing channels and balancing share and profit. Balancing channels means that giving low prices to modern trade customers should not cause anger in other channels, thereby affecting their purchasing and causing adverse effects on the company. Such situations are now fewer, with more being affected by online low prices. Balancing profit and share: having share is good, but if it is at the expense of profit, this share advantage is not sustainable. Once the company stops low-price investment, the share gained will eventually be taken back by competitors. Companies also cannot ignore share for profit; reducing share will affect sales and ultimately profit.

In Conclusion:

At the beginning of the article, I asked what constitutes good store performance? The best store performance should look at five indicators: profit, revenue, market share, order fill rate, and market execution. All five indicators are indispensable for good performance!

The concepts and methods in the key account management system can help everyone achieve balanced development of the five indicators.

In reality, we always encounter a vicious cycle. From the perspective of top management, profit, share, and sales are all valued, but once the overall target is broken down to individuals, the importance of share is objectively ignored. Some sales team members use the company's emphasis on share to obtain resources for low-price promotions, thereby achieving personal sales targets, while profit assessment is only for the overall team. Indeed, refined management needs to be improved.

Mastering the methods to improve share is not difficult, because buying displays with money and doing low-price promotions to capture share is easy; the difficulty lies in the grasp of professionalism, control, and balance.

This control ability needs to be obtained from the key account management system. If you have such confusion, please long-press to add the enterprise WeChat account, note "KA," and welcome to join the KA discussion group to discuss together.

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