Click the image above for details For distributors, establishing a comprehensive market pricing system is a crucial step. As the saying goes, "pricing determines the market." Inadequate price control can lead to a series of problems in the market that are difficult to resolve. One of the most troublesome issues for distributors is cross-regional selling (channel conflict), which is largely caused by unstable pricing systems. For example, if you offer lower prices to wholesale clients, and then the prices at retail terminals are more favorable than yours, over time, terminals will be unwilling to purchase from you. They may even sell your products in other regions, leading to penalties from the manufacturer. For instance, consider a milk product. If you supply the same specification to both traditional and modern channels, with a supply price of 45 yuan and retail price of 55 yuan for traditional channels, and the same supply price of 45 yuan for modern channels, but the supermarket can sell it at 48.5 yuan, traditional channel customers will definitely complain about the distributor. Small terminal stores have slower turnover and lower sales volume, so they have higher profit requirements. In this situation, traditional channels may fail to sell the product, and ultimately, they will stop cooperating with you. Different channels require different pricing systems. A stable market pricing system and a scientifically reasonable channel pricing system are key to a distributor's sales growth. -01- Leverage Brand Advantages to Build a High Pricing System! Let's look at a case: a plain cotton T-shirt sells for 30 yuan online, but with a NIKE logo, the price becomes 300 yuan, and the profit margin doubles. This is the value of a brand. The same applies to FMCG products; consumers purchase based on perceived brand value. For distributors, terminal customers' decision to sell your product depends 20% on the product's value (whether it sells well) and 80% on the profit margin (whether it makes money). Simply put, if a product doesn't make money, selling well is useless; if it makes money but doesn't sell, it's also useless. Most distributors have well-known brands, so product value is not a concern. The real question distributors should consider is how to design pricing systems for each link and manage price control to ensure sufficient profit margins. Many distributors have a concern: they hold several first- and second-tier brands but dare not set high pricing systems. Moreover, sometimes to meet sales targets, they compromise principles, such as changing a 10-for-1 deal to 5-for-1, causing extreme price instability. Distributors should adopt the philosophy of pursuing high price points. Some worry that high prices will definitely cause cross-regional selling, but this concern is unfounded. As long as you focus on terminal sales, a price increase of two or three percentage points is completely fine. Unless you deal with secondary wholesalers, who are typically the source of cross-regional selling. As mentioned in previous articles, reducing intermediate links is key. Build high walls, weave a wide net, sell directly to terminals, reduce the number of secondary wholesaler customers, and prevent cross-regional selling. Reducing intermediate links, bypassing secondary wholesalers, and raising the pricing system are directions many distributors should take next. Why raise the pricing system? Consider a case: a condiment distributor saw a certain soy sauce at a low price and took on its agency. Initially, sales were good, but when another soy sauce appeared on the market, sales dropped immediately. Distributors cannot rely solely on price wars; only high-priced products can highlight product value. From the consumer's perspective, today's consumer mindset has changed. They are not price-oriented but health-oriented, believing that "cheap goods are not good." This is why brand owners are increasingly pricing products higher; high prices better reflect product value. Live-streaming e-commerce has been very popular recently, but you'll notice that branded products account for over 95% of live-stream sales, precisely because branded products have a stronger sense of value. Moreover, setting high prices creates larger profit margins, which can meet the resource demands for market investment. For example, if a bottle of soy sauce is priced at 5.2 yuan to supermarkets, and they sell it at 5.6 yuan, you could raise your supply price by 0.2 yuan to 5.4 yuan, and the supermarket sells it at 5.8 yuan. For the retail operation, the difference is minimal, and consumers accept it. But for the distributor, this represents an additional 3 percentage points of profit. You can use these profits for promotions, hire in-store promoters, and invest these resources into the market for better results. -02- Different Channels Require Different Price Management Approaches! Within a region or a company's sales team, prices must be unified and transparent, implementing a single pricing system, but different channels should have different management methods. Special channels, such as terminal canteens, should have special prices that are reported and filed. 1. Traditional Channels Traditional channels have many customers, for example, 1,500 customers. It's difficult to get all these customers to use a uniform price level. However, you must adhere to the principle of a unified pricing system with minimal disparity. If the disparity is too large, the market will be chaotic. Terminal customers care most about whether they make money and whether there is sales volume. Especially in traditional channels where sales volumes are generally small, it's even more important to ensure a stable pricing system so they can earn profits. For AB-class large stores in traditional channels, implement the pricing system and operation model of modern channels: high prices, high operation, seize resources to boost profits and sales. These stores go beyond the scope of traditional small shops, with high foot traffic, so they should be treated with the same operational methods and specifications as supermarkets. 2. Modern Channels In modern channels, selling higher-priced items with bundling and combination promotions is most effective! The pricing system for regular items in modern channels should be higher than in traditional channels. Promotional items should be differentiated from CL stores in traditional channels to ensure normal profits for traditional channel customers. For example, with corn oil, modern channels sell a 5-liter bundle at 70 yuan, while traditional channels offer a 5-liter unbundled version at a relatively lower price. When modern channels run promotions, they should absolutely not use the 5-liter specification; instead, use a 4-liter specification to differentiate from traditional channels. Remember this key point: for products that generate high sales volume and high profits in modern channels, never easily engage in low-price promotions. A single low-price promotion can boost modern channel volume but will affect traditional channel volume by at least 30%. If promotions are necessary, avoid price reductions. Instead, use bundling, such as offering a 700ml small oil with a 5-liter purchase. Avoid direct price cuts that could damage the pricing system. 3. Wholesale Channels I have always emphasized reducing intermediate links, but some distributors have a large proportion of wholesale channels and cannot completely abandon wholesalers in the short term. They need a transition period. In such cases, it's essential to properly manage relationships with wholesale markets and key secondary wholesalers: both pull and push, differentiate key items, keep core item prices consistent, and offer sales rebates for certain items. "Pull" means that if wholesale channels account for a large proportion, dropping them immediately would significantly impact sales, so phase it out gradually. "Push" means poaching their customers to become your new customers. To prevent cross-regional selling, do not offer too low prices. The pricing system for wholesale customers should be at most 2% lower than that for CL stores in traditional channels. Do not sell at low prices, as this would impact traditional channels and cause customer dissatisfaction. You can sign a sales agreement, for example, specifying a price for a ton of volume, with rewards for no cross-regional selling and no rewards if it occurs. -03- Maintain the Pricing System Through Digital Management Recently, "digital distribution" has been a hot topic. Many distributors subconsciously think that using digital tools equates to digital distribution: salespeople placing orders, warehouses picking orders, and finance auditing. These are all basic uses. Digital distribution means applying digital tools to actual business scenarios to make the entire distribution process more refined, not just using tools. Price management is one such scenario in the distribution process. By using digital management to maintain the pricing system, market prices become more stable and management becomes simpler. Many distributors have likely encountered this situation: a salesperson, to boost sales, offers a very low price to a terminal. They return and tell the boss that the competitor's price is low, so they had no choice but to lower the price, and they've already quoted it to the terminal. The boss can only accept it. The market is run by salespeople, and you can't watch them all the time. But if this phenomenon isn't changed, the distributor's profits are hard to guarantee. The use of digital tools can solve this problem: set a minimum price limit in the system backend, so salespeople cannot issue orders below that price, preventing them from arbitrarily changing prices to boost sales. If a promotion is needed, the salesperson must make a note, and the backend must be modified before proceeding. After the promotion, prices return to normal. For example, if the backend minimum price for a barrel of peanut oil is 50 yuan, a salesperson cannot issue an order below 50 yuan. If a promotion is truly necessary, they must report in advance, modify the limit to 49 yuan, and after the promotion, the price reverts to the minimum limit. In conclusion: How to manage the pricing system well can be summarized in one sentence: Design different pricing systems for different channels and different customer types.