---
title: "Quick and Effective New Market Development: One Goal, Four Steps"
description: "Many salespeople feel overwhelmed when developing new markets, unsure where to start. This article outlines a four-step method for finding, evaluating, convincing, and servicing distributors, helping you navigate new market development with confidence."
author: "代振"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2015-04-17"
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# Quick and Effective New Market Development: One Goal, Four Steps

> Many salespeople feel overwhelmed when developing new markets, unsure where to start. This article outlines a four-step method for finding, evaluating, convincing, and servicing distributors, helping you navigate new market development with confidence.

Many salespeople feel overwhelmed when developing new markets, unsure where to start. The main reason is that they don't understand the market, don't know what kind of customers are ideal, and wonder, "How can we find them and make them our customers?" Here are some methods I often use when developing new markets, divided into four steps. I hope they can help colleagues who are also facing the challenge of new market development.

Step 1: Finding Customers
1) "Follow the vine to get the melon": I often ask wholesale distributors of non-staple foods about the major distributors in the local market. During conversations, I inquire about distributors whose channels, networks, capital, and personnel are suitable for our products (including their addresses and contact numbers), because I know they usually have business dealings with those big customers.
2) "Wait by the stump for the rabbit": I wait at the entrances of major food sales channels (KA supermarkets, wholesale markets, wholesale departments). Many distributors deliver goods there daily. When a distributor delivering other manufacturers' products arrives, I approach them, hand over my business card, and explain my purpose. If the distributor shows interest in my products, I'm fairly confident I can win them over. If it's the distributor's salesperson, I identify myself, ask for their boss's address and phone number, and then visit after a phone call.
3) "Throw a stone to test the road": Upon arriving at a new market, I first look for the local non-staple food wholesale market. If there isn't one, I find a small wholesale department and say, "Hello, I'm from [Company]. I'm here to develop the market. Would you be interested in distributing our products?" Usually, they politely ask me to sit and say, "We've never worked with manufacturers and aren't interested now. Go see [Name]; they're the big player here!" I then casually ask for that customer's phone number and address. Some enthusiastic ones even help contact the customer.
4) "Seek external help": As the saying goes, "At home, rely on parents; outside, rely on friends." A decent salesperson usually has friends from other companies or industries. (Newcomers can ask colleagues or leaders for distributor information in the local market.) I have many such friends. When the first three methods fail, I call friends to provide relevant distributor information, then make appointments and visit them one by one.

Step 2: Evaluating Customers
1) Assessing Distributor Strength:
Note: For a company, distributors are the ticket to market entry. Whether a product can grow quickly depends heavily on distributor selection. Although many food companies have changed distributors, sometimes multiple times, each change harms the manufacturer (e.g., old distributors dumping goods at low prices causing price chaos, or mishandled legacy issues damaging the manufacturer's reputation).
Six key points to judge distributor strength:
a. Capital: Do they have sufficient working capital to distribute our products? Check inventory (typically, working capital is more than double the total value of warehouse goods) and ask about their financial situation (discount their stated figure by about 20% to estimate actual working capital).
b. Warehouse: Is there enough space to store our products?
c. Personnel: Do they have dedicated staff to promote and sell our products? Understand their sales team's division of labor.
d. Vehicles: Do they have enough vehicles for delivery? Markets with over 500,000 in sales need at least two box trucks; under 500,000, at least one.
e. Network: Do they have mature networks suitable for our products? Analyze based on the channels of their current products.
f. Management: How well do they manage their own operations? Check if their accounts are clear and if they know their inventory status.

2) Assessing Distributor Business Philosophy:
A clear business philosophy directly impacts a customer's development prospects. Some old-style distributors, with years of experience, have money, vehicles, personnel, and networks, yet their business is declining. In contrast, new-style distributors, despite limited resources, are thriving.
A. Why old-style distributors succeeded in the past:
a. Five or six years ago, manufacturers typically used a large agent system, where one agent held distribution rights for a province or several provinces. Due to large territories, they had county- and city-level sub-distributors who came to them for goods.
b. Early entrepreneurs accumulated substantial capital. With ample funds, they could buy in bulk and get more favorable policies from manufacturers. They also had county-level distributors to help sell, so business grew quickly.
c. The period five or six years ago was a rapid growth era for China's food industry and all industries. If you caught the wave, you could make a lot of money.
B. Why old-style distributors are now declining:
a. Food manufacturers now penetrate down to county and township levels, eliminating the large agent system and taking away their former big sub-distributors. Their old methods no longer work.
b. Manufacturers now require distributors to deliver to rural areas and operate terminals. Old-style distributors complain about high delivery costs (wages and vehicle expenses), supermarkets' delayed payments, and small shops' low order volumes. They still cling to the idea of "finding good-selling products to represent, setting up a store, and waiting for sub-distributors to come." As a result, their business shrinks.
C. Why new-style distributors rise quickly:
New-style distributors lack the capital and strong brands of old-style ones. If they also waited at home, they'd fail. So they take their products and deliver door-to-door. They quickly grasp the principle of terminal success, proactively supplying supermarkets and small shops. They don't worry about small orders or high delivery costs because they know more customers mean more outlets, which form a network. A good network allows them to sell more products and generate profits, and it becomes a bargaining chip with manufacturers.
When selecting distributors, we must distinguish between old-style and new-style, and choose new-style ones as our customers.

3) Assessing Distributor Reputation:
During customer visits, ask other manufacturers' personnel about the customer's creditworthiness, or ask their sub-distributors about their reputation.
Specific questions: Do they lead in dumping goods and price-cutting? Do they intercept promotional funds? Do they falsely report market conditions to claim expenses? Are deliveries often delayed? Do they refuse to exchange goods for sub-distributors or deliver irregularly (only during peak seasons)? Do they withhold employee wages? If any of these six behaviors exist, immediately exclude the customer.

4) Assessing Distributor Cooperation Willingness:
Does the distributor strongly identify with the manufacturer's product (brand), have confidence in the market prospects, and are they willing to grow with the manufacturer? Customers with strong willingness will cooperate actively and follow company requirements, leading to high success rates. Conversely, a distributor with weak willingness won't invest actively, reducing success rates.
Techniques to assess willingness:
A. Observe the distributor's attitude (if very interested, they'll be polite to our salespeople and care about the company's development; otherwise, they'll be indifferent).
B. Understand their network and current products (if our product is for circulation and theirs are all terminal products, and they occasionally express a desire to enter circulation but lack suitable products, or if they have circulation channels but their products aren't selling well and they need a better product to fill network gaps), such distributors will likely go all out to promote our products once they cooperate.

Step 3: Persuasion and Closing
1. Briefly explain our company's basics (corporate culture, business philosophy, development status, and future plans).
2. Probe their needs (why choose our product?) and emphasize how our product meets those needs.
3. Detail additional benefits of distributing our products, such as enhancing their local market visibility, bringing rich network resources, earning more money, and learning professional management knowledge from the company.
4. Provide examples and facts (cite successful cases from other markets to convince them that distributing our products brings real benefits; successful experience elsewhere can be a great encouragement).
5. Address their objections and questions promptly to avoid doubts. Don't reveal all approved policies and preferential terms at once; retain some as a favor after the agreement, which will make them grateful. Never make promises you can't keep just to close the deal.
6. After all matters are settled, sign the distribution contract and accompany the customer to make payment and place orders (orders mainly follow customer requirements; salespeople can offer suggestions based on other markets' sales).

Step 4: Service and Management
Service:
1. Tracking: After the distributor pays and orders, track the order to ensure timely and accurate delivery.
2. Arrive with the goods: Be present when goods arrive. First, check if the delivered quantity matches the order, and provide a complete product promotion plan.
Plan contents:
A. Product mix (clarify which are main push, profit, and volume products).
B. Channel pricing (set reasonable profit margins for each channel).
C. Channel selection: Choose the most suitable channel based on product characteristics, and create a development schedule for outlet numbers (e.g., January: 10 wholesale customers, 50 retail customers, 2 KA supermarkets, 10 BC stores, 2 special outlets; February: 15 wholesale, 70 retail, 4 KA, 15 BC, 3 special; March...).
D. Promotional methods: Set distributor prices with high prices and large promotions. For example, if we want wholesalers to sell at no less than 22 yuan per unit, set the price at 22 yuan and add a 2 yuan promotion (usually cash-convertible items or free goods). This stabilizes wholesale prices because their cost is 22 yuan, so they won't sell below that.
3. Contact distributors by phone at least every three days and visit each managed customer at least once a month.
Management:
1. Manage distributor personnel: Personally lead their staff in distribution activities to teach them skills and techniques.
2. Manage distributor vehicles: Initially supervise to ensure they load as much of our products as possible; eventually, they should do so voluntarily.
3. Manage distributor capital: Arrange order plans based on inventory to avoid missing order windows and having funds tied up elsewhere.
4. Teach distributors inventory management: They should know their inventory status precisely. Avoid situations where they say, "We still have some, I think," only to find a pile of expired products at year-end.
5. Regularly communicate with distributors about market challenges and discuss solutions.

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