Amid China's economic slowdown, market fragmentation, and e-commerce impact, FMCG companies' traditional channels have been hit, and sales generally face bottlenecks. How can marketing organizations and channels innovate collaboratively, break down manufacturer-dealer organizational boundaries, form enabling integrated marketing channels, and create a new engine for marketing growth? This article explores this topic through Yihai Kerry's marketing empowerment organizational transformation.
-01 - Three Major Pain Points of Traditional Marketing Organizations and Channels Under traditional marketing organization and channel models, there are many unresolved pain points. As a leading enterprise in China's grain and oil industry, Yihai Kerry Group, which owns famous brands like Arawana, also faces issues with traditional marketing organization models.
1. Contradiction between unified marketing plans and market specificity Currently, most traditional marketing organizations have relatively unified marketing plans. However, with the internet era, the fragmentation of mass markets, and the rise of niche markets, regional market differences are growing. This makes unified marketing plans less precise and targeted, failing to be effective, and ultimately wasting marketing resources.
For Yihai Kerry, with over 2,000 counties nationwide, each market has different consumption habits, such as soybean oil, rapeseed oil, peanut oil, and blended oil markets. Competitors include Luhua, Fulinmen, Daodaoquan, and others. Facing vastly different market demands, relatively unified plans for new product launches and promotional campaigns encounter localization issues.
2. Contradiction between slow marketing adjustments and rapid market changes Consumer demographics are changing, consumption demands are changing, competitors are changing, and the pace of change is accelerating. In the past, traditional centralized marketing organizations had no decision-making power at the frontline. When new situations arose, they could only react through layers of reporting and instruction transmission, which distorted information and caused slow responses.
With consumption upgrading, healthy oils like sunflower, olive, corn, and rice bran oil are rising. Price sensitivity is decreasing, and health awareness is increasing. Additionally, channel sinking and deep marketing have become important trends. Facing complex and rapidly changing markets, how can Yihai Kerry's marketing organization respond quickly and keep up with the times has become a major issue.
3. Contradiction between manufacturer marketing goals and distributor interests Manufacturers and distributors have both shared and differing interests. Manufacturers aim for sales growth and product upgrades, while distributors aim to make money. In traditional marketing models, manufacturers assign sales tasks and targets to distributors annually. When sales are poor, manufacturers may pressure distributors to stock up. Distributors, for their own benefit, often comply superficially, and product market performance naturally suffers.
With intensifying competition, Yihai Kerry's distributors are aging, with low operational quality and declining profitability. Helping distributors improve operational quality and profitability, and truly aligning distributor and manufacturer interests, is a key task Yihai Kerry has recognized.
Furthermore, under the trend of channel sinking and deep distribution, a large number of frontline sales personnel are needed, which imposes huge cost burdens on manufacturers. Whether distributor teams can be activated and manufacturer-distributor conflicts transformed into collaboration becomes a critical marketing issue.
-02 - Centralized Control Marketing Management is the Root Cause Traditional marketing organizations typically use centralized decision-making, where headquarters functional departments formulate brand strategies, promotional plans, new product launch plans, and sales plans, and then regional sales organizations and distributors execute them. Decision-makers and executors are separated.
Decision-makers often rely on limited market research and executor reports, making it impossible to fully understand complex and personalized market factors, leading to a "closed-door" dilemma. Executors, on the other hand, may not fully understand the rationale behind decisions, leading to deviations in execution. Moreover, no one likes to execute others' orders, especially when plans seem unsuitable for local markets, often causing internal conflicts and distrust.
A distributor once gave me an example: when a new product launch plan was issued, he knew it wouldn't fit the local market, but he couldn't defy the manufacturer. With no other choice, knowing it was wrong, he carried out large-scale distribution, ultimately leading to massive returns.
In fact, the conflict of interest between manufacturers and distributors is not between the two parties but between distributors and marketing teams. In traditional channel organization models, marketing teams work under KPI assessments, such as sales growth, new product growth, and cost reduction, which directly determine their bonuses.
This leads marketing teams to focus on their own short-term goals rather than the company's long-term interests. With a KPI-only approach, they may pressure distributors to stock up regardless of market conditions, resulting in capital occupation, high inventory, return risks, and profit losses for distributors.
Facing such situations, distributors often dare not speak out, so they comply superficially, misappropriate market funds for entry and promotions, and reduce personnel and other investments to compensate for losses. How can market performance be good under such circumstances?
-03 - Full Authorization + Small-Team Operations As mentioned earlier, centralized control management organizations are the root cause of many pain points. If we can build a group of small frontline teams, grant them marketing decision-making and execution authority, and let them make autonomous decisions and adapt flexibly based on local market conditions, we can improve the targeting of marketing plans and adjust them in execution according to market changes.
In this case, regional marketing organizations should transform into service support platforms, equipped with various resources, directly supporting frontline combat teams in marketing planning, resource allocation, capability enhancement, and product operations.
At the distributor level, if organizational boundaries can be broken and resources reorganized under common goals with division of labor and collaboration, work efficiency will greatly improve, and marketing costs will decrease.
-04 - Breaking Organizational Boundaries for Deep Manufacturer-Distributor Collaboration Let's do a simple calculation: Yihai Kerry has over 3,000 distributors nationwide, each with an average of 10 people, totaling over 30,000 people. By empowering channel transformation and incorporating distributor teams into the organizational structure, a huge force can be formed. Under the trend of channel sinking and deep distribution, if marketing is refined to townships and villages, this becomes a key measure given limited marketing costs.
Based on this idea, how exactly should it be done?
1. Build Joint Business Entities The transformation of enabling marketing channel organizations starts with building a group of fully authorized small marketing teams. These small teams, with counties as regional units, are composed of manufacturer marketing personnel and distributor teams, called Joint Business Entities (JBEs). Manufacturer sales staff serve as "political commissars and consultants" for distributor business teams.
JBEs are fully authorized to autonomously set goals, including annual sales targets, new product launch targets, operational efficiency improvement targets, and profit improvement targets. They autonomously determine implementation paths, including specific market strategies, competitive methods, and organizational structure adjustments.
At the beginning of each year, JBEs propose marketing goals and plans, which are guided and adjusted by the marketing support platform, which also provides marketing resource support.
To support frontline operations of JBEs, Yihai Kerry reformed its sales offices, moving project and market functions from branches to the front, forming a strong marketing service support platform to provide firepower support. Platform leaders shifted from instruction controllers to mentors, coaches, and referees, helping JBEs develop autonomously.
2. Enhance Capabilities through Performance Traditional executors become decision-makers. With this role change, capability building for frontline sales and distributors becomes key. If JBEs lack relevant capabilities, hastily delegating market planning authority can lead to chaos.
Frontline sales personnel need marketing planning, business diagnosis, and team promotion capabilities to become business consultants and political commissars for distributor bosses. Distributor bosses need business planning and implementation capabilities in addition to the above three.
Around these two key areas, we applied the Agile Co-creation methodology, combining consulting and co-creation extraction to build the "Distributor Three Elements and Six Departments" excellent operation model.
In the initial phase, we invited 30 benchmark distributors nationwide to establish a diagnostic checklist based on the DuPont model, extracting key success factors, operational details, and cases in market, operations, and organization, and converted this "business bible" into courses.
Simultaneously, 30 distributors and 30 marketing backbone personnel formed 30 1+1 small teams. Each team aimed to improve distributor performance, continuously benchmarking, identifying key issues, and setting project goals and plans.
In the 2018 Yihai Kerry Consumer Products Division marketing organization and channel empowerment project, 30 distributors achieved significant improvements in sales, new products, and profits, with overall performance far exceeding the average distributor level.
3. Drip Irrigation Resource Allocation Mechanism Additionally, JBEs need information and resource support. A pain point of traditional marketing organizations is resource waste. Marketing resource investment is usually linked to distributor sales. However, some distributors are conservative and lack proactive expansion willingness, making such allocation mechanisms ineffective.
The new allocation method is an "application-approval system," where JBEs propose marketing and resource support plans, and the marketing support platform guides plan modifications and decides resource allocation based on the rationality of marketing goals, feasibility of marketing plans, ROI, and distributor resource matching. This drip irrigation resource investment model greatly improves marketing resource utilization efficiency.
4. Performance Bet Mechanism The starting point of JBEs is to improve distributor operational quality, such as sales growth, new product development, operational efficiency improvement, cost reduction, and profit enhancement. This effectively resolves conflicts between distributors and marketing teams, bringing them into the same trench.
During project implementation, a performance bet mechanism was designed, setting challenging goals. If goals are achieved, Yihai Kerry fully bears marketing resource investment; if not, distributors bear a corresponding proportion.
The success of the 2018 project gave everyone great confidence, and Yihai Kerry began promoting the project on a larger scale. Since the project started in 2017, over 500 distributors and frontline sales personnel have participated, and participating distributors have seen significant growth in sales, new product sales, and profits.
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