As December arrives, major FMCG brands have basically started working on next year's plans. This article will discuss how regional managers should review and plan their business.
Many regional managers may think, "I do business planning every year; I'm already familiar with it. What's there to talk about?" In fact, many people have misconceptions about business planning, both in understanding and methodology.
Let me elaborate.
Two Common Misconceptions in Business Planning
Many regional managers have two misconceptions when it comes to business planning.
First, treating business planning as a chore to complete.
At year-end, when superiors require regional managers to submit annual summaries and next year's plans, many treat it as just a task. Some regional managers say, "The company has its own arrangements for next year's work plan; I'll just follow what the leader says." They treat it merely as homework to satisfy their superiors.
Second, failing to create a plan for each dealer.
Each dealer in the region has different circumstances (competitive landscape, category structure, internal management level). A single, generalized plan for the entire region may look like it's been done, but it can't actually be implemented.
These two misconceptions are quite common.
First, regional managers must clarify a concept: business planning is not for the leader, but for themselves. Knowing how to succeed in your area allows you to succeed again; knowing why you failed in certain aspects helps you avoid failure in the future. The purpose of business planning is to help you do better in the coming year.
Second, business planning is not a formality. It requires deep, multi-dimensional analysis. Through one-dealer-one-plan, you should help each dealer in your area create an annual business plan that best suits them and aligns with brand development strategies.
Additionally, regional managers should have a sense of autonomy and responsibility.
What does that mean?
Many regional managers don't proactively propose their own business plans; they passively wait for leadership's arrangements. Their reasoning is that the company has an overall business plan and won't adjust for their specific region.
In fact, whether leadership considers your special circumstances depends on whether you present well-founded ideas. When I was a regional manager, I had an experience where the provincial plan existed, but I proposed my own regional plan based on business review, and ultimately convinced the leader to adopt my full proposal. If your suggestions are based on data and logic, you can influence leadership decisions and gain more initiative.
So, how should regional managers make business plans? To plan well, you must first conduct an in-depth, multi-dimensional business review.
Conducting Business Review from Two Aspects: Sales Performance and Channel Status
Objectively and meticulously analyzing the past helps us see the future more clearly. Business review should not be based on memory or feelings, but on facts and data for multi-dimensional mining and analysis.
Specifically, we can review from two aspects: sales performance review and channel status review.
Let's go through them one by one.
I. Sales Performance Review
(1) Multi-dimensional Total Volume Analysis
First, review sales performance: what was the total sales of the brand in your region in 2021? But this is not a simple comparison of two numbers (sales vs. target); it's a comparative analysis based on the brand's total volume indicator.
Time dimension: If possible, include actual sales data from the past few years and compare year-on-year growth of actual sales over the past three years. Sales figures are static numbers, but they come from dynamic processes. Placing this number on a timeline helps us view it objectively from a trend perspective. This is a vertical comparison.
Space dimension: Break down the total volume by district/county, preferably by each salesperson's responsible area, to help analyze opportunities in each sub-region. This is an internal comparison.
Competitive dimension: Include major competitors in the analysis. This is a horizontal comparison.
Putting these numbers in a framework helps us analyze 2021 performance more objectively, identify potential areas and areas where competitors pose risks. These are the opportunities and improvement points for the coming year.
You might ask, where do we get competitor data? For chain supermarkets and most A/B-class stores, it's relatively easy to obtain. For other data, the team needs to make rough estimates. Experienced sales representatives should have a basic grasp of sales in their areas through daily visits and market observation. Regional managers should also frequently visit the market and communicate with dealers' key staff to better assess the market.
These numbers won't be completely accurate, but roughly correct numbers help us review 2021 performance more comprehensively and objectively. Only with a good comparative analysis of total volume can we make reasonable plans and sales strategies for next year.
(2) Category Achievement Analysis
Besides total volume analysis, we need to do category analysis. Why? It's a necessary step to refine the granularity of analysis. But category analysis isn't just about creating a pie chart of category structure; we still need to combine historical data for trend analysis.
We often talk about "growth," but growth is a structural concept: within total volume changes, there are shifts among categories or different growth rates. Moreover, this growth is trend-based. Analyzing these trends helps us more reasonably allocate category tasks for each dealer and salesperson next year, as well as the amount of resources to invest.
(3) Top SKU Business Analysis
After category analysis, we further refine granularity by selecting the top 10 SKUs by sales volume for analysis. This analysis can be done from two dimensions.
First, internal analysis. Compare the top 10 core SKUs in the entire province with the top 10 core SKUs in your region. This comparison helps identify opportunities. For example, if a SKU accounts for 8% of sales in the province but only 4% in your region, doesn't that mean it has great potential in your area?
Second, competitor analysis. By pulling data from multiple core stores, AC Nielsen data, and synthesizing market information, analyze the top 10 SKUs of competitors in the province. Comparing your region's top 10 with competitors' top 10 can help you find more breakthrough points and make improvement plans.
II. Channel Status Review
(1) Sales Achievement Analysis by Channel
Besides total volume, category, and SKU analysis, regional managers should also analyze sales across different channels. Generally, channels can be divided into key accounts, terminal, circulation, special channels, etc. Channels with small sales can be grouped as "others." Key accounts can be further divided into self-operated national KA, co-distribution national KA, regional KA systems, etc. Terminal and circulation departments can be subdivided based on different routes.
Calculate the completion rate of target volume for each channel. Based on these data, analyze the rationality of channel division, route division, and target setting. This provides a basis for adjusting channels and routes and setting targets for 2022.
Note: This channel analysis should be combined with sales personnel and key categories. That is, each channel's data should be broken down to the responsible salesperson. Business review should include not only business inventory but also organizational modules, which can support next year's organizational structure adjustments and compensation structure optimization.
Combining channels with categories also gives you more perspectives to discover problems and opportunities from a business standpoint.
(2) Key Store Achievement Analysis
From channels to stores, this is a refinement of channel analysis, as individual stores are the handles of business. Analyze sales at core stores, such as core stores in regional KA and chain systems, and A/B-class stores in terminal departments. You can also list the top 20 core stores in different channel types to analyze business models, such as category structure, gross margin and expenses, payment terms and receivables, etc.
Your investment and sales in these stores should be based on actual data to calculate input-output ratio and trends. Moreover, look at competitors' sales in these stores, especially their best-selling SKUs.
Additionally, analyze the consumer groups around the stores and classify them logically, such as local residential communities vs. migrant worker areas near factories, youth gathering areas vs. old residential areas, high-end vs. resettlement housing. Stores in these areas differ significantly in distribution standards and marketing promotion measures.
Market competition is about grabbing market share, which essentially comes down to core stores. For key stores, based on thorough analysis, you should create one-store-one-plan, ensuring both output and controllable expense ratios. Therefore, you need to study the organic combination of category structure and promotion methods.
(3) Channel Construction Analysis Review
Channel construction analysis should be viewed from two levels: distribution and promotion actions.
At the distribution level, list the target number of different store types in the region and compare with the actual number of stores that completed distribution and display. In this comparison, refine to category or even specific SKU to analyze gaps and opportunities.
Additionally, analyze key promotion strategies across different channels, such as ordering meetings, internal purchase events, surround selling, cross-selling, promotion scheduling, and shopping guide management. Compare target frequency vs. actual frequency, target sales vs. actual sales, and investment costs vs. output. This helps you arrange time and resources for major marketing actions next year in advance.
For ineffective promotion strategies, analyze whether the issue is timing, methods, execution details, or simply that they are no longer suitable for the current market environment. Promotional activities are essential, but you must ensure a high success rate; otherwise, you waste money and hurt team morale.
Two Suggestions for Regional Managers on Planning and Action
As mentioned earlier, objectively and meticulously analyzing the past helps us see the future better. But seeing clearly isn't enough; you must translate it into planning and action. This should be combined with the brand's plans and each dealer's actual situation. I won't go into detail here; I'll just emphasize two points.
First, reasonable structural layout.
In the business review above, whether it's total volume, category, SKU, channel, or store, we've already mentioned making 2022 plans based on actual analysis.
Channels: Given increasing specialization, classify channels reasonably, then arrange staffing, visit frequency, service processes, and assessment methods according to different channel types.
Categories: Determine which high-potential categories and SKUs need key investment, and which categories should reduce spending to maintain profits.
Stores: If the four-quadrant method is too complex, you can divide stores into maintenance and offensive types. Maintenance stores aim to maintain current sales and reduce operating costs. Besides obvious cost reduction, there's a hidden way: extending visit frequency. But this must be combined with marketing management software; otherwise, you might lose outlets, which is not worth it. Offensive stores aim to grab market share, then optimize category and gross margin structure to achieve better profitability. Pacing is crucial; you must not blindly increase investment.
"Growth" is a structural concept; a reasonable structural layout brings total volume growth. A reasonable structural layout comes from reasonable classification, which comes from multi-dimensional data analysis and review.
Second, set up a marketing department in the dealer's organizational structure.
From past review to future planning, strategies must be implemented through organization and teams. Regional managers generally focus on their own teams, but they should also pay attention to the dealer's organizational construction, as a large amount of market operations rely on dealers.
In the November 16 article, I mentioned the design of a reasonable dealer organizational structure. Here, I emphasize one point: dealers should add a marketing department manager.
Why?
First, various new channels and new play methods are emerging endlessly. Second, some marketing strategies formulated by brand owners often fail to be implemented at the dealer level, leading to wasted expenses and lost opportunities.
Because traditional dealers have pipeline-type talents who can run terminals and maintain customer relationships, but they often struggle to handle marketing strategies of certain complexity and newly emerging sales channels. Sometimes, these new channels conflict with existing business.
A dedicated marketing department manager at the dealer level can solve these problems. He can take on two responsibilities: one is to implement the brand's marketing strategies, supervise the sales team's execution, identify problems in the process, and correct them promptly; the other is to plan and research new models and new play methods, and open up new channel strategies.
Promoting dealers to improve their organizational structure will make regional managers' work in 2022 easier.
Final Thoughts:
Success comes from preparation; without preparation, you will fail. Whether it's business review or annual planning, these are tasks regional managers must do well. But because they are done every year, for many regional managers, they become a formality and fail to serve their intended purpose.
This article aims to raise regional managers' awareness of the importance of annual business planning and provide specific methods for reference. I hope it offers inspiration and help to regional managers at the juncture of 2021 and 2022.
About the Author: Wang Jun, former head of regions, provinces, and large areas at Liby Group and Yihai Kerry Group, as well as a marketing executive at headquarters. He deeply understands the operational logic of different channels in the Chinese market. He is now a co-founder of Bingguo Brothers and is willing to exchange ideas with industry practitioners for mutual progress. The above article represents only personal views.
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