---
title: "Regional Market Operation Leadership: Should It Rest with Brand Owners or Distributors?"
description: "The complete offline channel chain is: brand owner - distributor/dealer - salesperson - outlet - consumer. The core of effective offline channel coverage is to connect all links in product circulation, which first requires addressing three questions: who does it, what to do, and what model is best. This article discusses these questions, arguing that market leadership should be determined by market efficiency, not by brand owners' preference."
author: "高级研究员 海游"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-02-25"
language: "en"
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# Regional Market Operation Leadership: Should It Rest with Brand Owners or Distributors?

> The complete offline channel chain is: brand owner - distributor/dealer - salesperson - outlet - consumer. The core of effective offline channel coverage is to connect all links in product circulation, which first requires addressing three questions: who does it, what to do, and what model is best. This article discusses these questions, arguing that market leadership should be determined by market efficiency, not by brand owners' preference.

The complete offline channel chain: brand owner - distributor/dealer - salesperson - outlet - consumer.
From brand owner to distributor is called sales; from distributor to salesperson to outlet is called distribution; from outlet to consumer is called sell-through; from consumer back to outlet is called pull-through.
The core of effective offline channel coverage is to connect all links in product circulation. Above that, three questions must first be addressed: first, who does it? Second, what to do? Third, what model is conducive to doing it well? Today, let's discuss these three questions.

**Addressing the question of who does it**
In recent years of consulting work, the debate over whether market operation leadership should rest with brand owners or distributors has been a focal point.
Some traditional brand owner sales management teams argue: operation leadership must be kept in the hands of the brand owner to facilitate unified command and consistent pace, which is more beneficial for overall development.
Other brand owner sales management teams argue: whoever operates with higher efficiency and stronger combat effectiveness should be given the market. If distributors are more efficient and competitive than the brand owner's team, a new distributor model—the contracted distributor—can be adopted, which is more conducive to resource integration and improving the operational efficiency of both manufacturer and distributor.
Between these two views, I personally lean toward the latter for three reasons:

**1. Over nearly four decades of FMCG industry development, the distributor force has undergone qualitative changes.**
Distributors have grown from the initial "buy-sell price difference" mindset, having been educated, guided, and instilled with knowledge by excellent domestic and international FMCG brands.
For example, Coca-Cola and Master Kong were among the first to introduce the channel refinement model, making distributors realize the value of "terminal is king" and how to better serve terminal outlets.
Jinmailang and betel nut companies successfully implemented the "small boss contracting" model, making distributors realize that they and their employees are not only in an employment relationship but can also be partners, and changing the cooperation relationship can better stimulate the team's operational efficiency.
Therefore, **today's surviving distributors have been baptized by market survival of the fittest; they not only know how to "sell" but have gradually learned to "operate."**

**2. The internet process has broadened distributors' "horizons."**
The internet has broken down geographical barriers, making it easier for people to access products and services globally.
Through the internet, distributors can learn about market demand and consumption trends in different regions, helping them make more accurate market research and sales strategies.
The internet also provides distributors with more sales channels and methods. Distributors can set up their own online stores through e-commerce platforms, achieving a dual online-offline sales model. They have also learned to use the internet for market promotion and brand publicity, attracting more potential customers.
Furthermore, the internet provides distributors with more efficient and convenient operational tools and data analysis methods. They can use internet technology for supply chain management, inventory management, order processing, and other tasks, improving operational efficiency and customer service quality. They can also collect and analyze large amounts of data through the internet, gaining deeper market insights and further optimizing business strategies.
Therefore, **the internet is helping distributors rapidly upgrade their operational efficiency.**

**3. Supply chain transformation further enhances distributors' operational efficiency.**
**First, reducing inventory costs:** Through supply chain optimization, distributors can better coordinate with suppliers, reducing inventory backlog and surplus. Through timely and accurate demand forecasting and supply planning, distributors can finely control inventory, reduce inventory costs, and improve capital turnover efficiency.
**Second, shortening delivery cycles:** By optimizing supplier selection, warehousing and logistics, and order processing, product response speed and delivery efficiency can be improved, meeting customer needs and enhancing customer satisfaction.
**Finally, achieving cost optimization:** Supply chain transformation can reduce procurement and operational costs by optimizing logistics transportation, warehouse management, and supplier cooperation, thereby improving operational efficiency and profit margins.
Therefore, **the supply chain is helping distributors rapidly upgrade their operational efficiency.**

**Summary:** Today's distributors are not what they were thirty years ago. Many large and medium-sized trading companies have already achieved enterprise-level operations and possess good operational capabilities.
**Whether market operation leadership should rest with whom is not determined by the manufacturer but by the market. Seeking a leader that can outcompete rivals in competition is the core of sustainable development for manufacturers.**

Then the question arises: how to identify which type of distributor has the capability for market operation leadership?
For brand owners, the preferred distributor standards are only two: one is the ability to do the job (capability), and the other is the willingness to do it (intention). This requires brand owners to establish a complete distributor capability and willingness evaluation system to select those with strong capability and willingness to lead regional market operations.
**Brand owners daring to delegate authority is a major innovation and progress in the channel coverage model!**

**Addressing the question of what to do**
For the FMCG industry, the transaction (sales) between brand owners and distributors often has few problems; the difficulty lies in distribution (B-end work) and sell-through (C-end work).
It would be best to advance both tasks simultaneously, but in actual operations, constraints such as limited energy of frontline teams, limited budget for market expenses, and significant differences in the comprehensive performance and investment of major competitors in different markets make it particularly important to seek a replicable and sustainable model.
Generally, I suggest brand owners initially segment markets based on two indicators: population size and annual per capita consumption amount. This can be divided into four categories:

**1. For strategic markets, the characteristics are: large market capacity and strong brand power.**
At this time, the core work should focus on the B-end.
**First, ensure outlet coverage.** For food and beverages, the theoretical outlet definition is generally one outlet per 400 people. How to achieve over 90% coverage of theoretical outlets within a specified time is an urgent task.
**Second, improve outlet quality.** On one hand, improve display quality (meeting display standards and shelf share standards); on the other hand, build N SKUs in outlets (achieve full coverage of core SKUs of the company's product series at different outlet levels within a specified time).
The core of B-end work is to **shorten the distance between the brand and outlets, establish a base within outlets, and thereby promote distribution.**

**2. For key market 1, the characteristics are: small market capacity and strong brand power.**
At this time, the core work is almost the same as for strategic markets, but note that due to small market capacity, available resources will be relatively limited according to budget. How to achieve effective coverage of outlets at low cost? **Scientific and reasonable planning of resource investment** is particularly important.

**3. For key market 2, the characteristics are: large market capacity and weak brand power.**
At this time, the core work should focus on the C-end.
**First, do brand communication well.** Specifically, how to build brand influence in the regional market. In addition to traditional outdoor exhibitions and brand day activities, it is also necessary to leverage new media (Douyin's local life, WeChat official accounts, Xiaohongshu, Bilibili, etc.) to influence young people.
**Second, consumer operations.** Three questions must be addressed: Who are the target consumers? Who are the local KOCs? Through what methods to interact with and influence these consumers?
The core of C-end work is to **shorten the distance between the brand and users, establish consumer mindshare, and thereby drive sell-through.**

**4. For potential markets, the characteristics are: small market capacity and weak brand power.**
At this time, for general brand owners, this is not the current core market. We should spend limited energy and resources on "eating meat," while "bones and soup" can be appropriately postponed.
**The core of potential market operations is: key breakthroughs, i.e., effective coverage + competitive display. Implement "targeted" distribution to target outlets and guide consumer purchases through category-related displays.**
The core of the work lies in **gradually building brand influence and progressively connecting consumer purchase channels.**
After the two-dimensional market classification matures, multi-dimensional distinctions can then be made to refine key operational points for each module, as shown in the figure below:

**Addressing the question of what model is conducive to doing it well**
The definition of channel model is essentially the division of rights, responsibilities, and interests between manufacturer and distributor. What kind of market matches what kind of distributor, and what kind of rights, responsibilities, and interests? Let me share a case of channel model planning I did for a listed company.

**1. Leading operation model: matches distributors with strong capability and strong willingness.**
**The distributor acts as the market leader,** with core work including: market outlet construction, development and visits to various outlets, display maintenance; formulation and implementation of market promotion plans; management and assessment of teams and shopping guide teams, etc.
**The brand owner acts as the market assistant,** with core work including: market supervision and inspection, summary of sell-through activities; brand building, implementation of company brand; daily participation in morning meetings, tracking data and process advancement; conducting market co-visits and standard training, assisting in creating models, etc.
Next are a series of supporting tasks such as expense models, coverage models, and inspection models. It must be emphasized that the leading operation model is not simple expense contracting, nor is it management by contracting; rather, manufacturer and distributor each perform their own duties and maximize their own efficiency.

**2. Following operation model: matches distributors with weak capability and strong willingness.**
**The distributor is positioned as an investor and participant, while the brand owner team is positioned as the business leader.**
The distributor's core work includes: market outlet construction, development and visits to various outlets, display maintenance; formulation and implementation of market promotion plans; management and assessment of teams and shopping guide teams, etc.
The brand owner's core work includes: building systems, negotiating and establishing standardized operating systems (organizational management systems); building teams, helping distributors with daily team management, participating in morning meetings daily, tracking data and process advancement; conducting market co-visits and standard training, assisting in creating models; building brands, implementing company brand, etc.
It must be emphasized here that **the brand owner's regional supervisor, as the distributor's professional manager, must first possess good operational capabilities. They must not only undertake the brand owner's various operational management goals and act as the market operator, but also manage the distributor's team and daily operations.** Therefore, their capabilities, qualities, and job responsibilities must have implementable process systems.
The success or failure of the market depends on the brand owner supervisor's operational capabilities.

**Summary:** The correct order to evaluate a company is—**first look at business, then organization, then mechanisms, and finally cadres.** During the inspection, if cadres are found to be inadequate, the organization will certainly not be good either. In fact, if you use people well, they are "good"; if you use them poorly, they are "bad."
The nature of the distributor team is the same as a corporate organization; good or bad often depends on the fit of the model. In consulting, I often emphasize the importance of the model. With a good cooperation model, manufacturers and distributors can maximize their subjective initiative and better adapt to market competition.

**From March 14 to 16, 2024, during the Spring Sugar Fair, the Second China FMCG Distributor Conference, organized by New Distribution in conjunction with Zhoupu Data, will be held in Chengdu.**
On March 15, a closed-door private sharing session for distributors will be held, titled "Low-price impact, manufacturer direct control, declining customer traffic, what are the options for distributors?" It will feature one-on-one dialogues with outstanding large distributors to discuss experiences, explore business opportunities, and discuss the era's dividends.
At the same time, we will invite 16 national benchmark distributor owners and relevant industry executives to share their latest thoughts on distributor business. We hope to provide direction and set up a lighthouse for the distributor community in the face of drastic changes today, so that at least their business direction is not blurred or confused!
The Second China FMCG Distributor Conference is not only a thought feast of knowledge, cases, and methods, but also a conference that leads the future development of distributor business!

**This conference will revolve around the theme of "Supply Chain Revolution." Over three days, there will be one main forum, one China FMCG Hard Discount Conference, one China FMCG Distributor Conference, more than ten sub-forums and closed-door exchange sessions, and the first major debut of the [Extreme Supply Chain] Brand Factory Direct Procurement Fair. It will bring together thousands of FMCG brand owners, distributors, retail transformers, and industry service providers from across the country in Chengdu for continuous brainstorming to discuss the challenges and opportunities, changes and ways out in the era of supply chain revolution.**
In this era of supply chain revolution, a new business era will be born. We hope every participant will still have a place in this wave, and we believe this will be a conference worth attending! For business cooperation, please contact:
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