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Terminal—a word that is both hated and exhilarating. In the current landscape, no one can monopolize terminals, not even powerful super-terminals like Gome or Walmart; yet no one can afford to ignore them, as even international brands like P&G, Coca-Cola, and Haier dare not underestimate their importance.
(1) Scarcity Makes Valuable: The Current State of Terminal Resource Scarcity
If we follow the existing definition of terminals, our terminal resources are indeed scarce. In a medium-sized prefecture-level city with a population of 500,000, if there are 100 wholesale-retail channels, 10 large supermarkets, 100 hotels, plus 2 professional FMCG wholesale markets, 1 professional home appliance wholesale city, and 1 building materials wholesale city, then the city's functions should be relatively complete. According to the Pareto Principle (also known as the 80/20 rule, developed by Italian economist Vilfredo Pareto in the late 19th and early 20th centuries, which states that in any set of items, the most important ones constitute only a small portion, about 20%, while the remaining 80% are the majority but less important), among these terminals, about 20 wholesale-retail channels, 2 large supermarkets, and 20 hotels should be the ones with good business. Yet, at least 20 to 30 different brands and products from the same industry and category flood into this city to compete. It is easy to imagine that without market expansion, under the same 80/20 principle, what price must non-best-selling products (or brands) pay to gain a voice and achieve sales in these limited terminals?
Some may ask: if terminal resources are scarce, why not increase the number of terminals to alleviate this contradiction? When a large number of terminals are born, competition among terminals themselves is also fierce. Would you pay attention to a terminal that doesn't move goods? The scarcity of high-quality terminal resources is the correct answer to this question and the root cause of the difficulty in controlling terminals. Why are super-terminals like Carrefour, Gome, Sanlian, and Dazhong so arrogant? Because they are high-quality terminal resources, whether nationally or locally, and they are still relatively scarce, thus breaking the existing supply-demand balance.
As more multinational terminals enter China and more powerful local terminals continue to grow, high-quality terminal resources will increase significantly in the coming years. At that point, the scales may tip back to the suppliers, and the broken balance may be restored.
(2) To Capture the Enemy, First Capture the Leader: Control the People Who Control the Terminals
No matter how large the terminal—whether a superstore or a large restaurant—there are people responsible for its operation and management. If you build good relationships with the direct managers of these terminals, think from their perspective, help them solve problems, and even become their advisors or think tank members, controlling the terminal becomes natural. If you communicate with an adversarial attitude, working for the sake of work, the other party will naturally be on guard, as each serves their own master.
Brands or companies that handle terminal relationships well are those that communicate well with the terminal's managers. Terminals themselves are inanimate, but people are flexible. Using human adaptability to obtain the terminal resources we want is a common tactic of smart companies.
One of our provincial supermarket department managers summarized his experience with a classic phrase: "Customer relationship communication is everywhere!" He expanded this into 10 points, which we share here:
The salesperson's work attitude, work style, and approach are the most basic form of customer relationship communication. Use your excellent work style and personal charisma to win over your partners; if they accept you, they accept your work.
Discussing cost investment is also effective customer relationship communication. Always make supermarket supervisors feel that our investment is support for joint sales, and more importantly, support for their supermarket's work—it is mutually beneficial, not something we owe, and we can choose to withdraw support.
Helping them complete sales tasks is the most effective customer relationship communication; supermarkets also have their own systems and tasks.
Offer advice and suggestions for their work; they also feel lost at times.
During communication, repeatedly use phrases like "We're all employees, we're all friends" to cross psychological barriers, shorten the distance, and create resonance.
Greet them like friends during holidays.
When they face personal difficulties or illness, help and care for them sincerely, like a friend.
When they make personal requests, regardless of size or difficulty, do not agree too quickly to avoid negative effects. What is easily obtained is not cherished or appreciated; it is seen as deserved, and demands may escalate. If you fail to meet their expectations, they may harbor doubts, avoid deep interaction with you in this area, create distance, or even bear resentment.
Tie personal interests to sales support.
The scales of fortune always favor the diligent.
Remember one principle: the harder someone is to communicate with, the more you must overcome psychological barriers and visit them more often.
(3) Misfortune May Be a Blessing: Lack of Cost Support Is Not Necessarily Best
Many people fall into a misconception when dealing with terminals: they think that if they can negotiate no cost support at all, they have controlled the terminal and achieved victory. In reality, there is no free lunch! Even powerful brands like Nestlé milk powder and Coca-Cola have reasonable support costs when dealing with supermarkets. Brands without any cost support may occupy a place on the shelf but are not promoted, or are buried at the bottom shelf, or worse, become tools for supermarkets to attack competitors, thereby destroying the hard-built price system.
The basic principle when dealing with terminals is to invest the minimum cost for maximum effect. If a supermarket truly charges no fees and does not seek to expand its own profits, it is hard to imagine how it can sustain itself in the current competitive environment. Would you be willing to deal with a terminal that cannot see tomorrow?
(4) Targeted Action: Build a Regional Terminal Database
Understand the number and quality of terminals in the regional market; the monthly sales of each terminal; the comparison of sales during promotional and non-promotional periods; location and customer source analysis; analysis of terminal management personnel; records of customer relationship activities, including time and methods; competitive brand data analysis; and analysis of competitors' promotional tactics and their effects, as well as their impact on us. The more detailed the regional terminal database, the more initiative we have in negotiations and communication with terminals. Use indisputable facts and hard numbers to expose the baseless claims of terminal procurement personnel, making them allocate more unreasonable costs to competitors rather than always thinking of us first.
Building the database requires dedicated personnel and computer archiving. To prevent leaks, marketing personnel not directly involved with terminals should not have easy access to the data. When negotiating with a specific terminal, only extract data relevant to that terminal. Regular updates are also crucial; to prevent corruption, procurement personnel change frequently. If our updates cannot keep pace, the information may become outdated, reducing the success rate of negotiations.
(5) The Ultimate Goal: Who Is Whose Terminal?
"Doing terminals is suicide; not doing terminals is waiting to die" captures the helplessness of terminal operations. Yet, despite this helplessness, many brands still squeeze into terminals. Why? Because of terminal sales volume and their driving effect on other related channels. In the liquor industry, Kouzi Jiao once struck gold in terminal operations, but in recent years, there have been no reports of using the same method to develop new regional markets. Not because the method is obsolete, but because the resistance is too great, market startup is not as fast as in previous years, and financial support for the market is insufficient.
At the same time, innovative marketing methods have also taken away market share from products that rely on terminals for distribution. Examples include the "post-dish-pan" method targeting core power consumers in the liquor industry; the home direct sales model represented by Amway and Avon in the cosmetics industry; the joint-stock joint-sales model represented by Gree; the product-group distribution model represented by Wahaha; and the self-built terminal network model of Bird.
As long as you develop an operating model based on your own financial resources and actual company situation, it is the best model; there is no need to copy others. Any successful experience needs to be borrowed, and any successful model needs to be selectively used. Only then can terminal operations clear the clouds and see the rainbow!
For manufacturers, any "sales platform" that directly faces consumers selling products can be called their terminal. If they can control and coordinate their relationships well, they naturally won't worry about products not moving.
All manufacturers are tilting their efforts toward these terminals. Home appliance sellers only focus on large terminals like Gome, Suning, and Dazhong that can quickly bring sales; FMCG sellers cling to super FMCG stores like Carrefour and Xin Yi Jia; liquor sellers only target large restaurants with booming business. These terminals are spoiled, with their tails in the air, treating everyone with a different face each day, and the costs spent on terminals are skyrocketing. In this give-and-take, it often enriches the terminals while damaging the already thin profits of enterprises.
These so-called terminals also have their own terminals—their terminals are the consumers and unit purchasers who visit them daily. To please their own "terminals," these super terminals of manufacturers use every trick in the book to win favor. One-yuan TVs, air conditioners sold by the pound, super discounts, free gifts—nothing is off the table. The difference is that these terminals are smarter than us: they use our money to buy goodwill from their "terminals." We pay the bill and still have to watch their faces—uncomfortable to think about.
So, can we bypass our terminals to directly please the terminals' "terminals"? This involves two issues: First, the cost of direct bypass. Without a sales platform, how can the terminals' "terminals" find us and trust us? And can we afford the cost of building such a platform? Second, brand awareness. If we bypass terminals directly, will consumers accept our products? Why should they? If we solve these two problems, our bypass will be healthy and meaningful.
In the past, TCL's self-built terminals and Haier's home appliance specialty stores were successful examples of directly controlling terminals; while P&G, Coca-Cola, and domestic Wahaha are successful examples of winning terminals through brand power. Because of their successful self-built terminals and strong brand power, their voice in these super terminals has not been stripped, making direct bypass possible. As Gree declared when it "fell out" with Gome: when Gree's sales in Gome account for less than 5% of its total sales, any "threats" or coercive measures cannot change the overall market situation!
Only by understanding who is whose terminal can we know the direction of the road ahead. When the terminals' "terminals"—consumers—are under our control, controlling terminals becomes real. As the saying goes: If a person's mind is clouded, what cannot be controlled?
Reflecting on current terminal operations, many brands are crowding onto a single-plank bridge, rarely looking far ahead. Perhaps this is why there are so few Chinese international brands.
To conclude, borrowing a quote from renowned domestic marketing master Lu Changquan: "No opponent is too strong to be challenged, and no enterprise is too weak to compete. Even if the cards in your hand are terrible, you can find a solution based on the actual conditions." The same applies to terminals: no terminal is so powerful that it can do whatever it wants! As long as we treat them with a normal mindset and find appropriate ways to respond based on reality, we will sound the victory march.
This article is excerpted from the management book "The First Book of Liquor Marketing" by Borison Management Books.
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