As the market moves down, township markets are gradually becoming important venues for FMCG manufacturers to increase sales and profits. However, township consumers' mindsets differ from those in first- and second-tier cities, causing many manufacturers to face significant obstacles when expanding into townships. This is also one of the most headache-inducing issues for brand channel managers: channel layout in township markets. Several issues need to be considered:

  1. How to serve outlets more efficiently? 2. How to allocate service resources, including personnel visits and vehicle delivery? 3. How to motivate distributors to serve actively?
  2. When necessary, how to lay out distributor networks? These issues may seem independent, but they are actually intertwined. In essence, it's about balancing sales, costs, profits, and management. If these issues are not well thought out, don't talk about improving township channels; otherwise, "improvement" is worse than "staying put." Today, let's discuss township channel layout. How to Serve Township Outlets Efficiently? To achieve efficient service to township outlets, first understand the distribution of township outlets. Based on my market visits, I summarize the following five points: 1. Significant differences between north and south, and between developed and developing regions: In many southern markets, urban-rural integration has long been achieved. For example, when I visited the Foshan market, I hardly saw any townships; only some urban villages exist. The so-called township market outlet layout is not much different from urban areas (can be served as urban outlets). In most northern markets, townships and villages are conventional, with lower population density and higher outlet dispersion. 2. Significant differences between township and village outlets: If classified by channel, township outlets are mostly convenience stores, supermarkets, and medium-sized stores (with rich product assortments), while village outlets are mostly traditional grocery stores (focusing on high-frequency daily consumer goods). 3. Functions of large township stores: The functions of many large township stores are changing. Besides in-store sales, some large stores are becoming distributors for nearby village outlets and are also one of their main suppliers. 4. Catering and special channel outlets: These are mainly concentrated in bustling township areas. With improved living standards, the number of entertainment channels is increasing significantly; chess and card rooms are booming in southern township markets. 5. Distributor and wholesaler layout: They mostly combine wholesale and retail, with a standard configuration of one vehicle, one driver, and one store, serving delivery within 100 outlets, without visits, mainly relying on phone orders for delivery. Township distributors and wholesalers are relatively dense; larger villages may have one or two, while smaller villages have almost none. Given the above, how should manufacturers lay out to achieve efficient service? My suggestions are: 1. Research is the primary task: First, understand the township's population distribution, per capita income, distributor outlets and average turnover, local consumption habits, the most influential promotional methods, and the brands with the largest market share. This prepares you for better township market layout. 2. Focus on big stores, let go of small ones: Big stores should be prioritized, not for sales, but for brand building. Township consumers' brand awareness is increasing; big stores are windows for brand building. Even if business is poor, focus on image building to prepare for future market efforts. For example, set up two fully branded stores in bustling township areas, put up wall ads at township entrances and exits, and distribute couplets or calendars with posters to every household—these are practical promotional methods. 3. Focus on high-volume outlets, let go of low-volume ones: High-volume outlets should be prioritized, regardless of store size, focusing on sales. Many high-volume township outlets actually emphasize delivery over retail; they have small storefronts but strong service capabilities, wide coverage, and strong product recommendation abilities. Additionally, I once visited a chess and card room where a single unknown brand of canned energy drink sold nearly 200 cases in a month, equivalent to a large supermarket's sales. Such outlets should be deeply explored and well served. 4. Two- or three-tier service model: In townships (third tier), lay out distributors and wholesalers to serve distributors and key outlets; in villages (second tier), focus on serving distributors (some wholesalers or distributors may be in townships). Note: Nothing is absolute; the core is to serve the regional population and outlet count. 5. Channel product structure must match: When selecting products, consider the current consumer price band and launch appropriately priced products. Choose 2–3 main products for the township market. For core products, balance high and low ends; don't just go low-end, nor position the brand too high, making it an unattainable castle in the air. 6. Differentiated services for north and south: In developed southern regions, township and urban services need to be integrated; essentially, there's little difference. In northern regions, townships must balance costs and output, carefully calculating visit frequency, market expense investment, monthly activity, and per-store output. How to Allocate Service Resources: Vehicle Sales or Order Taking? Many ask: How to allocate service resources? Is vehicle sales or order taking better for township areas? We need to clarify the pros and cons of each. Vehicle sales pros and cons: Selling with products on board lets outlet owners see and touch products, giving a sense of security, which can boost transactions and order amounts, reducing lost orders. However, costs are high, and vehicle and driver efficiency cannot be maximized. Order taking pros and cons: In-store service improves, visit efficiency increases, and coverage costs decrease. However, there's a risk of missed orders, and promoting new products is less effective because customers can't see the full case, reducing promotion efficiency. Also, bestsellers are harder to push for stock. Essentially, these pros and cons can be broken down into three dimensions:
  3. Product popularity: In principle, mature products should rely on order taking; new products on vehicle sales; growing products on a combination.
  4. Delivery distance: In principle, short distances favor order taking; long distances favor vehicle sales; medium distances combine both.
  5. Outlet tier: In principle, high-volume outlets favor order taking; low-volume outlets favor vehicle sales (if quality is too low, distributors & wholesalers should serve); medium outlets combine both. These three dimensions can create eight intervals. Each interval's coverage type should be determined by manufacturers based on principles and actual conditions. For example, in urban-rural fringes, for high-quality outlets, should new product promotion use vehicle sales or order taking? In principle, urban-rural fringes favor order taking; new product promotion favors vehicle sales; high-quality outlets need order taking. So we can conclude: It leans toward order taking, but considering salesperson needs (e.g., feedback that new product distribution is difficult and needs vehicle sales support), we can start with vehicle sales and follow up with order taking later. As the saying goes: Water has no fixed shape, soldiers have no constant formation. Channel operations should not be rigid; adapt to circumstances. How to Motivate Distributors to Serve Townships Actively? The level of distributor enthusiasm for serving townships depends on two factors: coverage costs and township channel profits. When channel profits exceed coverage costs, distributors become motivated; the greater the excess, the higher the motivation. Coverage costs include: Channel profits include: Distributors' product mix, price differences under stable pricing, rebates under brand rules, etc. (We'll detail these later.) I often receive complaints from distributors. Some "brainless" brand managers send a notice to distributors requiring them to improve township service levels, add vehicles and personnel, and do full vehicle sales. In this process, they don't calculate the distance-based profit and cost for distributors, nor do they plan long-term business, such as when break-even will be achieved or when profit growth will occur. They just act as "bossy" managers, which backfires, making distributors feel township markets are a chicken rib (tasteless but wasteful), creating resistance. To motivate distributors to serve townships, in my view, it boils down to twelve characters: Calculate accounts, find methods, lay out well, and achieve high efficiency. How to Lay Out Township Distributor Networks? 1. Define business area planning criteria Many companies overlook this and set uniform standards that are impossible to implement. Markets are not regular shapes, and area division is not geometric area. Consider these five dimensions: a. Relationship between population and outlet count: If specific outlet data is unavailable, predict based on population. For beverages, for example, the number of outlets that can be stocked is approximately population/400. b. Market brand strength differences: The granularity of area division differs between strong and weak brand regions. c. Regional geographic area: Don't waste time traveling back and forth. d. Sales team configuration: The number of salespeople relates to financial indicators (e.g., annual sales amount per salesperson) and service indicators (ratio of outlet count to maximum outlets per person). Seek the optimal configuration of areas and personnel. e. Other outlet characteristics and influencing factors should also be considered. 2. Township distributors are essentially a second- or third-tier network building issue Three points to note: a. Distributors are developed by dealers but must accept brand management. It's best to sign tripartite contracts, set quarterly and annual rebates (dealer annual rebates can be split), increase their sense of belonging, and they can also be a reserve force for dealers. b. Design reasonable channel profits. Distributor profits can reference dealer situations, but the company must issue unified guidelines (profit range limits) to avoid unreasonable allocation. c. Dealers are responsible for direct-operated terminals within a certain distance (e.g., core urban areas or within 30 km) and maintenance of key regional customers. Distributors and wholesale-retail stores are supplementary visit forces for the enterprise's periphery. Final Thoughts: According to Kantar Consumer Index data, for the 4 weeks ending January 27, 2023, FMCG consumption in township-level markets totaled approximately 45.8 billion yuan. If January 2019's FMCG share of 7.4% of the annual total is used as an estimate, the 2023 township FMCG market could reach 616.4 billion yuan annually. If township consumption levels reach county levels, the township FMCG market would grow an additional 10.5%, meaning an extra 64.6 billion yuan in potential business in 2023. So the market potential is enormous. "Products going to the countryside is easy; mindsets going to the countryside is hard!" This is a true description of the vigorous campaign by FMCG companies to go to rural areas. Corporate channel departments lack in-depth research on township markets and build them as if they were cities. The result is often: opportunities are there but not seized; money is visible but not earned. Here, I hope major FMCG manufacturers can get involved, go deep into township frontlines, formulate the most suitable channel strategies, let distributors make money, and let brands develop.