Sales contribution, profit contribution, market performance, sales network, promotion operations—these marketing terms are familiar to every distributor or brand practitioner, but in reality, most people's understanding is fragmented. They can talk like experts on any single topic, but in practice, they are disorganized and patchwork, mainly because they lack an overall macro understanding of the market and cannot effectively combine all elements. I remember my former leader often said: "Use market means to do sales, and go back to the starting point to see problems." The essence is to take the market as the starting point and coordinate all marketing work. Today, I will sort out the regional market strategy model for distributors and brand personnel. The following content covers a wide range, and it is not possible to describe it all in one article; it is only a brief overview. -01- The Starting Point of Business: The Market What is a market? There are many definitions. I believe the essence of a market is the place of business. I have always believed that there is no shortcut in business, just like a farmer farming, to achieve a better harvest. ** First, you must have more cultivated land: do a good job in retail coverage management, let more channels and more outlets sell, and firmly control them. Second, higher yield per mu: do a good job in in-store element management, let outlets sell more, increase SKU per store, and increase sales per SKU. For a distributor, sales revenue is the foundation for profitability, and better revenue comes from market coverage, distribution, and improvement of in-store elements. If these elements are not done well, it is difficult to obtain good operating profits. These are often not due to poor business skills, but mainly due to insufficient attention to the market. They have walked too far on the sales road and forgotten why they started. FMCG practitioners like to do what they are good at, but ignore some basic market work and ignore the market as the starting point. In this case, talking about growth and profit seems inadequate. -02- Four Aspects Around the Starting Point I. Market Investment: How Much Money Was Spent The market needs to be nurtured, and nurturing requires money. The result of business is to make money, so how much money to spend and how to spend it is an art. This art is based on the limitations of single-store output and market expenses. The investment principle is to concentrate superior resources to launch attacks on local fronts. Specific market investment includes two parts. 1. Promotion Expense Investment: a. Tiered investment for terminal store customer displays, rebates, etc., that is, divide terminal outlets into several levels according to sales volume. Some companies name them diamond, gold, silver, copper, iron customers, others name them VIP, first-level, second-level, third-level customers. Implement expense investment according to actual conditions to ensure smooth product display at terminal stores; b. Investment in market activities and consumer experience expenses to ensure smooth product movement at the consumer level; c. Investment in channel promotion expenses to ensure channel penetration and coverage; d. Investment in online and offline media support to ensure smooth consumer awareness of the product. The above should be continuously followed up with cost-effectiveness ratio, that is, control input-output and balance profits. 2. Operating Expense Investment: a. For brand owners, consider the control of landed cost (production and shipping), reducing landed cost a little will make the product more competitive; b. Distributor warehousing, ensure high turnover in warehousing; holding inventory is increasing costs; c. Distributor logistics, do a good job in order allocation and route planning to ensure efficient vehicle delivery; d. Distributor personnel, configure forces, effective incentives, reasonable division of labor, ensure all personnel work efficiently and fully; e. Distributor capital, cash flow is more important than profit. The above should be continuously counted, evaluated, and summarized to achieve improvement in all aspects. General principle: Market is graded, outlets are graded, weigh the effect of resource investment, and achieve:
a. Be good at accounting, set cost-effectiveness ratio, plan budget; b. Be good at allocating accounts, set expense bearing plan; c. Be good at follow-up, follow up sales and expense status; d. Be good at evaluation, cost-effectiveness ratio and break-even analysis; e. Be good at adjustment, adjust front and back office investment according to actual conditions. II. Market Output: What Achievements Were Made Market output is the result of business operations. Output should include two levels: one is market share, the market sells more goods; the other is profitability, the market earns more money. 1. Sales Contribution: Most distributors always quickly pursue the continuous increase in volume. Only when the volume is large enough will the distributor's market position be large enough. At this time, they will occupy a dominant position in the category, have market voice, and resources will gradually tilt towards them, thus having the conditions for rapid profitability. 2. Profit Contribution: For distributors, profit comes from sales volume * price difference between purchase and sale - market investment, that is, increasing revenue and reducing expenditure. The principle is to expand sales volume, and the second is to reduce market investment. This requires distributors to clearly understand these two principles and refine them into daily operations. General principle: Output must have goals, and strive towards goals. a. Share goals, share determines competitive landscape; b. Growth goals, including incremental and growth rate goals; c. Unit output goals, set single-store output goals for key terminals and single-item incremental goals for key items. III. Market Front Office: What to Do in the Market The market front office refers to the specific work of frontline combat personnel in the market. Under the leadership of the main combat unit commander (usually a city manager), they complete the two major indicators of market coverage and terminal performance. 1. Terminal Performance: Confirm terminal performance elements and sub-items and standards (distribution, location, display, price, inventory, promotion, sales aids, etc.), and analyze the key business drivers of the segment market. Including but not limited to: a. The quality of product display location, the closer to the cash register, the better, achieving visibility outside the store and visibility everywhere inside the store; b. The vividness of product display, including but not limited to cut cases, stacked cases, shelves, special displays, materials; c. Product price, sales aids, and promotions; d. Product inventory; e. Performance and feedback of main competing products. 2. Coverage Performance: Confirm channel coverage targets, inspect coverage quality, and analyze coverage benefits. Including but not limited to: a. Development of target outlets, quantity and quality of outlets; b. Attack on key stores, such as hypermarkets, convenience store chains, and other image stores; c. Channel development, strive for full channel coverage. IV. Market Back Office: Who Does the Work The market back office refers to the channel expert team that empowers and adds value to each combat channel of the front office main force, providing professional support systems by category and brand, and the rear support system for full-domain marketing operations. Ensure that the distribution network and business team do the right things, use the right people, and do things right. 1. Business Team Issues and Opportunities: a. Business operation level, including the process of each work, the tools of each process node, and the standards of each operation; b. Performance assessment level, including KPI for each position, information sources for each KPI, and composition of personnel wages; c. Work planning, including OGSM (meaning: to achieve the purpose, specific detailed goals, action strategies (battlefields and tactics), and measurement of indicators (correct evaluation)), business goal decomposition, business resource decomposition; d. Personnel configuration, including the organizational structure of the sales team, the number of sales personnel, and the business level of sales personnel; e. Organizational expenses, including organizational personnel expense budget, cost-sales ratio of each position, and profit center management mechanism of each organization; f. Team development, including making team members have prospects, ability, and enthusiasm. 2. Distribution Network Issues and Opportunities: a. Support of existing distributors to the channel, including but not limited to inventory, distribution, capital, personnel; b. Analysis of distributor financial returns and cooperation, to ensure the stability of the distributor team and full commitment. -03- Summary The above revolves around one starting point (market), expands four aspects (investment, output, front office, back office), and leads to eight tasks (promotion expenses, operating expenses, sales contribution, profit contribution, terminal performance, coverage performance, business team, distribution network). This is a rough framework for thinking about regional market structure and processes. Whether brand owners or distributors think about their market model, they cannot do without this process. They can also use it to re-examine their business. I sincerely hope it can bring some inspiration to everyone. Finally, let me communicate with readers: This series of articles focuses on the decomposition of market actions one by one, talking about a market point, with the aim of passing on operational experience to grassroots managers. For example: How to do a good job in a themed promotion activity? Steps to promote new products? How to develop campus channels? How to acquire target consumers? How to improve a "bad market"? How to develop urban business districts? Several ways for distributors to reduce costs and increase efficiency, etc., are all summaries of frontline practical experience. I hope more distributors and grassroots personnel can see it and make a small contribution to FMCG operations under the epidemic. Extended Reading:
May Day Promotion Season: Is It Just Setting Up Tables and Offering Special Prices?
Tips will be paid 400-2000 yuan once adopted.