Not all manufacturer bosses are clear-headed, nor can they all empathize with distributors. The way a manufacturer launches a new product directly reveals whether it truly understands distributors or is just bluffing them.
Let's first look at what manufacturers typically say when launching new products:
- Either they emphasize how good the product is, including carefully selected raw materials, advanced processes, high quality standards, no harmful substances, and all beneficial ingredients added.
- Or they emphasize how new the product is: new processes, new formulas, new materials, new concepts, new claims.
- How big the market is, how much room for growth.
- How strong the manufacturer's support is, such as advertising investment, hiring A-list, B-list, or C-list celebrities.
- How large the profit margins are, with gross margins starting at 20-30 points.
- How orderly the market is: exclusive distribution, regional protection, strict control of cross-selling and price chaos.
- As long as you order and pay on the spot, you get purchase incentives, reimbursement for round-trip airfare, free cars, reimbursement of certain expenses, free materials and gifts, plus various long-term policies.
- Again, emphasizing how easy the product is to sell, how high the profits are, sales plus profit, making a fortune.
Of course, from the manufacturer's perspective, these statements are not wrong. They use all possible praise, even violating advertising laws. One would think this should prompt distributors to accept new products.
These tactics have persisted for years, which also indicates another issue: the manufacturer's top management insists on standing in their own shoes, unwilling to think from the distributor's perspective, and unwilling to deeply understand distributors. They have consistently positioned distributors as sales tools rather than partners, and simplistically defined distributors' development direction as purely profit-driven.
Unfortunately, the effectiveness of these tactics has been declining year by year, and manufacturer bosses have not delved into the root causes. Then they start complaining that business is hard, distributors are hard to manage and uncooperative, and that despite their huge investment, distributors don't appreciate good products. When their tactics fail to fool people, they blame distributors. In reality, it's the manufacturer bosses' own stubborn mindsets that are the root cause.
Next, from an objective standpoint, let's break down whether these promotional strategies used at new product launches actually impress distributors.
- About the product being good This is the first thing manufacturers emphasize, such as good raw materials (also boasting about the raw material production base), good processes, good quality control, good nutrition, good taste, good packaging, good brand—in short, everything is good. From start to finish, you can't find a single flaw; it seems comprehensive. But in the eyes of distributors, this contains a serious problem: no product is perfect; there must be shortcomings. If the manufacturer lists a bunch of advantages but refuses to mention disadvantages, it's either deliberately hiding them or the manufacturer itself doesn't know what problems will arise after the product hits the market. This shows the manufacturer hasn't fully understood the product yet.
It's like someone introducing you to a potential partner, saying she's perfect in every way: great figure, young, beautiful, good temper, good family background, easygoing parents, already has a house and a car—what would you think? If she's so great, why isn't she married yet? Did she come back from Dongguan?
Actually, wouldn't it be more reliable and realistic to honestly mention some shortcomings?
- About good profits On top of the product being good, manufacturers further emphasize good profits. The basic logic is that because the product is good, plus various manufacturer support, it will sell well. Selling well brings profits, and they even do the math for distributors, such as gross margin space, how it compares to old products, how it's better than competitors, high purchase incentives and year-end rebates, etc.
In the eyes of slightly experienced distributors, the manufacturer is treating them like children! Just raise a few real issues:
This is only a theoretical value: it assumes the product really sells well, no returns or exchanges at the terminal, no cross-regional sales, no price chaos in the market, no new distributors added locally, no corruption among the manufacturer's sales staff, and the manufacturer keeps its promises. Only then will this theoretical value materialize.
Without sufficient sales volume as support, high per-unit profit is meaningless.
Distributors need to invest various resources and energy to achieve purchase and sales, and solve various problems, all of which involve costs. Does the manufacturer know how much these costs are and how much they will eat into gross profit?
The manufacturer calculates only gross profit, which is not net profit. What will the final net profit be? Based on the actual profit levels of domestic distributors, the net profit is generally only 3-5 points, meaning you can remove a zero from the manufacturer's claimed gross margin. A 30-point gross margin ultimately yields only a 3-point net profit.
Profits are generated later, but in the early stage, distributors need to invest heavily. Will early investment necessarily lead to later returns? Not necessarily. How much risk is there? The manufacturer doesn't say; it's the distributor who bears it. In short, the manufacturer certainly won't lose out.
Strong manufacturer support They emphasize how much support the manufacturer provides to the market and distributors, such as various advertising plans, expensive celebrity endorsements, colorful ground promotion activities, lots of novel gifts, supporting display materials, and even support for entry fees and display fees. If you pay for orders today, or order a certain quantity, you get purchase incentives, sales rebates, reimbursement for customer round-trip airfare, arranged overseas tours, or even luxury cars.
On the surface, it seems the manufacturer is bleeding money! But in business, only the buyer is wrong, never the seller. Where do these so-called investments ultimately come from? Does the manufacturer boss pay out of his own pocket? A slightly experienced distributor can see at a glance: isn't this just wool from the sheep's back? All investments are ultimately factored into the product price, which must be inflated. For example, a product costing 3 yuan might have its ex-factory price raised to 8 yuan, with 3 yuan used for market investment. This trick has been played for decades, and manufacturers still enjoy it (because there are foolish distributors every year). In other words, all the manufacturer's investments are ultimately paid for by the distributors themselves. Claims like the manufacturer sacrificing current profits, saving money from scale profits, or having investors burn money are mostly scams.
Another issue: if the manufacturer can sustain such large investments, it means they're still making money, which means the actual product cost is very low. For instance, the liquid cost of a bottle of beverage might be just over 0.1 yuan. This low product cost contradicts the manufacturer's claims of high-quality raw materials, advanced equipment, and quality assurance. Does such a thing as both good and super cheap exist in this world?
- Obvious leading advantages They often claim to be the industry's first in something, leaving competitors far behind, even elevating to the level of industry reshuffling! Distributors! Seizing this business opportunity is seizing the chance to shake hands with wealth! Come on, COME-ON.
Advantages are relative; only when you have something others don't is it an advantage. But distributors have several doubts about the manufacturer's so-called advantages:
If it's a product-level advantage, don't they consider competitor imitation? Chinese people's innovation ability is not great, but their imitation ability is world-class. What methods does the manufacturer have to ensure competitors won't imitate? Patented technology? Special confidential processes? Unique raw material sources? Or has the core technology holder been beaten and chained in the basement by the manufacturer boss?
If it's a market strategy advantage, in the current market environment, an innovative market strategy becomes obsolete after one use, and repeating it is hard to guarantee results. To continuously launch new market strategies, a strong marketing department is needed. But among Chinese companies, perhaps only a few dozen can claim to have strong marketing departments.
If it's an execution team advantage, some manufacturer bosses like to bring their sales teams on stage to perform loyalty dances, shout slogans, and run. But in Chinese companies, people are the most unreliable. How can the manufacturer boss guarantee that no one in the sales team will resign, be poached, or change their ways? Can they always maintain that pumped-up work enthusiasm?
Old people selling new products When a manufacturer launches a new product, it needs sales personnel to drive its implementation. So, will the current old employees sell the new product, or will a new team be formed?
The vast majority of manufacturers do not configure a new team specifically for new products; they definitely use the current old team to handle new products. From the manufacturer's perspective, this is normal. But from the distributor's perspective, it's a different story:
First choose the person, then choose the product. No matter how good the product, without the full follow-up of the manufacturer's salesperson, it won't sell well. Even ordinary products can be successful if everyone is dedicated and hardworking.
Distributors are familiar with the manufacturer's old sales team, knowing their work attitude, execution ability, stability, and dedication (if they don't know, it means the manufacturer has no place in the distributor's mind). If their existing impression is negative, distributors will think: can these salespeople who play on their phones, play games, hide in hotels watching TV, are good at exploiting loopholes and taking advantage, and even actively ask distributors for money—can they do a good job with new products?
If the manufacturer's sales personnel have average work ability, then in the early stage of the new product launch, has the distributor seen any obvious changes? For example, work attitude, communication skills, business ability, way of thinking, or execution. If nothing has changed, the requirements for new products are definitely much higher than for old products. How will they cope?
If it's a long-term cooperative manufacturer, are there any unresolved historical issues between the current or previous sales personnel and the distributor? If there are leftovers, regardless of the amount, it's always a knot in the distributor's heart. If this old knot isn't untied, will the distributor have confidence to take on new products?
If it's a new manufacturer recruiting distributors, distributors often check the manufacturer's job postings online. If there are many sales positions being recruited, distributors immediately lose confidence: if the people haven't even been hired yet, how will the new product be sold in the future? Or they judge by the on-site performance of the manufacturer's sales staff. If they see sales staff in uniform, each looking down at their phones, not attending to guests, but huddled together chatting and laughing, behaving indecently, flirting with hotel waitresses, or at the banquet, after passing out cigarettes from the table, pocketing the rest—looking at the manufacturer boss's impassioned speech on stage and the behavior of these sales staff, do distributors still have confidence to sell this manufacturer's new product?
Striving for perfection Personally, I'm most afraid of manufacturer bosses saying this, such as how particular they are about raw material and auxiliary material selection, how they take only XX out of every XXXX, how particular they are about processes, how strict and serious quality monitoring is, quality requirements of thousandths or ten-thousandths, scrapping products with even slight quality differences, not allowing a single drop or bottle of non-conforming product to leave the factory.
Such words are over the top; when words go too far, they become bragging. Let's be objective:
- Assembly line production inevitably has some error rate; it's normal. Even military factories making shells can't guarantee 100% explosion. Don't make things too absolute.
- Emphasizing strict quality requirements easily leads to excessively high expectations from distributors, who think the market operations and the quality and execution of the manufacturer's sales personnel should also be at a corresponding level. But the result is...
- If the manufacturer doesn't rely on loans, uses entirely its own funds, or even uses less than one-eleventh of the big boss's funds, doesn't seek short-term profits, and doesn't plan to go public, then such meticulous quality is possible. But if there's huge loan pressure or performance pressure before an IPO, how can the manufacturer have the mindset to be so meticulous in the production environment?
- Instead of emphasizing how good the quality is, it's better to be realistic: state the normal pass rate, and if there are quality issues, clearly quantify the standard return and exchange process.
In summary, distributors do need new products, and they need them continuously. However, when manufacturers launch new products, they mostly push them from their own perspective, giving little consideration to the actual situation of distributors in introducing and operating new products. They think that if they describe the new product as flawless, distributors will definitely like it, and with enough purchase incentives, they can directly prompt payment and ordering. So-called maturity is the ability to think from others' perspectives; so-called stupidity is basing everything on "I think." If manufacturer bosses don't change these stubborn mindsets, the survival rate of new products will be hard to improve.
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