For FMCG companies, distribution rate has always been an important indicator of process management. It is said that after Coca-Cola's marketing director toured the Chinese market, he remarked: "There is still market opportunity for Coca-Cola in China, because next to the old ladies selling tea eggs, there is room to place Coca-Cola products!" This shows the importance of distribution rate for sales. When I train company sales personnel, I also tell them that for FMCG sales staff, their work mainly boils down to two points: achieving a certain distribution rate and maintaining it. Without distribution, there is no sales! Unless your product is available for consumers to buy, all marketing efforts are in vain.
Intense market competition has gradually introduced the concept of deep distribution into the beer industry, and seizing terminal outlets has become a consensus among beer companies. We also see that the timing of the first distribution round at the beginning of the year is getting earlier and earlier. Currently, in most areas of East China, beer companies generally start distribution after the 15th day of the first lunar month (usually in February in the Gregorian calendar). The main work in March and April is to consolidate the distribution results to achieve a certain distribution rate and gradually realize secondary replenishment in some outlets. By May, as the weather warms up, the sales focus shifts to maintaining the distribution rate, including after-sales service and various efforts to stimulate sales. The effectiveness of this initial distribution round is truly crucial for the sales of mid-to-low-end beer in urban markets. If the distribution rate cannot be pushed up at this time, it will be difficult to improve later. Without a distribution rate, the entire year's marketing work will be passive, and the year's harvest will be hard to secure.
This article offers several considerations for beer companies about to engage in the initial distribution battle at the start of the year, hoping for discussion:
- Pay Full Attention to Handling Legacy Market Issues During the off-season, beer companies often fail to maintain sales points adequately. Because external competition weakens and internal sales pressure decreases, the sales team loses a sense of urgency, and sales work such as terminal visits, small-batch delivery and bottle returns, and customer complaint handling may not be done properly. Therefore, during the first distribution round at the beginning of the year, various terminal legacy issues are bound to arise, such as untimely bottle returns during the off-season, difficulty in redeeming promotional awards, and beer age being too long, all of which become obstacles to distribution.
Companies must be fully psychologically prepared for these issues. If they cannot promptly resolve the immediate problems of these small terminal owners, it will have a negative market impact and make it difficult to distribute further. Therefore, companies must have the courage to prepare solutions for potential legacy issues, sincerely apologize and promptly handle them during the distribution process, eliminate these adverse effects, and clear the obstacles to distribution.
- Develop a Clear Terminal Coverage Strategy Plan In urban markets, mid-to-low-end beer terminals can be roughly divided into two categories: one is on-premise consumption places such as small and medium-sized restaurants, food stalls, fast-food restaurants, and also hotpot restaurants, snack bars, tea houses, noodle shops, small restaurants, barbecue shops, dumpling restaurants, night market stalls, and corporate canteens. The other is off-premise places, where consumers buy beer at the outlet but drink elsewhere. Such terminals mainly include standalone convenience stores in communities, grocery stores, general stores, and also water delivery stations, fruit shops, rice shops, grain and oil shops, cigarette shops, and liquor stores. During the off-season, companies can organize the improvement of terminal basic data, such as organizing business personnel to conduct outlet surveys to understand the number, distribution, business type, sales volume, brands sold, and the market situation of the company's products in the area. These are the battlegrounds for distribution work and must be clarified first.
Before the initial distribution at the beginning of the year, companies should develop a clear terminal coverage strategy plan, such as determining terminal classification standards and classifying terminals, determining distribution policies and distribution rate targets for different terminals, and detailing executable terminal coverage promotion plans so that the initial distribution battle can be carried out systematically and step by step.
- Emphasize Increasing Distribution Rate in Convenience Stores According to industry estimates: the sales ratio of restaurants in off-season to peak season is about 1:2.6, while for convenience stores, the ratio can reach 1:10. Therefore, to increase volume in the peak season, it is necessary to rely on convenience stores.
However, increasing and maintaining the distribution rate in convenience stores is somewhat difficult. First, convenience store sales are unstable; after an off-season, most convenience stores will run out of stock, and the distribution rate of distributors or manufacturers to convenience stores will drop to an extreme low, almost requiring redevelopment of "new customers" every year. On the other hand, because off-season sales are poor, store owners are reluctant to stock up, so distributors or manufacturers tend to focus more on the on-premise restaurant channel and neglect this segment. To increase the distribution rate in convenience stores, the following points need special attention:
- Master the timing of distribution. Distribution to convenience stores can follow restaurants, generally starting in March or April. If too early, poor sales make it difficult to distribute, and even if distributed, poor sales affect terminal confidence. If too late, the convenience store's limited working capital or shelf space will be taken by others, missing the first distribution opportunity.
- Keep the initial distribution quantity small, such as two or three cases per group.
- Convenience store owners care about whether the product "sells well", so besides distribution policies, it is best to "create momentum", such as display rewards or collective distribution, to boost the sales confidence of convenience store owners.
Emphasize Motivating the Sales Team Distribution is relatively hard work and time-sensitive, so the initial distribution at the beginning of the year must motivate the sales team. Positive incentives can be introduced in stages, such as distribution competitions, rewarding the top 20% of the team, and guiding key indicators like number of new stores opened and distribution sales volume. Through various management methods, create an atmosphere of catching up and surpassing. Only by making the initial distribution fervent and competitive within the sales team can it have an impact on the market. If the sales team is lukewarm, the initial distribution cannot be "hot"; if you cannot "make a decisive move", you will only "lose momentum the second time and be exhausted the third time".
The Guiding Goal Should Be "Distribution Rate Increase" Rather Than "Sales Volume" Sales volume is the foundation of sales personnel's survival, and I understand that. But if sales volume is also the guiding goal during the initial distribution phase, that would be bad. You must know that the direct goal of distribution is to increase the distribution rate; we want to enter more stores, and we are competing for terminal shelf space, inventory capacity, and the store owner's limited purchasing funds. If sales volume is still the guide, it may raise the threshold for store owners to stock up. For example, if following the principle of "small quantities, frequent distribution", the designed distribution policy might be "buy 3 cases, get 1 case free" as a group, but if sales volume is the guiding principle, it might be designed as "buy 15 cases, get 5 cases free" as a group, which increases the difficulty of distribution. Moreover, assessing distribution personnel by sales volume may also prompt them to apply larger promotional policies to wholesale customers, converting "large orders into small orders" to exchange for sales volume, which would be counterproductive.
The Increase in Distribution Rate Must Be Fast Rapid market breakthrough is the lowest-cost marketing method. Just as using a strong fire to boil water in ten minutes saves more energy than using a gentle fire for a day. Beer companies must distribute quickly at the beginning of the year to create market momentum, which is the most effective way to quickly start the market. Moreover, the initial distribution at the beginning of the year is also the time when beer companies must suddenly show their stance and compete. Through "speed", give confidence to the sales team, distributor customers, and terminal market, laying a good foundation for the year's sales. Of course, whether speed can be achieved is indeed a test of the company's overall marketing operation capability. Here, it is suggested that beer companies can set up a "direct sales vehicle sales team" during the initial distribution phase to concentrate superior forces and achieve rapid breakthroughs in distribution.
Sales Expenses Should Be Appropriately Tilted Toward the Initial Distribution Phase Expenses during the initial distribution phase cannot be extracted proportionally based only on sales volume. The initial distribution has strategic significance for beer companies, and expenses must be tilted. Here, expenses include promotional costs for distribution itself. For example, in Hangzhou, a company's initial distribution for convenience store channels offered "buy 5 cases of beer, get 4 bottles of 1.25L plastic bottle cola", and for restaurants "buy 5 cases, get 1 case free, plus 1 case of beer for tasting for new customers (bottles and cases not given)", and may also be supplemented with other expenses to varying degrees, such as promotional materials, terminal display reward activities, bottle cap prize activities, and community promotion activities. The intensity is indeed considerable; in fact, the company is operating at a loss during this phase, but precisely because of this, it lays the foundation for the company's good market performance throughout the year. Another company, due to a low expense rate in the early stage, progressed slowly in distribution, and by May realized that even if it wanted to increase expenses, there was no opportunity because the beer market pattern for the year had already been set.
For expense investment during the distribution phase, two points are reminded here: first, the "intensity" used should be primarily competition-oriented, and under the goal of achieving rapid distribution rate increase, cost is still a key factor to consider; second, the designed distribution intensity should be "able to be put out and taken back", otherwise it is tantamount to setting a trap for the company itself.
Emphasize Sales Point Maintenance During the Distribution Process While achieving distribution rate increase, the distribution process must also emphasize sales point maintenance, such as timely shelving, good display, sales assistance, and follow-up visits. Only when the distributed terminals generate sales and become true "sales points" can they be called "live outlets". Therefore, those salespeople who distribute products to small shops and then casually open the carton and place a few bottles on the shelf have more marketing awareness than those who sell more but only know how to sell.
Have Corresponding Sales Stimulation Measures Follow Up After distributing beer to terminals, certain sales stimulation measures should follow, such as community activities, bottle cap prizes, or terminal display rewards and other ground promotion activities. Only by making the product move can distribution be considered healthy. For example, terminal display rewards: while distributing heavily to convenience stores in March and April, they can be carried out intensively within the community to create brand atmosphere. This activity is relatively easy to execute and not too costly, but the "pull" effect is good, and it can even directly promote distribution. Here are a few reminders:
- Choose some novel display props to grab "eyeballs".
- Plastic cases or film-wrapped beer are easier to carry out this activity than carton beer (because of rain impact).
- Business personnel should conduct irregular checks against display requirements during market visits, but display rewards should be given to terminals as much as possible; during checks, guide more, otherwise it affects customer relations.
- When the display period ends, rewards should be redeemed promptly.
- Emphasize the Survival Rate of Distribution Points After distribution, beer companies should pay attention to the "outlet survival rate" indicator. Some companies' distribution rate never increases because secondary distribution is difficult and there are many dead points. Our research found that on initial purchase, as long as the product positioning matches and there is sufficient profit, it can promote trial purchases at sales points; but on secondary purchase, service becomes another key factor. Therefore, to promote secondary purchases and increase outlet survival rate, after-distribution sales point maintenance, sales stimulation measures, and ground momentum creation must keep up.
Reply with the following keywords to categorize and read related professional articles: Sales Supervisor, Second-tier Management, Regional Manager, Distributor Management, New Channels, City Manager, Competition, 2015, Manufacturer-Dealer Game, Product Slow Sales, Terminal Visit Management, Route Management, Deep Distribution, Internal Management, Sales Skills, Profit Improvement, Recruitment, Distribution, Daily Management, Team Motivation, Trade Promotion, Sales Misconceptions, New Product Launch, Township Market, New Product Pricing, Sales Target Achievement, Closing Orders, Market Visit Inspection, Baijiu, Beer, Sales Increase, Agency Products, Cross-region Sales, KA, Terminal Visualization, New Market, Market Operation, Learning, Book Recommendations, Inventory Management, New Salespeople, Consumer Promotion, Execution, Old Products, Expired Product Handling, Model Market, Investment Attraction, New Media, Distributor Development, Performance Appraisal, Assessment, Annual Planning, Shopping Guide, Morning Meeting, Display, Transformation, Stock Pressure, Festivals, Distributor Cost Control Channel Operation, Marketing Theory and Laws, Brand Truth, Order Meeting, Team Management, Training, Debriefing, Debriefing Report.