The busy year has finally passed. As a liquor distributor in a prefecture-level city in Hubei, Mr. Zhao achieved total sales of 12 million yuan last year, doubling the previous year's figure. According to his estimate, after all expenses, net profit should have been at least several hundred thousand yuan. However, after accounting, the book profit was less than 200,000 yuan, and the actual profit might be even less. Mr. Zhao is puzzled: why did sales increase so much, but profit did not increase much? This is an era of high prices. Although manufacturers have been trying to raise retail prices, not all price increases pass through smoothly. Besides simply raising ex-factory prices, manufacturers also use channel and terminal promotions to support retail price increases. The rising cost of gifts and promotions is eating into distributors' profits: gifts are becoming more exquisite and expensive; consumer and channel promotions often require distributors to "bleed"; and various terminal fees often need to be shared between manufacturers and distributors. The increase in marketing costs exceeds the profit brought by sales growth. So, how should distributors defend their profits in this period? To solve the problem, we must focus on the main contradictions. The distributor's profit defense mainly starts with the following four counterattacks. Counterattack 1: Curb Cross-Region Dumping Linfen, Shanxi, is a mountainous area. Manager Zhao of Linfen Hongyu Trading is a distributor for a beer brand. To solve distribution difficulties, he set up second- and third-level wholesalers in the region. However, as the market developed, this model exposed drawbacks: on one hand, the multi-level wholesale model meant each level added a markup, and because of the many levels, the overall price level in the region was higher than in other areas; on the other hand, to increase retail profits, wholesalers added 3-5 profit points to some promotional products for wholesale, directly leading to a loss of price competitiveness at the terminal. Because terminal prices were high and promotions were absent, cross-region dumping from surrounding markets occurred frequently, and even the same product appeared at different prices in the region. A reasonable and scientific price system can quickly drive sales growth, while an unreasonable price system can directly lead to the product's demise in the market. In product price management, two points should be noted: 1. Establish a price system. The complexity and diversity of the Chinese market determine the diversity of sales channels. To ensure reasonable profits for distributors in different channels and ensure consumers buy products at a uniform price in the same regional market, marketing experts suggest considering the following two principles when setting prices: first, the brand positioning principle. If the brand has strong influence, the price system should consider distributors pursuing profit through volume; if brand pull is insufficient and market position is low, the price system should give relatively larger price space to different channel members. Second, the principle of identifying competitors: in building the price system, fully analyze competitors' product lines to formulate a price system with competitive advantage. Third, follow the principle of different channel natures: different channel members have different requirements for profit space. For example, chain channels focus on volume rather than per-unit price difference, and have a strong ability to absorb profit products and special-offer promotional products. 2. Control the price execution process. The terminal is where products are directly sold and where price wars start. We often see customers in the same business district, to expand sales and compete for downstream customers, ignore manufacturer requirements and undercut each other, ultimately suffering heavy losses. Therefore, to avoid price undercutting, three aspects should be addressed: first, use strong measures to stop price chaos. For example, when signing distribution agreements, make the market price management system a key assessment condition. This way, even if price undercutting occurs, there is a basis for taking mandatory measures. Second, make sales guides the guardians of terminal prices. Some distributors adopt a two-sided price strategy, ostensibly implementing agreed prices but secretly giving certain price space to sales staff or guides, leading to a phenomenon of "hidden price cuts" at the terminal. Third, adjust the product structure in retail outlets. For price conflicts between terminal outlets and retail stores in the same business district, adopt differentiated supply to reduce price wars caused by channel competition. When the product line is relatively rich, different product combinations can be selected for different distributors. For distributors with strong retail capabilities, such as chain supermarkets and large department stores, the focus should be on image products, profit products, and limited promotional products as requested; for customers in third- and fourth-tier markets, the focus should be on regular "volume" products, making reasonable use of company resources. Counterattack 2: Curb Product "Idling" To achieve overall profitability, distributors should manage and control product structure. In terms of a single brand's product line, there are profit products, image products, regular volume products, and special-offer promotional products, each with different responsibilities. To ensure their own profits, distributors must learn to control the market sales structure and not simply follow the market or use special-offer products to fight the market. Cheap goods sell well and turn over quickly, but their profit margins are limited, easily trapping distributors in an awkward situation of no profit and product "idling." The ideal sales structure for distributors should be spindle-shaped, with high-margin products at one end and commodities that must be sold even at no profit at the other; the middle is mostly low-margin products that generate cash flow and support expenses. Due to the uneven quality of distributors in the Chinese market, many distributors are unaware of controlling sales structure, and their sales structure becomes cone-shaped: the bottom is special-offer products that basically make no money, the middle is low-margin products, and the high-profit products that should be making money occupy only a very small share, leading to poor profitability. Distributors should reasonably plan their product mix, focus on product combination, and achieve complementarity. First, complementarity between peak and off-season products; second, complementarity between different grades of similar products; finally, complementarity between different categories in the same channel. Learn from the product management methods of distributors in advanced industries to form a "product tree" for the products they represent. Implement a "diamond" promotion strategy to create an aggregation effect in the market. The so-called "product tree" planning is to find "star" products as the core, "cash cow" products as support, and "dog" products as attack brands among the brands represented, to combat similar agents and build a strong marketing network. In addition, distributors should know clearly which products are used to gain sales and which to gain profit. Furthermore, distributors should pay attention to reasonably introducing new products and maintaining a certain elimination rate in the product mix. Every product has its life cycle. Choosing to represent a product during the introduction, growth, maturity, or decline stage obviously offers different profit opportunities. During the introduction stage, manufacturers generally reserve larger profit space for the channel to increase channel push. At this time, distributors can often get more policy preference and market support from manufacturers. Counterattack 3: Curb High Costs Due to intensified competition, promotion has become the main means of competition in the liquor channel, even forming a situation of "promote and sell, don't promote and don't sell." Because merchants have developed a strong dependence on promotion, it has become the most effective competitive means to increase sales. Gifts, special-offer products, and on-site demonstrations have become the "three magic weapons" of liquor sales, but promotions consume resources. Taking gift promotions as an example, a major trend is that gifts are becoming more refined, branded, and high-quality, with prices rising and expenditures increasing. It is reported that the loss rate of gifts is as high as 40%. Gift costs are rising, while product prices are falling and becoming more transparent. Distributors' profit margins are further squeezed. In the off-season, companies and distributors spend huge amounts on channel maintenance and market promotions to maintain market share. Some distributors spend a very high proportion of annual sales expenses on off-season product promotion, channel construction, and personnel training. At the same time, many distributors offer high rewards to terminals to mobilize channel enthusiasm, leading to rising channel and terminal maintenance costs. Faced with the rising "exorbitant taxes and levies" of large chains, as well as daily expenses such as promotions, publicity, and channel maintenance, distributors must subtract costs to add profits. It is difficult to reduce the various fees of large chains, but they can be shared by combining multiple products or cooperating with other suppliers to enter stores together. In addition, there is much to be done in the management of promotional items. To prevent gift loss and ensure gift distribution is executed properly, manufacturers require every promoter to keep a daily ledger, record customer contact information, and note the name and quantity of the gift for the product, thereby achieving effective management of gift resources and reducing gift expenses. Off-season promotions require special attention. Distributors need to accurately grasp the market and adopt different maintenance methods at different product market stages. For example, in the market rising period, promotions can bring volume growth, but in the maturity period, promotions may bring losses to distributors. Similarly, in publicity and channel maintenance, distributors can also compress expenses and reduce costs through refined management methods while ensuring benefits, thereby improving profitability. Counterattack 4: Curb Manufacturers' Empty Promises Generally, the policies requested by distributors are often "discounted" by manufacturers. Therefore, after suffering losses, many distributors raise their demands based on experience, and manufacturers bargain on the spot. What should be reasonable support becomes a bargaining chip. Many manufacturers like to write empty promises, and at the end of the year, they default or delay for various reasons. Either they fulfill part, or they push it to the next year, counting it against next year's payment, and cannot truly fulfill it to the distributor. The tricks in between also cause distributors to lose a lot of profit. Distributors profit by selling manufacturers' products. The size of the distributor's territory and sales volume, as well as their relationship with the manufacturer, determine the distributor's profit space. There is a folk saying: "The crying child gets the milk." Distributors are the same; in terms of policy support, distributors must also learn to "cry." After all, in the regional market, distributors have great local advantages. Manufacturers rely on distributors for market promotion, so distributors should frequently report to the manufacturer on the progress and developments in the regional market, especially when encountering problems and difficulties, and need to report and communicate more. Especially in market support, distributors should be wary of companies "packaging" at the end of the year and adopt a strategy of taking it in parts, in batches, over time, in small amounts, asking more and frequently, and trying to get the company to fulfill within the agreed time, thereby gradually dismantling the manufacturer's empty promises. Through "efforts," obtaining advertising support, training support, information support, promotional support, price support, and product support is not as difficult as imagined. The key is for distributors to master the "crying" technique and grasp the right time and opportunity. The manufacturer's support increases the resources in the distributor's hands, and the distributor uses these resources for product promotion, promoting sales and increasing volume, which gives them greater voice and support from the manufacturer. This is a mutually reinforcing process. Entering a virtuous cycle in the market is a solid foundation for distributors to gain profits. Sales and profit can be balanced. Increasing revenue and reducing costs are both indispensable, but reducing costs is often overlooked and thus appears more critical. In terms of understanding, distributors must face the dialectical relationship between costs and sales, balance the input-output ratio of both, and the market can achieve simultaneous growth in profit and sales. 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