Amid China's economic slowdown, fragmented consumer demand, e-commerce disruption, and squeeze competition, traditional FMCG channel models are under pressure, with sales generally hitting bottlenecks.

Against this backdrop, New Distribution, in collaboration with Professor Gao Song from the Business School of East China University of Science and Technology, launched the 'Gao Song: Channel Empowerment' column to explore new channel models, strategies, and methods for FMCG manufacturers in the new era. (This is the ninth installment of the series.)

Under the model of manufacturer-empowered channel organizational transformation, how to build frontline team combat mechanisms is the core issue determining the model's effectiveness.

To drive this transformation, Marketing Director Lao Cao found Professor Li, a renowned channel empowerment expert, and together they initiated the 'Distributor Excellence in Management' project. After six months, the project achieved excellent results.

Lao Cao and Professor Li discussed how to institutionalize the frontline team combat model for broader rollout.

According to Professor Li's analysis, Huawei's Iron Triangle is a B2B model: it forms project management teams centered on Account Manager (AR), Solution Expert/Manager (SR/SSR), and Delivery Expert/Manager (FR). Essentially, it is a customer-facing, project-centric frontline combat unit designed to better handle complex and diverse customer needs. (Figure 1: Huawei Iron Triangle)

The FMCG industry should learn from Huawei's Iron Triangle model to build its own frontline team combat model for the B2C sector.

However, the FMCG industry has a longer channel chain than B2B. In traditional channels, manufacturers must cooperate with distributors to complete channel promotion. Therefore, the core of building frontline combat teams is to break organizational boundaries, integrating manufacturer marketing organizations with distributor teams to form joint combat teams.

Thus, based on the actual conditions of the FMCG industry, Professor Li and Marketing Director Lao Cao designed the FMCG Iron Triangle model.

-01- Organizational Structure of the FMCG Iron Triangle

The FMCG Iron Triangle is an autonomous business unit serving county-level markets. It is responsible for market strategy planning based on changes in market demand and competition, calling for fire support from the rear, applying for company resources, commanding business and service teams at the front, empowering terminals, and managing consumers.

The FMCG Iron Triangle also consists of three roles: Sales Representative, Product Specialist, and Distributor Owner. (Figure 2: FMCG Iron Triangle)

1. Sales Representative

The Sales Representative is the frontline salesperson representing the manufacturer responsible for county-level marketing. They must be stationed in the market long-term, deeply integrated into the distributor team, and jointly command operations with the distributor owner.

Key responsibilities of the Sales Representative include:

1) Political Commissar of the Distributor's Business Team: Responsible for training, motivating, reviewing, and organizing the distributor's business team to achieve business goals.

2) Business Consultant to the Distributor: Based on the health check system, regularly help the distributor review and reflect on business, and propose improvement suggestions.

3) Collector of Market Information: Visit frontline markets, gather information on consumers, small retail outlets, and competitors, and implement terminal control.

4) Participant in Market Planning: Participate in formulating county-level market product upgrade strategies, terminal coverage strategies, and consumer education plans.

2. Product Specialist

The Product Specialist is responsible for a product category, including product development, market planning, and launch promotion. Traditionally, product specialists were placed at marketing headquarters or regional sales companies, but in the FMCG Iron Triangle, they are moved to the front line, becoming a key part of the triangle.

Key responsibilities of the Product Specialist include:

1) Planner of Product Portfolio: Responsible for new product launches, phase-out of old products, and maintenance of a healthy product portfolio in the county-level market.

2) Researcher and Educator of Consumers: Research market consumers and demand, feed back information, and plan consumer education activities.

3) Proposer of Customized Product Solutions: Based on market insights and consumer research, propose customized R&D plans for local market products.

4) Planner of Terminal Empowerment Strategies: Based on the specific conditions of local terminal stores, propose specific strategies for display, promotions, and sales personnel allocation.

3. Distributor Owner

In the traditional channel model, the distributor owner is an object of negotiation and utilization, an external business entity. In the empowerment channel model, the distributor owner is a key internal role and an important part of the FMCG Iron Triangle.

Key responsibilities of the Distributor Owner include:

1) Proposer of Marketing Goals and Plans: Jointly set local market marketing goals, plan strategies, and invest human, financial, and material resources.

2) Improver of Business Quality: Monitor business health indicators, identify problems, plan solutions, and continuously improve.

3) Commander of the Business Team: Responsible for recruiting and organizing the frontline business team, designing compensation and incentive systems, and daily command.

4) Head of Operations Management: Responsible for order management, warehousing, distribution, accounts receivable, and other operational tasks, improving efficiency and service quality while reducing costs.

4. Marketing Front Office

To support the FMCG Iron Triangle, a marketing front office must be built to provide timely fire support. Marketing Director Lao Cao and Professor Li discussed transforming the original prefecture-level sales offices from mere sales outposts into joint combat units with comprehensive marketing functions.

The new marketing front office's functions include market publicity and planning, product and project management, consumer research and education, channel strategy and promotion, and sales budgeting and planning. Its main job is to respond quickly to frontline needs and fully support the FMCG Iron Triangle's operations. Of course, the marketing platform must also integrate marketing strategy and brand development into frontline work.

(Figure 3: FMCG Three-Platform Model)

-02- Operations of the FMCG Iron Triangle

The essence of the FMCG Iron Triangle is to build a fully empowered, self-driven, agile, and efficient frontline combat team, thereby greatly improving marketing efficiency and reducing costs.

Therefore, the company's operational mechanisms must truly change for the FMCG Iron Triangle to work effectively. The new operational mechanisms can be arranged from four aspects: empowerment, information support, capability building, and benefit sharing.

1. Empowerment: Let those who hear the gunfire make decisions

The FMCG Iron Triangle is granted full marketing decision-making authority, including setting local marketing goals, planning product portfolios, and formulating marketing strategies. When new situations and problems arise during execution, they have the autonomy to adjust flexibly and respond agilely.

The FMCG Iron Triangle has the authority to recruit, assess, and allocate for the business team, autonomously setting performance evaluation plans to incentivize the frontline team.

The FMCG Iron Triangle has autonomous operational rights, autonomously planning and executing business improvement plans based on distributor health check reviews.

2. Information Support: Provide resources, information, and services

In the traditional model, marketing resources such as promotion fees, display fees, and sales personnel costs are allocated top-down, typically based on sales volume ratios. Due to a lack of understanding of frontline marketing conditions, this inevitably leads to waste and inefficiency.

In the FMCG Iron Triangle model, resource allocation is a pull model from front to back. The FMCG Iron Triangle formulates marketing plans and applies for marketing resource support. The marketing front office evaluates the effectiveness and rationality of the plans and allocates corresponding resources.

This model is more precise and greatly improves the efficiency of marketing spending.

Additionally, market information, media publicity, product training, R&D customization, and promotional activities also follow the front-to-back pull model.

3. Capability Building: Frontline capability improvement is key

The key to the effective operation of the FMCG Iron Triangle is improving frontline team capabilities. From the organizational design, it's clear that the Sales Representative's role has fundamentally changed—from an ordinary soldier to a special forces operator, proficient not only in weapons but also in hand-to-hand combat, information warfare, and more.

Frontline sales must take on multiple roles such as market planner, business consultant, and team commissar. This requires market research and planning capabilities, distributor business diagnosis and improvement capabilities, team leadership, and organizational execution. This poses a major challenge to the model.

The marketing back office must arrange effective capability-building measures, combining training with actual combat, improving frontline capabilities during operations, and helping them shoulder their responsibilities. One key purpose of the 'Distributor Excellence in Management' project planned by Lao Cao and Professor Li is precisely this.

4. Benefit Sharing: Attract top talent to the front line

A major reason for the lack of talent in frontline marketing is the incentive mechanism. In the traditional organizational pyramid, income and power rise with organizational level. Therefore, the best people in the organization strive to climb up for better career development.

In the FMCG Iron Triangle model, the marketing organization is not hierarchical but front-to-back. The marketing front office is the key department that generates revenue. The organization needs to guide top talent forward. This requires the leveraging effect of incentive policies.

Benefit sharing means transforming the marketing organization's distribution mechanism, tilting benefit distribution toward the value-creating front office, attracting more excellent business talent to frontline teams, serving customers, and creating value for the organization.