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20 years ago, almost no one had heard of Master Kong; 10 years ago, many had heard of it; now, everyone knows Master Kong! Since investing in mainland China in September 1988, Master Kong has achieved admirable results through over 20 years of unremitting efforts: Master Kong holds the number one market share in instant noodles nationwide, the number one market share in tea beverages, and in 2009, it also achieved the number one market share in mineral water. Its fruit juices also achieved a commendable third place in national market share, with total sales reaching 50 billion RMB in 2009!

What is the secret to Master Kong's success? Some say it's the product, others say it's advanced equipment, some attribute it to a high-quality management team, and others to an impeccable management system. I believe the secret weapon that established Master Kong's market position is primarily a complete set of marketing methods! It is through these marketing methods that Master Kong has created one miracle after another.

Master Kong's marketing methods can be summarized into three basic approaches: channel intensive cultivation, category and item management, and brand communication. Among these, channel intensive cultivation is the most important marketing method and is the sharp sword that has led Master Kong's food business to success and glory!

Master Kong began implementing channel intensive cultivation in 1998, continuously reforming according to market development stages. Through relentless efforts, as of the end of December 2008, it had 552 sales offices and 84 warehouses nationwide, serving 5,872 distributors and 69,096 direct retail stores, covering 970,000 retail outlets. With these powerful sales platforms, the company's channel intensive cultivation will play an increasingly strong role, supporting its rise as China's food kingdom.

“Channel intensive cultivation” is not Master Kong's patent; it was established by the famous American consulting firm McKinsey & Company. Ting Hsin International Group acquired the rights to use “channel intensive cultivation” from McKinsey at a high price in 1998. During the process of attempting to implement channel intensive cultivation, Master Kong gradually developed a set of operating systems and methods suitable for itself, achieving great success in its instant noodle and beverage markets!

Definition of Channel Intensive Cultivation

Channel intensive cultivation refers to the process management of channel customers (distributors, secondary wholesalers, retail terminals). By dividing target market areas and setting corresponding channel operation models, it ensures that major sales points in the channel receive visits and professional service and management with fixed personnel, fixed areas, fixed routes, fixed points, fixed frequency, and fixed times, achieving comprehensive control over channel customers, improving product coverage in the channel, and ultimately making the company the master of the channel. The ultimate goal is “my territory, my rules.”

Fixed Personnel: This means that for this area and this route, responsibility is assigned to a specific person; that salesperson is the operator of this area and cannot be changed arbitrarily; in special cases such as leave, a flexible person will assist.

Fixed Area: The area is fixed, and the customers covered are relatively fixed; the area needs to be delineated on a map to avoid ambiguous zones, duplicate management, or blank areas with no one responsible.

Fixed Routes: Within the fixed area, six routes are divided, with routes assigned from Monday to Saturday. Of course, customer classification must be considered, and visit frequency is set, arranging the six-day routes based on visiting 40 outlets per day.

Fixed Points: Sales personnel are required to arrange the order of customer visits for convenience, mark the visit sequence number of customers, and then arrange which customers to visit weekly and daily according to the set visit frequency, ensuring that daily visits are fixed.

Fixed Frequency: Based on customer classification and other factors, set the visit frequency for each customer to ensure the number of visits per month for each point customer.

Fixed Time: According to the principles of fixed routes, points, and frequency, the arrival time at each point should be within a relatively fixed time range under normal circumstances.

In summary, the purpose of the six fixed elements is to establish service commitments with customers, facilitate relationship building, comprehensively control the channel, and become the master of the channel.

Why implement channel intensive cultivation? With intensifying competition, channel control capability plays a decisive role in sales growth. The drawbacks of the original marketing model have constrained the rapid development of enterprises.

The drawbacks are as follows:

  1. Too many channel levels, long channels, too many intermediate links for distributors, and the outdated “sit and wholesale” operation mode of distributors lead to low sales efficiency, delaying the time for products to reach consumers, and increasing the company's distribution costs and product prices.
  2. Market price chaos, difficulty in controlling market prices, leading to low channel profits and frequent cross-region selling (dumping).
  3. Increased difficulty in promoting new products.
  4. Low distribution efficiency; difficulty in increasing distribution coverage.
  5. Occasional product stagnation in the channel.
  6. Low channel customer loyalty, making it difficult for enterprises to control channel customers. Market competition is increasingly fierce, and the original channel operation methods cannot better adapt to market demand or promote rapid enterprise development.

The purposes of channel intensive cultivation:

  1. Enterprises comprehensively control the channel, shorten channel levels, and become the master of the channel.
  2. Expand market coverage and establish channel advantages in points, lines, and areas.
  3. Strengthen customer service and accelerate product turnover.
  4. Increase product distribution efficiency and create reasonable channel profits.
  5. Stabilize price systems and reduce dumping.
  6. Timely grasp market information and strengthen communication and service.
  7. Improve marketing mix to ensure successful rapid distribution of new products. Ultimately, shorten the channel and control the end.

Objects of Channel Intensive Cultivation:

  1. General distribution channels (wholesale and retail);
  2. Direct-operated channels (K/A).
  3. Closed channels (stations, factories, prisons, schools, etc.). That is, fully direct-operate second-tier in urban areas. Fully control the second-tier downstream of third-tier in surrounding areas. Fight for consumers.

Channel intensive cultivation operation modes. According to channel form differences, channel intensive cultivation is divided into urban intensive cultivation and suburban/outlying intensive cultivation. Urban intensive cultivation operation mode: fully direct-operate second-tier, and A and B level first-tier customers. Grasp the 2:8 rule, serve better A and B level multi-points. Suburban/outlying operation mode: suburban direct-operate second-tier. Outlying directly manage third-tier, control downstream second-tier customers.

Content of channel intensive cultivation: The core content is quantitative management of retail terminals and related channels, strengthening service, compressing channel levels, improving product coverage and distribution efficiency.

Specifically includes:

  1. City classification: Determine the city level based on population, annual per capita consumption, and per capita GDP.
  2. Area division: According to different city sizes and market concentration, divide areas into core urban areas, intensive cultivation cities, suburban areas, and outlying areas, to operate according to different channel operation modes.
  3. Channel census: Organize personnel to conduct a comprehensive inventory of all food sales points in urban and outlying areas of each city, and register them.
  4. Set operation modes: Based on city classification, set channel operation modes for core urban areas, intensive cultivation cities, suburban areas, and outlying areas.
  5. Personnel deployment: Based on the number of retail terminals or wholesalers and development plans, allocate sales personnel proportionally.
  6. Visit route quantification: The number of retail terminals or wholesalers that sales personnel must visit daily must meet company standards; tasks must be completed according to the company's specified visit frequency and work content.
  7. Work content quantification: According to the delineated work routes, each customer is visited following the standard eight-step visit procedure.
  8. Visit frequency quantification: Determine visit frequency based on customer level, ensuring key customers receive key services, making personnel and time use more effective.
  9. Timely order transfer and delivery: According to the required delivery variety, quantity, and time, the distributor ensures delivery is completed.
  10. Channel customer management: Divided into terminal customer management, wholesale customer management, and selection and management of distributor customers.
  11. Methods to improve sales performance: Increase distribution items and distribution rate to accelerate product turnover.
  12. Sales organization operation and personnel management, etc.

Stages of channel intensive cultivation development: Master Kong began implementing channel intensive cultivation in July 1998, roughly going through the following stages.

Stage 1: Before July 1998: Large distributor system. Stage 2: July 1998 – September 1999: Comprehensive channel intensive cultivation. Stage 3: November 1999 – December 2006: Efficient channel intensive cultivation. Stage 4: January 2007 – present: Refined channel intensive cultivation.

The so-called large distributor system: It means that sales representatives directly manage regional distributors. The company directly supplies goods to distributors and does not manage first and second-tier customers. Before 1998, products were basically in short supply, distributors had high profits, strong willingness to operate, and high enthusiasm. This model saved a lot of personnel and transportation costs. However, the disadvantages of this model are also obvious. First, the market fate is controlled by some third-tier customers (distributors), and the enterprise has extremely low market control, leading to large fluctuations in sales. Second, distributors are only willing to sell best-selling products and are unwilling to assist the enterprise in promoting new products and full-item sales.

Comprehensive channel intensive cultivation stage: It means that the factory's sales personnel not only manage distributors but also are responsible for first and second-tier customer management. And according to channel forms, set up postman, mailbox, and stall bed management. This stage differs between urban and suburban areas in that suburban areas do not serve first-tier customers. Channel intensive cultivation is divided according to market forms: intensive cultivation urban areas, suburban areas, and outlying areas.

  1. Channel intensive cultivation organizational structure chart

  2. 98.7--99.9 Urban intensive cultivation operation mode: Urban intensive cultivation means that sales representatives are responsible for comprehensive management of direct-operated second-tier customers. Assistant sales representatives serve first-tier customers. Advantages of this model: Comprehensive channel control, easier promotion of new products, full-item sales can be implemented; shortened channels, increased profits; faster product delivery to consumers, quality guaranteed; reduced bad inventory in the channel.

  3. 98.7--99.9 Suburban area operation mode: Suburban areas refer to areas between intensive cultivation urban areas and outlying areas. The company directly operates second-tier, with sales representatives directly taking orders and managing. No first-tier service; first-tier is served by second-tier.

  4. 98.7--99.9 Outlying area operation mode: The outlying area operation mode is the large distributor system before 1998. Sales representatives directly manage third-tier customers, not serving second-tier or first-tier.

  5. Special terms for channel intensive cultivation: Third-tier channel distributors: Refers to distributors who directly wholesale goods to wholesalers, and wholesalers directly ship to retail points. Second-tier distributors: Refers to distributors who directly ship goods to retail points. Borrowing shell: The company directly controls downstream customers, using the upstream distributor's warehousing and distribution functions to proactively control end (downstream) customers. Second-and-a-half tier: If retail behavior in a wholesale market exceeds 50% of sales, then one distributor can be entrusted among the stalls in that wholesale market to control supply prices. Semi-direct operation: Refers to sales representatives managing second-tier distributors, while assistant sales representatives control the retail points they cover. Postman: Refers to second-tier distributors (wholesale) with distribution capability who deliver goods to the door. Mailbox: Refers to second-tier distributors (sit-down wholesale) who cannot deliver to retail stores. Stall bed: Refers to wholesale stalls in wholesale markets. K/A: (Key Account) Refers to key customers in the end channel (department stores, supermarkets, hypermarkets, etc.). Closed channels: Stations, factories, internet cafes, prisons, schools, etc.

  6. Profit distribution among channel levels. To stabilize channel prices and ensure channel customer profits, the company has set up a channel price system. Example: For a box of Braised Beef Noodles, the third-tier customer's factory purchase price is 24.5 yuan, and the price to second-tier is 24.5 yuan, but the company gives a rebate of 0.4 yuan per box; the second-tier customer's purchase price from the factory or distributor is 24.5 yuan/box, and the price to first-tier is 25 yuan/box, with a single-box profit of 0.5 yuan/box. Borrowing-shell distributors and 2.5-tier distributors purchase from the factory at 24.5 yuan/box, and their price to second-tier is 24.5 yuan, but the company gives a rebate of 0.2 yuan/box; according to this price system, channel customers at all levels coexist peacefully and operate normally.

99.11-06.12 period: Efficient channel intensive cultivation

  1. Structure chart The difference between efficient channel intensive cultivation and comprehensive channel intensive cultivation is that wholesale markets and mailboxes are delivered by logistics distributors, while postman distributors are responsible for first-tier delivery. The difference between suburban and outlying areas is that suburban areas directly serve second-tier.

  2. 99.11-06.12 Intensive cultivation urban area operation mode: The intensive cultivation urban area operation mode has sales representatives directly manage logistics and postman distributors, and control downstream second-tier customers. Assistant sales representatives serve first-tier customers. The advantages of this operation mode are: A. Management tends to be simplified. B. Channels are easy to control. C. New products are easy to promote. D. Channel delivery is faster. E. Costs are lower. Disadvantages: Due to profit impact, establishing and stabilizing logistics and postman distributors is difficult.

  3. 99.11-06.12 Suburban area operation mode: Suburban areas refer to areas between intensive cultivation urban areas and outlying areas. The company directly operates second-tier, with sales representatives directly taking orders and managing. No first-tier service; first-tier is served by second-tier.

  4. 99.11-06.12 Outlying area operation mode: Operation mode: The outlying area operation mode refers to assisting third-tier customers in managing 2.5-tier distributors and downstream second-tier customers and first-tier conditions. This mode can improve the situation where third-tier customers previously had no profit or very low profit in delivering to distant township second-tier customers.

07.01-now: Refined channel intensive cultivation With the acceleration of urbanization, the rise of large supermarkets, the decline of urban wholesale markets, and the transformation of wholesale market wholesalers, to strengthen channel control, the transformation of channel intensive cultivation is imperative.

  1. Core urban area refined channel intensive cultivation operation mode The core urban area refined channel intensive cultivation operation mode covers effective terminals comprehensively in core urban areas, directly operates second-tier, and subdivides channels. Direct-operated customers are delivered by the company's logistics distributor - Tingtong Distribution; distribution channels are delivered by DC (Distribution Centre), and DC only delivers to second-tier wholesalers; both Tingtong and DC purchase directly from the factory; DC customers are visited and orders transferred by team leaders, wholesale customers are visited and orders transferred by sales representatives; first-tier customers are visited and orders transferred by assistant sales representatives.

  2. Urban/city distributor operation mode The urban/city distributor operation mode in intensive cultivation urban areas effectively covers retail terminals/second-tier customers, subdivides channels, and improves intensive cultivation benefits. Direct-operated customers are delivered by the company's logistics distributor - Tingtong Distribution; distribution channels are delivered by urban/city distributors, and urban/city distributors only deliver to wholesale customers; both Tingtong and urban/city distributors purchase directly from the factory; urban/city distributors are visited and orders transferred by team leaders, wholesale customers are visited and orders transferred by sales representatives; first-tier customers are visited and orders transferred by assistant sales representatives, and CC-class customers are covered by wholesale radiation.

  3. Suburban/outlying channel construction diagram - Suburban/outlying A1 operation mode Explanation: 1) Suburban/outlying A1 controls valuable terminals in county towns, with dedicated vehicles for 2±0.5 tier distribution. The suburban/outlying A1 operation mode means that suburban/outlying A1 distributors deliver to county town wholesale customers and township 2±0.5 tier customers; suburban/outlying A1 distributors purchase directly from the factory; all county town wholesale customers and township 2±0.5 tier customers are visited and orders transferred by wholesale sales representatives or resident sales representatives, county town first-tier customers are visited and orders transferred by suburban assistant sales representatives, and CC-class customers are covered by wholesale radiation or vehicle sales.

  4. Suburban/outlying channel construction diagram - Suburban/outlying A operation mode The suburban/outlying A operation mode needs to control terminals with brand display value in county towns (KA/MA), with dedicated vehicles for 2±0.5 tier distribution; suburban/outlying A distributors deliver to county town wholesale customers and township 2±0.5 tier customers; suburban/outlying A distributors purchase directly from the factory; all county town wholesale customers and township 2±0.5 tier customers are visited and orders transferred by resident sales representatives, and township first-tier customers are covered by wholesale radiation or vehicle sales.

  5. Suburban/outlying channel construction diagram - Suburban/outlying B operation mode The suburban/outlying B operation mode needs to control terminals with brand display value in county towns (KA/MA), following customer vehicles for distribution; suburban/outlying B distributors deliver to county town wholesale customers and township 2±0.5 tier customers; suburban/outlying B distributors purchase directly from the factory; all county town wholesale customers and township 2±0.5 tier customers are covered by resident sales representatives through customer vehicle sales.

  6. Outlying C channel construction diagram - Outlying C operation mode The outlying C operation mode means that outlying C does business through third-tier customers, assisting customers in establishing channel advantages, with guidance > service; outlying C distributors are visited and guided by outlying sales representatives, one outlying sales representative serves several county town outlying C distributors, only controlling important second-tier wholesale customers in county towns; outlying C distributors purchase directly from the factory.

Marketing is an era of exceptional competition. In this era, market changes are everywhere, consumer behavior changes at all times, and marketing networks built according to market changes are also continuously improving. Therefore, the success of product sales depends on the ability of channel operation models to constantly change! Enterprise development depends on the number and quality of outlets, ultimately on outlet quality. When channels change from public resources to monopoly resources, it is hard for enterprises not to develop!

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