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I: Deep distribution is merely a tactical system. In China, modern channels represented by supermarkets and the internet, with their strong Western style, move unimpeded in urban markets; traditional channels represented by mom-and-pop stores remain deeply entrenched in the vast county and village markets. Modern channels have leveraged consumers as leverage to gain direct dialogue with manufacturers, gradually displacing intermediate channels (distributors). This Westernized channel characteristic has accustomed many companies to a direct-operation approach, with management being direct and response rapid, creating an illusion among marketing layers: to carry out manufacturer-managed, direct operation to the end!
Thus, the American-style approach represented by Coca-Cola emphasizes systematic operations, with independent order and delivery, prioritizing direct operation over distribution, despising second-tier wholesalers, and excelling in three-dimensional warfare. This American style once dominated urban markets led by modern channels, but in county and village markets dominated by mom-and-pop stores, it lost its advantage in the complex and intricate village warfare.
Deep distribution thus became prevalent: manufacturers deploy personnel to directly control terminals. This has been the unchallenged approach in FMCG marketing systems for years. Regardless of where personnel come from or how they are lost, a pattern is evident from market layout: sales volume is directly proportional to headcount!
Looking at the marketing history of the entire FMCG industry, it is essentially the history of deep distribution. Many major FMCG companies rose rapidly with deep distribution as their marketing operational system. For companies, deep distribution is merely a tactical system that supports the operational standards of channel members and grassroots and mid-level combatants. It is no different from a military training manual! The deep distribution system, characterized by offensive power, emphasizes micro-level operational capability.
As a tactical system, deep distribution can solve the problem of how to fight, but if the company's strategic system is not aligned, it inevitably leads to "one incompetent general exhausting a thousand troops"! For example, using deep distribution's tactical offensive methods to suppress competitors, and using capital's strategic means to acquire or exhaust them, thereby forming industry discourse power.
Conversely, if one merely uses tactical means to entangle with competitors in local markets, one often falls into the quagmire of "annual suppression, annual resurgence."
II: The dead end of one-size-fits-all deep distribution Go to companies and open their sales reports; you'll find that sales supported by deep distribution systems often account for 80-90% or even 100% of total sales. Go to the market and see that regardless of market type, branch management models and assessment systems are all the same.
Apart from the deep distribution system, companies have lost all other capabilities. To enter a blank market, they must recruit troops, set up formations, and install systems before operations can begin. Little do they know that "deep" is a relative concept, built on an extensive foundation. Without prior market cultivation, not even a local force (customer) can be found, and the regular army entering this area often finds itself in darkness, with no internal supplies and no external reinforcements.
In this regard, the deep distribution system often serves as icing on the cake, built on the foundation of predecessors' extensive layout and land grabbing.
Before introducing the deep distribution system, many companies' marketing systems were primarily based on extensive customer agency, continuously recruiting distributors and expanding regions to form thin horizontal sales. This horizontal sales brought the first bucket of sales to manufacturers, but it was often highly risky, failed to form focused sales, and contributed little to brand accumulation!
In this context, companies would campaign-style introduce deep distribution systems, focusing on intensive cultivation to build cumulative vertical sales! This introduction was often carried out in a campaign style, with overwhelming depth and one-size-fits-all execution. The result was often: initial performance explosion, later performance fatigue.
Why?
- Neglect of peripheral market cultivation, self-imposed boundaries, able to focus but not expand!
- Judging heroes by sales volume, ranking performance by sales, but forgetting that high-sales markets are built on predecessors' extensive foundation!
- Treating sales in weak peripheral markets as grain, not understanding that peripheral sales are seeds!
Many problems also arise in the company's marketing system:
- In high-share markets, grassroots lose attack targets, visit efficiency is low, management is lax, and offices are in a "sheep-herding" state.
- In low-share markets, grassroots face sales pressure, gnawing at bones daily, and sales reps lack confidence before leaving the office.
- In markets where the brand share has a leading trend, manufacturer-dealer coordination is poor, like two skins.
III: The transformation mantra of deep distribution: Extensive is not guilty; intensive cultivation has limits! In the marketing world, mentioning extensive methods often invites a chorus of criticism. When evaluating a company's marketing system, one often says the marketing is poorly done because it's not detailed, it's rough!
For companies, it's crucial to know where to be rough and where to be detailed; when to be rough and when to be detailed!
No matter how powerful an FMCG company is, in reality, market layout cannot be uniform in thickness! Most companies' market layouts are mushroom-shaped with uneven strength. A strong market serves as the core base, with relatively weak markets radiating around it.
This is like the structure of an egg: the yolk is the core, forming a base advantage market, characterized by high share, high coverage, and high profit margins; the egg white is the hinterland market, where competitive advantages are emerging but not obvious, with ample room for improvement in share and coverage, requiring rapid breakthrough, and the acceleration in this area leads to lower profit margins. On the outer periphery, there are many blank or semi-blank markets with low sales, like the eggshell, protecting the main market. These three types of markets can convert into each other; companies use different management methods to achieve positive conversion from weak to strong!
A practical problem is before us: if transformation is not timely, the deep distribution system will churn in the yolk market! Churning in a market with no room for deep cultivation can only create bubble performance! Some companies will be troubled by fake flattening and pseudo-intensive cultivation!
Similarly, if the deep distribution system is applied to the peripheral eggshell market, due to insufficient brand power or harsh competitive environment, it's unsuitable for large-scale formation warfare; it's a long march!
Thus, the most suitable soil for deep distribution is the egg white market! Such markets have sufficient capacity and robust growth momentum. At this time, using deep distribution's offensive power, combined with distributor strength, the two forces coordinate operations, forming local superiority, expelling competitors, and achieving stability!
In advantageous markets, the deep distribution system is "idle" with worry; in weak markets, it's "tired" with worry!
In advantageous markets, manufacturer personnel convert to a supervisory system, restoring the distributor's role, using strong discourse power and profitability to provide management templates, and having the distributor's local forces guard the territory.
In balanced markets, manufacturers concentrate firepower to open the way, distributors follow up to defend, using deep distribution's delicate groundwork to solidify terminals! When share, distribution, and profit margins rise, gradually convert to base markets.