Among distributors, those handling strong brands are the most glamorous group. They primarily deal with powerful brands, have large sales volumes, and strong company capabilities. They not only wield significant influence in the channel but also enjoy high visibility among consumers. Such distributors, often influenced by strong brand companies, have achieved corporate management early on and maintain good relationships with powerful terminals like hypermarkets and supermarkets, with professional channel operations. These conditions are enough to make other peers envious.
Strong brand distributors indeed have many aspects worth learning from, but beneath their shining surface lie hidden weaknesses. These weaknesses not only turn their strength into a double-edged sword but may also bring adverse consequences, even leading to major troubles.
Weakness 1: Imbalanced Terminal Network, Strong and Weak Extremes
Strong brand distributors often have good cooperation with large terminals and are the main force in operating them. Especially for distributors of food and beverages, hypermarkets are the core terminals for sales, and strong brands have eye-catching displays and image presentations in these core terminals. For example, before entering the store, outdoor billboards already make a statement; at the entrance, escalator handrail ads guide smoothly; during shopping, floor stack wraps, insert cards, and end caps provide comprehensive visual merchandising; at checkout, there are cashier ads. From the moment consumers enter to when they leave, strong brand ads wrap the entire store in a dazzling display, effectively enhancing brand image. Of course, maintaining this glossy image requires effective team management and coordination across multiple departments. Without corresponding marketing management experience and resources, ordinary distributors find it hard to achieve, which is a point of pride for strong brand distributors. However, it's possible that just outside the hypermarket, a small retail shop presents a different scene: competitors' products are fully stocked and vividly displayed, with a good sales atmosphere, while strong brand products are nowhere to be seen. This is often due to the imbalanced terminal development by strong brand distributors, which may pose hidden risks to their own growth.
For example, Mr. Chen in the Henan market, a distributor for a leading beverage brand, only focused on core terminals. He believed that cooperating with hypermarkets was both worry-free and helped achieve targets, so why not? He concentrated most of his personnel, finances, and materials on large stores. These stores not only generated high sales and obvious promotional effects but also received substantial and comprehensive manufacturer support, making operations not only respectable but also allowing him to pocket some "expenses." With resources concentrated on stores, retail terminal distribution and maintenance became superficial, and sales staff were poorly managed. Additionally, this distributor handled multiple brands, lacked versatile staff skilled in small retail store distribution and maintenance, and found transfer costs and efforts too high. Thus, Mr. Chen often fobbed off the company with excuses like "D store is too small for volume, F store owner is troublesome, frequent transfers," emphasizing that "all my accounts are big players, easy to maintain, ship, and manage."
Despite the manufacturer repeatedly encouraging him to develop circulation terminals, Mr. Chen kept evading and stalling. He even prided himself on his communication skills, thinking he could easily fool the manufacturer, unaware that risks were creeping closer.
While he made the stores look impeccable, he spent almost nothing on image building and investment in circulation terminals, leaving distribution and image unsatisfactory. Meanwhile, second-tier brands and similar competitors had well-presented circulation terminals, such as convenience store posters, mom-and-pop shop signs, and small shelf displays, all impressive with ample stock. Many small retail terminals were turned into exclusive, main, or model shops by competitors. As Mr. Chen's small store network gradually eroded, he remained unalarmed and instead bet everything on the stores. The problem finally emerged during the store's 5th anniversary promotion when the store demanded a 10% price reduction, but the two sides failed to agree. The store turned against Mr. Chen, and his products were all removed from shelves. This was unexpected for him. He had always believed that with strong brands, the store wouldn't delist bestsellers. Although the issue was later resolved, the week-long loss during the holiday season cost him 15% of sales, causing him to miss his annual target. The manufacturer not only reduced his rebate level but also canceled all the rewards he had received in previous years.
Having previously ignored the company's requirements for comprehensive market maintenance, the accumulated conflicts in manufacturer-distributor cooperation gave the company an opportunity to support a new distributor, splitting Mr. Chen's territory in half. Mr. Chen suffered a complete defeat.
Smart distributors should place more emphasis on terminals, expand their territory, and steadily increase effective outlets. Stores should certainly be developed, but not to the point of severe imbalance; balanced development is essential. Although stores generate high sales, they often discount and promote, and it's the scattered small shops that provide retail profits. Stores build image, terminals drive volume, and they complement each other. Additionally, failing to seriously implement manufacturer policies will ultimately sow seeds of trouble in cooperation.
Weakness 2: Disdaining Small and Medium Brands, Losing by Negligence
Some strong brand distributors often instill in their salespeople the idea: "We represent well-known brands with high awareness, good image, and strong consumer loyalty, far beyond what small and medium enterprises can achieve. Small and medium brands are not a concern; we mainly need to guard against similar competitors." Due to such thinking, strong brand distributors tend to look down on small and medium brands, as shown in the following aspects:
When visiting terminals, salespeople often unconsciously display a condescending attitude. Besides arrogance, they may also slander or belittle small and medium brands in conversation, easily causing terminal customers to feel反感 and tired of their staff, even inviting "retaliation" from competitors, damaging the brand.
They pay no attention to market activities of small and medium brands and have no response, leaving opportunities for these brands to expand and grow.
Mr. Qin in Jinan is an agent for a well-known wine brand. During the 2010 Spring Festival, the peak season sales surged. To boost holiday gift sales, Mr. Qin launched promotions in chain supermarkets in Jinan, including buy-one-get-one offers and specially configured gift boxes with red shopping bags and wooden gift boxes. However, he neglected retail stores in circulation terminals. He believed that competitors in circulation terminals were mostly small and medium enterprises, not worthy of attention from a famous product like his. Not only were there no promotions in circulation terminals, but even cheap gift bags were not provided. A second-tier brand, usually suppressed, seized the opportunity to increase promotions and services to these retail stores. The two-bottle gift boxes were promoted more aggressively, with better prices and special festive gifts: couplets and red Chinese knots that every household buys for Spring Festival, and red festive gift bags that enhanced display effects. Although Mr. Qin was well aware of this competitor's promotional intensity, he thought, "My product is high-end; if I also lower my status and promote with discounts like this second-tier brand, wouldn't it be embarrassing? Besides, even if I promote in such retail stores, sales won't increase much, so it's better to stay put."
Meanwhile, the competitor not only intensified promotions but also strengthened sales follow-up and services, providing close service and guidance to circulation terminals. Sales grew rapidly, with some stores selling over 200 boxes during the holiday, three times Mr. Qin's product sales. There were also special channels like hospitals, stations, schools, and military units. Due to the competitor's aggressive follow-up during the Spring Festival, nearly dozens of retail points saw a decline in sales of Brand A. A more frightening follow-up effect was that after the holiday, there were many returns and exchanges for some single items, with customers complaining about Mr. Qin's products being overpriced, poorly marketed, and inadequately serviced.
Therefore, leaders, distributors, and frontline staff of first-tier brands should treat terminals with humility and seriousness. Sales are not just about distribution; more importantly, it's about how to sell smoothly and quickly to consumers. Success depends on details and the entire market operation chain; missing any link can be detrimental.
Weakness 3: Monopolizing Famous Brand Agencies, Overly Long Product Lines
Monopolizing well-known brand agencies is also a common problem for strong brand distributors. Because of their large scale and strong capabilities, they are often pursued by famous brands. In the eyes of distributors, each well-known brand represents a new profit growth point, not only providing good guidance and support in market operations but also requiring less effort in market promotion. Distributors naturally welcome such opportunities that come knocking.
As the saying goes, "Too much is as bad as too little." Everything should be done in moderation. Many smart strong brand distributors will expand their territory, deeply cultivate one brand, and when suitable new products come along, they establish new companies or teams to operate them, even expanding across regions and replicating successful models, making their operating area and scale grow continuously, establishing an unbeatable monument in the industry. However, some strong brand distributors often over-agency, leading to overly long product lines and operational problems.
Mr. Bao in Hebei is a well-known strong brand agent locally, with many famous brands under his belt. As his influence and scale grew, Mr. Bao's region didn't expand, but he kept taking on one brand after another. From a financial perspective, his capital allocation was irregular and unplanned, with no strategy to favor any particular brand. How these brands were sold and how funds were allocated depended entirely on subjective judgment and immediate financial conditions, leading to frequent cash flow tensions. From a market perspective, because he handled many similar products, he ended up fighting with himself in channels and terminals, creating a situation where doing well with one brand meant losing with three others, ultimately resulting in profits covering losses and being eroded. To change this situation, Mr. Bao had to adjust his product line and abandon some brands. However, the negative effect of frequent product line adjustments was that warehouses were filled with near-expiry products from various brands awaiting disposal, complaints about near-expiry products in the market surged, channel relationships became tense, and his company's reputation was severely damaged.
Mr. Bao, believing all his brands were strong and well-known, had a strong sense of superiority. He often prided himself on his seniority and experience, thinking he had ideas, capital, and networks. The end result was a gradual loss of channel networks, poor business operations, and a worsening reputation in the industry. By 2009, several local distributors had surpassed him in both scale and channel networks. When he suddenly realized he had degenerated from a major distributor to a mediocre one, a large number of peers had already caught up, strong brands were gradually distancing themselves from him, and his industry position was precarious.
The success of strong brand distributors comes from either good opportunities or strong determination, but the halo of success can also have negative effects, causing them to lose their fighting spirit and direction. Therefore, strong brand distributors also need to continuously improve themselves, adjust their marketing strategies timely and effectively according to market development and competitive changes, never underestimate opponents, and continuously enhance their own quality and the overall execution of their company team in competition, developing in sync with the macro environment and expanding their business.
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