---
title: "Three Steps for Distributors to Develop the Market"
description: "Stable market growth is more important than anything else. Distributors need sales, market share, and profit, but they need them to be stable. The process from developing a new market with a new product to forming a stable market generally goes through three stages: single product breakthrough, forming a product group, and forming a product structure."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2016-01-09"
language: "en"
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---

# Three Steps for Distributors to Develop the Market

> Stable market growth is more important than anything else. Distributors need sales, market share, and profit, but they need them to be stable. The process from developing a new market with a new product to forming a stable market generally goes through three stages: single product breakthrough, forming a product group, and forming a product structure.

Stable market growth is more important than anything else.
As agents of manufacturers in regional markets, what is the goal of distributors in developing the market? Some think it is sales volume, some think it is market share, and some think it is profit.
If we tell distributors that many of them have once achieved these but later lost them, they will not be surprised, because such things happen almost every day around them.
Distributors need sales volume, but they need stable sales volume.
Distributors need market share, but they need stable market share.
Distributors need profit, but they need stable profit.
Distributors do not need a flash in the pan market boom; what they need most is stable and sustained market growth.
The evolution process of a stable market
From developing a new market with a new product to forming a stable market, it generally goes through three stages:
Stage 1: Single product breakthrough
Generally speaking, in the early stage of market development, manufacturers and distributors cannot afford to promote multiple products at the same time. Therefore, they have to rely on the impact of a single product to create a good start in the market. Single product breakthrough requires doing the following work well:
First, select a mass product that can achieve volume. The purpose of single product breakthrough is, first, to form a sales network; only products that can achieve volume can form a complete sales network. Second, to build brand awareness; only products that can achieve volume have brand influence.
Second, explosive distribution to achieve market coverage. Explosive distribution requires speed, large distribution volume, and high market coverage rate. Explosive distribution can achieve the following effects: first, catch competitors off guard and complete distribution quickly before competitors' policies are introduced; second, rapid distribution to terminals will create momentum and give confidence to second-tier wholesalers, terminals, and consumers.
Third, stable high profit inducement for second-tier wholesalers. In markets dominated by second-tier wholesalers, especially in townships and below, second-tier wholesalers play a crucial role. The only motivation for second-tier wholesalers to promote unknown new products is profit margin. If the new product does not provide a higher profit margin than other products, it cannot pass the second-tier wholesalers, the product cannot reach the terminals, and thus loses the opportunity to meet consumers.
Fourth, strong in-store promotion at terminals. Old and well-known products can "sell themselves," and consumers often buy habitually. How can new products that consumers are not familiar with be sold? Mainly through strong recommendation at the terminal. If the staff at retail terminals do not recommend, the manufacturer or distributor must send people to the terminal for in-store promotion.
Fifth, short-term high-density advertising pull in regional markets (such as county-level markets). A common strategy for second- and third-tier brands is to form a strong brand in a regional market, giving consumers in the regional market the image of a first-tier brand. Since advertising costs in regional markets (such as county-level markets) are extremely low, a few tens of thousands of yuan in advertising can start a market. Therefore, while distributing, high-density advertising pull should be carried out, combining "push" and "pull" to start the market.
Sixth, carry out no fewer than three waves of strong promotional activities within half a year. Do not hope that one large-scale promotional activity can fully start the market. Many new markets are lost during startup due to insufficient push. Therefore, three consecutive waves of strong promotion are very necessary.
Stage 2: Forming a product group
First, extend new products around the main brand that has achieved single product breakthrough, to share the pressure caused by the overly high proportion of the leading product. A single product is easily attacked by competitors, and when attacked, no effective strategy can be used to fight back—if you ignore the competitor's attack, the market will be affected; if you fight back, profit margins will decline. After forming a product group, you can use the product group for strategic counterattacks. For example, use one product to compete with competitors while other products make profits.
Second, new products should enter the market with a "high opening, low going" approach. Remember, according to the requirements of most salespeople and distributors (higher quality, more beautiful packaging, lower price, better policies), new product promotion is bound to fail. To extend the life cycle of a new product, you must leave yourself enough retreat—price space. Therefore, when new products enter the market, the price should be higher.
Third, through the "product group," form a "well-known brand" rather than a "well-known variety." If a single product is too strong, it will form a phenomenon of "brand equals variety," which is an obstacle to promoting new products. Multiple varieties under one brand umbrella can enjoy the protection of the brand umbrella and also provide consumers with choices—if they are not satisfied with this variety, they can choose other varieties.
Fourth, the "product group" can also make it difficult for competitors to introduce targeted policies. Competitors generally do not attack all product lines; they usually choose the variety with the largest sales volume or the greatest threat to attack. If the product is single, all attack power is concentrated on one product, and this product may become a sacrifice. Under the "product group," the sacrifice of any product will not lead to a total collapse.
Stage 3: Forming a product structure
A "product group" is generally just an extension of varieties of the same grade, while a "product structure" is an extension of grades.
Although many companies have succeeded in sticking to a single product grade, especially high-end products such as high-end clothing, this strategy may be effective. However, in the mass consumer goods field, a single-grade product structure still has many problems.
First, only with structure can there be strategy. Companies should regularly make strategic combinations of products to meet the needs of consumers at different levels.
Low-end products can achieve volume, but their profitability is limited. Their functions are: first, to open up the network and form market coverage; second, to form brand influence, because low-end products have many consumers; third, to share sales expenses; fourth, to form economies of scale; fifth, to support personnel.
Mid-end products have both sales volume and profit, and their function is to form stable cash flow and stable profit.
High-end products have limited sales volume, but high profit margins, and can form the company's image.
Second, a market with a single product or product group is unstable. The outcome of single product competition is either losing money or exiting the market.
Third, the key to winning price wars (policy wars) is an effective product structure. In the Chinese market, price wars in low-end products are inevitable, determined by consumer demand characteristics and market competition characteristics—unless you exit the competition in low-end products. Companies must not avoid price; they should proactively initiate price wars or meet price wars. At the same time, they should use price wars to defeat opponents and make money in price wars. The only way to achieve both goals at the same time is to use the profits from mid- and high-end products to support low-end products in fighting price wars.
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