---
title: "Transformation: The \"Front, Middle, Back\" Three-Tier Model for FMCG Manufacturers, Let Frontline Sales Call for Headquarters' \"Fire Support\"!"
description: "Amid China's economic slowdown, fragmented consumer demand, the impact of online e-commerce, and a market entering squeeze competition, the traditional channel model of the FMCG industry is under assault, 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, launches the \"Gao Song: Channel Empowerment\" column to explore new channel models, strategies, and methods for FMCG manufacturers and distributors in the new era. Facing economic downturn and intensifying competition, most brand owners are stuck in a growth bottleneck. How to create a new growth engine through marketing organization and channel model transformation and innovation is undoubtedly a key concern for all leading brand owners."
author: "高松"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-11-19"
categories: "Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/Hh6TSk2giVYLqDSVsQFFtQ"
translation: "https://xinjignxiao.com/zh/articles/%E5%8F%98%E9%9D%A9-%E5%BF%AB%E6%B6%88%E5%8E%82%E5%95%86%E7%9A%84-%E5%89%8D%E4%B8%AD%E5%90%8E-%E4%B8%89%E5%8F%B0%E6%A8%A1%E5%BC%8F-%E8%AE%A9%E4%B8%80%E7%BA%BF%E4%B8%9A%E5%8A%A1%E5%91%BC%E5%94%A4%E6%80%BB%E9%83%A8-%E7%82%AE%E7%81%AB%E6%94%AF%E6%8F%B4-f7745d42.md"
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citation: "高松. “Transformation: The \"Front, Middle, Back\" Three-Tier Model for FMCG Manufacturers, Let Frontline Sales Call for Headquarters' \"Fire Support\"!.” New Distribution, 2019-11-19. https://xinjignxiao.com/en/articles/transformation-the-front-middle-back-three-tier-model-for-fmcg-manufactu-f7745d42/"
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---

# Transformation: The "Front, Middle, Back" Three-Tier Model for FMCG Manufacturers, Let Frontline Sales Call for Headquarters' "Fire Support"!

> Amid China's economic slowdown, fragmented consumer demand, the impact of online e-commerce, and a market entering squeeze competition, the traditional channel model of the FMCG industry is under assault, 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, launches the "Gao Song: Channel Empowerment" column to explore new channel models, strategies, and methods for FMCG manufacturers and distributors in the new era. Facing economic downturn and intensifying competition, most brand owners are stuck in a growth bottleneck. How to create a new growth engine through marketing organization and channel model transformation and innovation is undoubtedly a key concern for all leading brand owners.

Amid China's economic slowdown, fragmented consumer demand, the impact of online e-commerce, and a market entering squeeze competition, the traditional channel model of the FMCG industry is under assault, 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, launches the "Gao Song: Channel Empowerment" column to explore new channel models, strategies, and methods for FMCG manufacturers and distributors in the new era.**

Facing economic downturn and intensifying competition, most brand owners are stuck in a growth bottleneck. How to create a new growth engine through marketing organization and channel model transformation and innovation is undoubtedly a key concern for all leading brand owners.

What is the direction of transformation? What models can be referenced? Where are the problems and difficulties? This article attempts to explore these issues through a virtual X brand facing real problems and scenarios.

The above challenges and problems are merely symptoms; the real disease lies in the traditional marketing organization and channel model.

**-01-**
**Two Classic Marketing Organization Models Are Outdated**

Traditionally, there are two classic models for FMCG marketing organizations: the headquarters-centralized model and the regional integration model.

**The headquarters-centralized model is a strong headquarters, weak regional branch model.** Sales headquarters and marketing headquarters are both located at the headquarters, with market research, strategy formulation, brand promotion, sales planning, and resource allocation all held in the hands of the headquarters. The factory is merely a cost center with no operational authority.

Regional companies are dispatched agencies positioned as execution departments, merely executing headquarters' directives. The typical representative of this model is Procter & Gamble.

Figure 1: Headquarters-centralized model - P&G Greater China marketing organization structure

**The regional integration model delegates authority from headquarters to strengthen regional companies, which have full functions from procurement and production to marketing and sales, operating for their respective regions.**

The typical representatives of this model are Coca-Cola and PepsiCo. They delegate marketing and sales functions to regional bottling plants, while headquarters is only responsible for brand, product, and channel planning, annual brand, channel, and consumer overall plans, and assessment and supervision.

Figure 2: Regional integration model - Coca-Cola marketing organization structure - Coca-Cola headquarters
Figure 2: Regional integration model - Coca-Cola marketing organization structure - Bottling plant

X brand initially implemented the headquarters-centralized model. As market complexity and dynamic changes intensified, this model increasingly revealed its fatal flaw: the disconnect between headquarters' decisions and market reality. Consider that China is a market with huge regional differences. Facing different markets and dynamic realities, how can headquarters' decisions avoid the dilemma of being out of touch with reality?

Consequently, problems such as decision errors, information distortion, slow response, and conflicts between headquarters and regions become prominent. The emergence of these problems for X brand gave Y brand an opportunity. In recent years, Y brand has grown wildly, and its pursuit is clearly audible.

X brand has realized this problem. After taking office, Marketing Director Lao Cao discussed with the boss about transforming the marketing organization. Initially, the chosen direction was the regional integration model. X brand has factories in every province and provincial sales branches. The plan was to merge factories with sales branches to form provincial regional companies, with headquarters delegating marketing and sales functions to regional companies, which would become profit centers responsible for provincial operations.

This model expected to improve the organization's response speed and accuracy to the environment by delegating authority. However, after in-depth research and reflection, Lao Cao found that the regional integration model still could not solve many deep-seated problems.

1. This is only a patch solution. Provincial companies will face the same decision-making dilemma as headquarters. Provincial-level decision-making departments still cannot make precise decisions and respond quickly to every county and township.
2. X brand has a long product line, spanning multiple categories and many product items, greatly increasing management difficulty. The complexity of provincial company operations is high, and capable managers are scarce.
3. This model still cannot solve Lao Cao's biggest headache: channel sinking and intensive cultivation require dealer cooperation, but dealers lack willingness, and manufacturer-dealer coordination is poor.

What to do? Soon, this matter was shelved.

**-02-**
**Marketing Organization Operations Should Shift from "Push" to "Pull"**

Lao Cao is a person who loves learning and thinking, often reading articles and books on enterprise management and organizational transformation. Once, while waiting at the airport, he read an article about Huawei's marketing Iron Triangle, and the more he read, the more excited he became, keeping him awake for several nights.

**Huawei's Iron Triangle model is a customer-centric approach where small service teams are built to flexibly and efficiently serve customers in response to complex and diverse customer needs.**

The so-called Huawei project "Iron Triangle" refers to **a project management team centered on the customer manager (AR), solution expert/manager (SR/SSR), and delivery expert/manager (FR), forming a customer-facing, project-centric frontline combat unit that shifts from point-to-point passive response to face-to-face proactive customer engagement.**

Figure 3: Huawei Iron Triangle model diagram

In addition, the Huawei system department Iron Triangle organization is the support platform for the project Iron Triangle. The system department Iron Triangle consists of the sales business department, solution department, and delivery and service department. It exists as a customer-serving department and is a relatively stable functional organization form.

**The core idea of Huawei's Iron Triangle model is to establish flexible and efficient small frontline teams, fully empower them, and let those who hear the gunfire make decisions. The marketing organization mechanism shifts from top-down push to bottom-up pull. Headquarters' functional departments transform from control hubs to service support platforms, providing fire support for the frontline.**

Although B2B business differs from B2C marketing models, this idea can be borrowed!

Lao Cao began to expand his research scope. He found that in the current volatile, uncertain, complex, and ambiguous (VUCA) era, agile organizational transformation has become a trend. Alibaba's middle platform strategy, Haier's enterprise platformization and employee entrepreneurship, Han Du Yi She's group system, and Kazuo Inamori's amoeba organization all share the core of building flexible and efficient small teams directly facing the market, greatly improving the organization's response speed and marketing efficiency through empowerment.

Of course, the FMCG industry's marketing organization and channels are more complex, making transformation more difficult. However, Lao Cao knows well that the traditional marketing organization and channel model is the key constraint on marketing work. Once the transformation succeeds, it will create a huge competitive advantage, attacking from a high dimension to a low dimension, and gaining market share growth.

Therefore, **such an organizational transformation will be epoch-making, comparable to P&G's brand manager system and General Motors' divisional system.**

Thus, Lao Cao began to think and plan the transformation model for X brand's marketing organization and channels with agile thinking.

**-03-**
**Building a Three-Tier Model for FMCG Marketing Organization and Channels**

The first challenge Lao Cao faced was how to build flexible and efficient small teams facing the market.

Huawei's Iron Triangle is centered on one customer, composed of three internal roles.

The FMCG industry is different. After research, **Lao Cao planned to center on the county-level market, with frontline sales and dealer teams forming a joint business entity. This joint business entity is fully empowered to become a flexible and efficient small combat team for the county market.**

This joint business entity is responsible for local market operations, aiming at sales growth, new product growth, and improvement of dealer business indicators, unifying the interests of the brand owner and dealer, achieving alignment of goals, and maximizing the dealer's subjective willingness and enthusiasm.

The joint business entity has two main tasks: **empowering terminals and managing C-end consumers.** The core of terminal empowerment is to help small terminal stores with category management and sales promotion, assisting terminals in increasing category sales growth and gross profit improvement; consumer management refers to consumer education, interaction, and other work through community e-commerce, brand communities, etc., to grasp consumer needs and promote word-of-mouth effects.

In Lao Cao's vision, this joint business entity is like a US military combat team, able to autonomously adjust strategies based on competitive conditions and consumption trends, operate flexibly and efficiently, and create maximum market performance and competitive advantage.

Clearly, relying solely on the strength of combat teams is insufficient. Combat teams call for fire support, so headquarters needs to establish a front tier to serve and support the joint business entity's operations and provide fire support for the frontline.

Lao Cao considered transforming the original prefecture-level sales branches, adding functions such as market planning, consumer education, product projects, and sales training, to build multi-arms teams that strongly support the joint business entity's operations.

Provincial companies build a middle tier, downplaying marketing decision-making functions, focusing on building service support platforms for finance, human resources, information, customized R&D, and production, to support the front tier's various tasks.

The business headquarters becomes the marketing back tier, focusing on strategy, brand, and R&D, responsible for overall market strategy planning, brand strategic positioning, and basic research and product development.

From the overall perspective of organizational operations, the front, middle, and back tiers are not a top-down push model but a front-to-back pull model. Consumers and the market frontline become the focus of marketing work, with the three tiers collaborating to strongly support the joint business entity's frontline operations. Corresponding organizational mechanisms need to be built to match this three-tier structure, such as information communication, resource allocation, performance assessment, and capability development.

Figure 4: Three-tier model diagram in the FMCG field

After half a year of research and planning, X brand's marketing organization and channel transformation plan was freshly released. The prospects are exciting because once the pilot succeeds, it can activate the 50,000-60,000 people of more than 3,000 dealers nationwide in a short time, allowing X brand's channels to be further intensively cultivated, thereby opening up huge market growth space.

Lao Cao is well aware that the implementation difficulty of such a transformation is enormous. Lao Cao is determined to resolutely walk this path no matter what difficulties are encountered.

To reduce risk, Lao Cao plans to pilot in one province next spring, and after accumulating experience, gradually roll it out.

**Extended Reading:**
>
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## Citation metadata

- Publisher: New Distribution
- Author: 高松
- Published: 2019-11-19
- Canonical: https://xinjignxiao.com/en/articles/transformation-the-front-middle-back-three-tier-model-for-fmcg-manufactu-f7745d42/
- Original source: https://mp.weixin.qq.com/s/Hh6TSk2giVYLqDSVsQFFtQ

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