---
title: "Transforming Manufacturer-Dealer Cooperation from 'Control' to 'Empowerment': Three Key Levers—Product Upgrade, Competitive Benchmarking, and Organizational Activation"
description: "Amid China's economic slowdown, fragmented consumer demand, e-commerce impact, and squeeze competition, traditional FMCG channel models are under pressure, with sales hitting bottlenecks. In response, New Distribution, in collaboration with Professor Gao Song from East China University of Science and Technology, launched the 'Gao Song: Channel Empowerment' column to explore new channel models, strategies, and methods. This article, the seventh in the series, details how a dealer achieved remarkable results by shifting from control to empowerment, focusing on product upgrade, competitive benchmarking, and organizational activation."
author: "高松"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2020-01-08"
categories: "Management & Methods"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/a2AjcvA0Y0DyKMeXUHYYvw"
translation: "https://xinjignxiao.com/zh/articles/%E5%8E%82%E5%95%86%E5%90%88%E4%BD%9C%E4%BB%8E-%E7%AE%A1%E6%8E%A7-%E5%88%B0-%E8%B5%8B%E8%83%BD-%E4%B8%89%E4%B8%AA%E5%85%B3%E9%94%AE%E6%8A%93%E6%89%8B-%E4%BA%A7%E5%93%81%E5%8D%87%E7%BA%A7-%E7%AB%9E%E4%BA%89%E5%AF%B9%E6%A0%87%E4%B8%8E%E7%BB%84%E7%BB%87%E6%BF%80%E6%B4%BB-4984e953.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/transforming-manufacturer-dealer-cooperation-from-control-to-empowerment-4984e953/"
citation: "高松. “Transforming Manufacturer-Dealer Cooperation from 'Control' to 'Empowerment': Three Key Levers—Product Upgrade, Competitive Benchmarking, and Organizational Activation.” New Distribution, 2020-01-08. https://xinjignxiao.com/en/articles/transforming-manufacturer-dealer-cooperation-from-control-to-empowerment-4984e953/"
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---

# Transforming Manufacturer-Dealer Cooperation from 'Control' to 'Empowerment': Three Key Levers—Product Upgrade, Competitive Benchmarking, and Organizational Activation

> Amid China's economic slowdown, fragmented consumer demand, e-commerce impact, and squeeze competition, traditional FMCG channel models are under pressure, with sales hitting bottlenecks. In response, New Distribution, in collaboration with Professor Gao Song from East China University of Science and Technology, launched the 'Gao Song: Channel Empowerment' column to explore new channel models, strategies, and methods. This article, the seventh in the series, details how a dealer achieved remarkable results by shifting from control to empowerment, focusing on product upgrade, competitive benchmarking, and organizational activation.

Amid China's economic slowdown, fragmented consumer demand, e-commerce impact, and squeeze competition, the traditional channel model in the FMCG industry is under pressure, 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, launched the 'Gao Song: Channel Empowerment' column to explore new channel models, strategies, and methods for FMCG manufacturers and dealers in the new era.** (This is the seventh article in the series.)
In the past few years, the channel model for FMCG manufacturers and dealers has been primarily control-oriented. To deepen channel penetration, manufacturers hired large frontline teams to manage and control dealers' frontline market actions.
**The result was lower efficiency and intensified management conflicts with dealers.** Can manufacturers change their channel management mindset from control to empowerment, returning the market to dealer teams while playing a new role as enablers? Can they reap the benefits of channel organizational transformation?
# In the six months following the training, dealer Lao Zhang and Xiao Zhang diligently implemented the improvement plans made during the training, with full cooperation from X brand's city manager Xiao Fang, ultimately achieving surprisingly excellent results.
In terms of overall market performance, half-year sales surged 50% year-on-year! More commendably, the growth came mainly from high-margin and new products, lifting the share of high-margin products from 10% to 30%!
**The increased share of high-margin products directly boosted sales profit margin from 1% to 2.5%, improving Lao Zhang's profitability.**
Encouragingly, this growth was not limited to the main product line; several previously weak small product lines also began to grow explosively, creating new profit growth points for Lao Zhang.
Lao Zhang's sales per square meter, per vehicle, and per person improved significantly! Lao Zhang made money, earning 830,000 yuan in six months, with a return on investment of 25%, nearly doubling!
The initial transformation showed results, and the outlook was bright, energizing Lao Zhang's team.
To prepare for the mid-term review, city manager Xiao Fang, along with dealer Lao Zhang and Xiao Zhang, conducted a thorough review, analyzing the main reasons for their success. They attributed it to the creation of three new growth engines learned in the project: **product upgrade, competitive benchmarking, and organizational activation.**
**-01-**
**Empowerment Engine 1: Product Upgrade**
**Consumption upgrade is one of the most important trends in the FMCG industry. As incomes rise, people tend to buy better-quality products and become less price-sensitive.** Especially in China's fourth- and fifth-tier markets, 'town youth' (xiaozhen qingnian) face less life pressure and have seen significant income growth, making them more inclined to purchase higher-end products.
Xiao Zhang, who holds a master's degree in management from City University of Hong Kong, used the product attractiveness matrix, product-channel pricing methods, and product mix principles learned in training to select three new products from X brand's upgraded product line for focused promotion. These three products met local consumer needs and were relatively distinctive and differentiated.
Xiao Zhang fully coordinated with city manager Xiao Fang to develop a marketing plan for these three products. They planned trial sales arrangements, price rebates, store distribution, consumer experience activities, promotional campaigns, and sales staff incentives, with implementation plans covering timing, location, and resource investment.
**The core of product upgrade is consumer education**, guiding and driving new consumption trends, which requires dual efforts in display and consumer experience promotion. According to Xiao Zhang's statistics, the number of activities for new products over the six months was as follows.
**New product displays:** Flagship stores: 16; image stores: 34; standard stores: 11; TOP stores: 100; expanded network: 145; cut-case displays: 120.
**Consumer experience activities:** Manufacturer weeks: 8 sessions; medium-sized themed events: 16; small weekend promotions: 80; promotional team agricultural market promotions: 70.
Over six months, all three high-margin, consumption-upgrade new products were successfully introduced to the market, with clear sales growth momentum.
**-02-**
**Empowerment Engine 2: Competitive Benchmarking**
In the context of slowing consumer market growth, market share growth undoubtedly comes from converting competitors' customers. Therefore, planning specific competitive strategies for each region's competitors is a key method for growth.
In the 'Excellence in Business' learning project, Professor Li taught Lao Zhang and Xiao Zhang a complete competitive benchmarking methodology, divided into three major steps: **selecting targets, defining battlefields, and devising strategies.**
First, select the two most important competitors for competitive analysis. Second, choose the key terminals and product SKUs for competition. Finally, devise specific competitive strategies, such as price competition, promotional competition, and display competition.
The Jingzhou market faced two formidable competitors. One was Y brand, ranked second in the industry, positioned at the high end, with strong recent growth and significant investment in displays and promoters in large and medium supermarkets. The other was Z brand, which distributed low-priced products in small township supermarkets.
Dealer Xiao Zhang and city manager Xiao Fang carefully discussed and developed different competitive plans for the two rivals.
The competitive strategy against Y brand was '**outnumber them, attack from both ends**.' X brand has a long product line and many categories, so they could leverage multi-category advantages to negotiate with supermarkets for more shelf space, squeezing Y brand. For Y brand's best-selling SKU, Xiao Zhang selected two X brand SKUs—one with higher quality and pricing, and one with better value—for focused promotion, attacking Y brand from both ends.
These two tactics achieved excellent results. Taking Yuejiafu, the largest terminal store in Jingzhou, as an example: X brand's monthly sales were only 100,000 yuan, while Y brand's were 200,000 yuan.
City manager Xiao Fang and dealer Xiao Zhang negotiated a unified shelf display agreement with the store, adding promotional and consumer experience activities. Six months later, X brand's monthly sales reached 300,000 yuan, while Y brand's fell to 80,000 yuan. X brand gained the store's support, and even display fees were waived.
The competitive strategy against Z brand was '**price competition, terminal rebates**.'
Z brand's biggest weakness was that small stores didn't make money, and it had poor control over terminals. So, for Z brand's best-selling SKU, Xiao Zhang and Xiao Fang identified a comparable X brand SKU, applied to headquarters for policy support, and launched activities in small supermarkets with ultra-low 'shock' prices, while offering high rebates to small store owners, securing the best product displays and boosting X brand's overall share in small supermarkets.
After six months of competition, results were impressive: sales grew 50%, with the main share gains coming from Y and Z brands. Y brand's sales declined, and its city manager was replaced. Z brand's dealer suffered losses, and the market was on the verge of collapse.
**The market follows the Matthew effect: the strong get stronger, and the weak get weaker.**
**-03-**
**Empowerment Engine 3: Organizational Activation**
Organizational and team issues were a major problem for dealer Lao Zhang. Because the business wasn't profitable, Lao Zhang paid his sales staff low wages plus fixed commissions. With low income, capable people quit, leaving only the weak and inefficient, who not only dawdled but also criticized Lao Zhang for being stingy.
According to Xiao Zhang and city manager Xiao Fang's analysis, **the sales team was understaffed and lacked combat effectiveness, leading to low terminal coverage and activity, which was the core reason for Lao Zhang's sluggish sales growth.** Using the organizational activation methods learned from Professor Li, Xiao Zhang immediately began restructuring the team upon returning to Jingzhou.
**1. Adjust the sales organizational structure and strengthen the sales team**
Originally, Lao Zhang had only 7 sales staff, including himself. He handled large and medium supermarkets himself; township small supermarkets were covered by a vehicle sales model with two lines of 2 people each; and the wholesale market had 2 people.
It was clear that large and medium supermarkets were key markets requiring extensive work such as negotiating displays, promotional activities, and consumer experience events, which Lao Zhang alone couldn't handle. The two township lines also had insufficient coverage, with most sales going through wholesale channels.
The new plan increased the team from 7 to 10 people. Large and medium supermarkets got 3 people: 1 manager and 2 sales staff; townships kept the original 4, plus a new direct-sales point in remote townships with 2 people; the wholesale market was reduced to 1 person. Through a combination of recruitment and internal adjustments, the team was assembled within a month.
**2. Adjust sales compensation and performance evaluation to boost staff motivation**
Xiao Zhang divided sales staff compensation into four parts: base salary, commission, bonuses, and benefits.
Base salary is the basic guarantee; without a sufficiently high salary, it's impossible to attract excellent sales staff. Therefore, Xiao Zhang raised the base salary of existing staff by 40%.
Commissions are based on product sales. Previously, Lao Zhang used a uniform commission rate without considering strategic priorities. Xiao Zhang adjusted commissions based on product promotion priorities, increasing commissions for high-margin new products and reducing them for unprofitable old products. For certain entirely new categories, Xiao Zhang even shared product gross profit with sales staff to foster a sense of ownership.
Bonuses serve market strategies. Based on the strategic priorities for the second half of the year, Xiao Zhang designed the following bonus items:
> New product distribution incentive: 5-10 yuan per case; sales competition incentive: 5,000 yuan (monthly top rank); hot product incentive: special red envelopes; position building incentive: 15 yuan per unit (township floor display); 20 yuan per store (special shelf display); 10 yuan per store (network expansion and cut-case display).
Benefits are a form of care for employees, fostering long-term commitment and organizational loyalty. Xiao Zhang purchased work injury insurance for employees and added annual travel arrangements.
**3. Activate team combat effectiveness through meeting mechanisms and culture building**
Xiao Zhang learned about Alibaba's 'Iron Army' team-building approach in the course. What struck him most was the establishment of the Iron Army spirit. **If only material incentives are used, the team will always be a rabble; spiritual strength is eternal.**
To help the team grow and build an invincible team, Xiao Zhang resolved to establish a formal meeting and review system, a mentorship system where veterans guide newcomers, sales competitions, best employee awards, and team-building activities, allowing everyone to open up, bond emotionally, care for each other, and grow together.
The results of organizational activation were enormous. The sales team unleashed tremendous energy, with everyone working actively to extract benefits from the market. Sales staff income increased by an average of 50%, and because per-capita sales rose significantly, Lao Zhang made even more money.


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## Citation metadata

- Publisher: New Distribution
- Author: 高松
- Published: 2020-01-08
- Canonical: https://xinjignxiao.com/en/articles/transforming-manufacturer-dealer-cooperation-from-control-to-empowerment-4984e953/
- Original source: https://mp.weixin.qq.com/s/a2AjcvA0Y0DyKMeXUHYYvw

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