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Many distributors share common problems in product management. Looking at the development of distributors, it's not hard to find such a phenomenon: a distributor achieves annual sales of tens of millions with one brand, but as the bestseller declines, the distributor's sales revenue begins to plummet. In fact, the key bottleneck for distributor development is not that the bestseller enters a decline phase, but whether the company has other products to take over the price, channels, consumer base, and sales revenue of the bestseller. The "takeover" issue is a key problem in distributor product management.
Many distributors only understand product management as inventory management, thinking that recording shipments, receipts, and stock levels is the entirety of product management. In reality, product management should be considered within the overall company structure. First, classify the products you represent. To this end, I have designed a coordinate system with "profit margin" and "market share" as dimensions, providing a standard for distributors to classify their products (see Figure 1).
Figure 1: Product Classification
Star products are characterized by high profit margins and high market share. Strategic brands often have these characteristics when first introduced to the market. On one hand, new products have larger profit margins; on the other hand, with the company's strong brand promotion, distributors can achieve good sales volumes. If a distributor can secure such products, they can build their channels and team, rapidly strengthening their strength. Moreover, products with profit and visibility are easier for the team to distribute and strengthen channel connections.
Mature products are characterized by low profit margins and high market share, relying on volume. Generally, as channel driving continues, sales grow, and profit margins become more transparent, causing former star products to gradually become mature products. Mature products have large sales volumes, can achieve natural sales, and require no additional investment. They ensure the company's operating expenses, provide cash flow, and support the healthy development of other products.
Niche products are characterized by high growth rates and low market share. Distributors hold these products not to pursue sales volume but to earn profits and maintain customer relationships.
Inventory products, also known as declining products, are characterized by low profit margins and low market share. They not only fail to bring revenue but also create capital and inventory pressure.
Distributors' actual situations differ, so specific product management strategies vary, but the guiding principle is the same: clarify your product structure, define product attributes, and manage and adjust according to the development direction of each type.
Star products should develop into mature products. This requires distributors and companies to control market prices and ensure reasonable and stable profits at all channel levels. If these two issues are not handled well, star products may become unprofitable, be hidden by channel partners, and eventually become inventory products. "Drinking down a product in one year" is a true portrayal of star products becoming inventory.
Distributors should transform mature products into long-selling products to maintain channel control. The key to this transformation is maintaining reasonable channel profits while investing more in consumer cultivation, making consumers recognize the product and actively request it.
Niche products mainly aim for profit and customer relationship maintenance. If, on this basis, brand awareness is strengthened and a consumption atmosphere is created, niche products can develop into star products. However, if niche products pursue sales volume while ignoring core customer profits, it may backfire and cause products to stagnate.
Inventory products should be disposed of reasonably, even at the expense of profit if necessary, because the cash flow from clearing inventory and the savings in storage costs can create greater profits.
Based on the above analysis, review your current product structure: if you lack star products, you need to add a strategic leading product; actively seize opportunities in local liquor to provide continuous cash flow; promptly clear inventory products and use the freed funds to cultivate star products.
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