---
title: "When Input Does Not Match Output: A Detailed Discussion on Distributor Transformation!"
description: "Since the second half of last year, many distributors have felt market weakness and diminishing returns from promotional activities. This article discusses the transformation directions and strategies for distributors under the new business environment, focusing on regional refinement, terminal market control, and foundational management improvements."
author: "New Distribution"
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published: "2014-10-02"
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# When Input Does Not Match Output: A Detailed Discussion on Distributor Transformation!

> Since the second half of last year, many distributors have felt market weakness and diminishing returns from promotional activities. This article discusses the transformation directions and strategies for distributors under the new business environment, focusing on regional refinement, terminal market control, and foundational management improvements.

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Since the second half of last year, many distributors have clearly felt market weakness, and the marginal effect of previously planned promotional activities on market pull has been diminishing. In fact, this is just the tip of the iceberg. Overall, most distributors are currently facing a situation where market investment is increasing, output is decreasing, and operating costs are not declining. Faced with this situation, what should distributors do? This article will base itself on the current new business environment, explore the transformation directions and specific strategies for distributors, and propose key points for improving distributor management.

Industry Adjustment: Distributor Transformation Is Imminent

After years of rapid growth, China has entered a new stage of transformation and reform. The overall economy is slowing down, and the pace of structural adjustment is accelerating. In such an economic environment, the food industry has also entered a new phase, with accelerated structural adjustment and further segmentation of product channels.

Currently, the overall demand growth in the domestic food market is limited, and the market is in a stage of structural adjustment with gradually increasing industry concentration. In the beverage industry, the share of plant protein beverages has increased, while the market share of carbonated beverages has declined. Within various categories of the larger industry, structural adjustments are also taking place. For example, as mentioned earlier, the concentration of the plant protein beverage industry has increased. The total category size is currently 20 billion yuan, of which Yangyuan Six Walnuts accounts for 70%.

Under market economy conditions, consumers are always the first to mature. With the gradual maturity of the post-90s and post-00s consumer groups, product channels have achieved further segmentation. KA supermarkets, BC supermarkets, chain convenience stores, circulation small shops, KTVs, catering, and other channels have become key development targets for food companies. In addition, the gradual increase in traditional channel costs has, to some extent, promoted the rise of e-commerce channels. With industry structure adjusting, channels segmenting, and e-commerce channels rising, most companies will propose the slogan of “omnichannel marketing.” Offline, they develop three-dimensional channels, professional coverage, omnichannel marketing, and three-dimensional coordination; online, they use vertical e-commerce, platform e-commerce, and third-party traffic diversion for omnichannel promotion. Companies integrate online and offline, operating in an O2O model, shifting from small, scattered, and mixed to large, refined, and specialized.

With changes in corporate competition rules, the pressures faced by distributors are increasing. First, the pressure from companies on distributors is gradually increasing. For excellent distributors, companies require network construction, promotional promotion, service guarantees, and also require additional staff and vehicles. For average distributors, they will gradually be marginalized by companies. Second, pressure from the same industry increases, and competition among distributors for market share becomes more intense. Third, terminal competition intensifies. Finally, there is the distributor's own operational pressure: rising costs, compressed profit margins, and increased management difficulty.

Regional Refinement: Enhance Market Control

In the past, many distributors leveraged industry trends to achieve rapid development. However, under the new situation, if distributors remain conservative, have speculative mindsets, and lack core competitiveness, they will inevitably be eliminated. Those who dare to take a step forward toward terminals and customers, refine the market, and strengthen basic work will have a higher chance of success. Under the new situation, distributor transformation needs to lock onto the following directions:

Strengthen terminal market operations. Distributors need to understand the principle of “creating momentum in central markets, gaining volume in surrounding markets,” and strongly operate in key areas such as urban centers and key towns. Ensure dedicated personnel and vehicles, guarantee shelf presence and terminal quality; increase investment, strengthen advertising and promotion efforts; and strengthen refined management and strict market order.

Emphasize terminal construction and maintenance. Terminal construction includes four aspects: planning, sales assistance, customer relations, and maintenance. Distributors can optimize terminal layout in a timely manner, achieve effective coverage, and three-dimensional linkage. Focus on creating momentum in KA and catering channels, strengthen refined terminal operations, and cover segmented markets such as weddings, group purchases, and direct sales. Distributors need to focus on building highlight terminals, choosing to operate strongly in key regions, core business districts, key stores, and street communities to suppress major competitors and gain first-mover advantage.

Carry out promotional activities around sell-through. Distributors need to integrate communication in key regions, using the method of “central advertising radiation + core business district outdoor positioning + on-site packaging” to strengthen packaging and activity promotion in key terminals and communities. During the implementation of promotional activities, it can be divided into three stages: pre-communication, in-process control, and post-tracking. In the first stage, area business personnel need to communicate with terminals, communities, and related groups, such as joint actions and stocking, to clarify the purpose and method of the promotion and prepare props. In the second stage, each terminal conducts unified communication, including company introduction, brand promotion, and product selling points; distributors also need to effectively control promotional items, materials, and costs. In the third stage, follow up in the form of advertising, using promotional strength for secondary replenishment.

Clarify the positioning of secondary wholesalers based on channel planning. When it comes to market control, one cannot avoid mentioning the daily positioning and management of secondary wholesalers by distributors. Currently, many distributors simply rely on secondary wholesalers for product promotion, but in fact, this marketing model is wrong. Distributors need to firmly control key terminals, allocate sufficient dedicated personnel and vehicles, and meet terminal coverage and maintenance standards. In surrounding areas and segmented markets, such as special channels that are difficult to cover like KTVs, campuses, and train stations, they should be handed over to secondary wholesalers.

Improve Basic Management and Strengthen Team Building

After clarifying the transformation direction, distributors who can successfully transform should possess the following seven core competitive advantages: differentiated and profit-volume combined product advantages; sufficient manufacturer support; strong terminal market performance; strong terminal execution; standardized company management; stable team; and strong public relations capabilities. To possess these seven core competitive advantages, distributors must grasp several key points during the transformation period, focus on improving basic management, and strengthen team building.

First, sort out the product structure. Distributors need to clarify which products in their product system are for volume, which are for profit, which are for image building, and which are for sticking to terminal customers. After clarifying the product system, distributors can follow the three-character principle of “support, endure, and withdraw” to integrate product resources. “Support” means that distributors need to strengthen the building of advantageous brands in advantageous markets. “Endure” specifically refers to products that have development potential but are currently difficult for the general public to accept. As for how to endure, distributors need to discard products that do not make money and focus core advantages on potential products. “Withdraw” means that distributors cut products with transparent prices and less manufacturer support, and put funds and energy into advantageous categories and brands, increasing the promotion of brand products and high-tech new products.

Second, return to mainstream consumption. When it comes to agency products, many distributors believe that high-profit products are the right choice. Consequently, they represent some high-priced products, such as mineral water priced at over ten yuan. However, based on the current consumption level, mineral water priced at three to five yuan is the mainstream consumption. Therefore, for the new generation of mainstream consumer groups and the current market environment, distributors should not choose expensive products but need to return to mainstream consumption and represent branded, differentiated products.

Third, build a three-dimensional channel and strengthen terminals. Strengthen the construction of terminal networks and build a three-dimensional channel. First, segmented channels must be fully opened; second, terminal services must be strengthened; third, customer relationships must be deeply consolidated. Specifically, each channel plays a different role in the product sales process. For example, for beverage products, the catering channel is used to create momentum, the circulation channel mainly gains volume, and the supermarket channel plays a role in image display. Distributors can consider combining channel characteristics and making targeted layouts.

Fourth, close-to-consumer communication. For most companies, most ground promotion activities are mainly organized by distributors, including activity planning, execution, and follow-up. Afterward, companies will provide appropriate reimbursement based on the activity results. Therefore, how to maximize the effect of product promotion has become a common concern for distributors. In response, distributors need to avoid blindly advertising, and instead use distinct product appeals, combine with hot topics, and leverage momentum for three-dimensional communication.

There is a saying: Rather than perish like a “frog in warm water” waiting for death, it is better to actively seek new “cheese.” Distributors are currently in such a situation, but as long as they find the right transformation direction, leverage their own advantages, and decisively make strategic adjustments, success will surely not be far away.

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