Current situation and trend of the channels and te

Paint industry: current situation and trend of channels and terminals

the sales channels of paint enterprises have been flat since the beginning of this century. Manufacturers have constantly adjusted and reduced the sales areas of provincial general dealers and prefecture and municipal dealers, trying to open up more points and develop more dealers to cooperate directly with the company. In the terminal stores, the mode of franchised stores and large stores is popular, and the operation of grocery stores/small stores is difficult. Some manufacturers began to promote new stores, trying to improve the competitiveness of dealers and brands in the terminal. Dealers' management and cost awareness began to gradually increase, relying on the strength of manufacturers to improve their promotion level and sales skills, in order to achieve greater development

first, the evolution of channels

the change of sales channels is inseparable from the development and expansion of coating enterprises and the adjustment of brand strategy. In the 1990s, the strength of coating enterprises was still very weak, and they were in the stage of seeking survival. When looking for dealers, no matter whether you want to sell at the provincial level or at the municipal level, you just have to pay for the purchase. Of course, the first purchase of provincial dealers is certainly higher than that of municipal dealers, but the standard has not been formed, or it is very low. Most of them reach an agreement by exchanging conditions between the two sides. There is no long-term and scientific planning for sales channels. If two dealers in a prefecture level city are willing to purchase goods at the same time, it is not divided from the distribution area. In this way, the manufacturer is worried that both dealers will lose, and will adopt more multi brand strategies and add one brand to increase dealers and sales. This is also the reason why many coating enterprises have many coating brands. A marketing expert in the paint industry described this phenomenon most appropriately with a phrase: one mother has nine children, and everyone grabs food. For paint manufacturers, this kind of competition can only be regarded as an expedient measure to disperse enterprise resources and fail to concentrate their financial resources on establishing well-known brands. For dealers, a prefecture level city has a small market. Although the data analysis shows that the brands are different, the manufacturers are the same. With the promotion, it is inevitable to have a price war, and the profit margin cannot be raised. If the dealers of different brands from the same manufacturer are in the same market, their popularity is not high, but they are safe. If the sales volume and popularity of one of the brands are good, add another brand dealer, and the brand dealer with good business will definitely be impacted. For manufacturers, in the short run, it seems that the sales volume has increased, but in the long run, the brand and sales volume must be affected. This situation continued until around 2005 and began to change. Some manufacturers understood the disadvantages of multi brand strategy, and combined with the strength enhancement, it is imperative to adjust the brand strategy. We began to clean up poorly managed brands and dealers, shrink the front, and focus on building and promoting core brands. After about three years of development, the blank area of core brands is becoming less and less. Coating enterprises have successively carried out the work of optimizing the dealer network. One of the main channel strategies is to narrow the dealer area at the provincial, prefecture and municipal levels, directly develop county/county-level cities, township dealers, and flatten the sales channels. However, the situation of each manufacturer is different. There are six kinds of current ones:

first, provincial general distribution. A dealer is responsible for the sales of a brand within a province. This channel mode is mainly based on China Resources Coatings. In addition, few coating manufacturers adopt the provincial agent mode, and even some small enterprises rarely adopt this provincial distribution channel mode. However, China Resources Coatings does not adopt the model of provincial dealers, only in some provinces. The main consideration is that the provincial dealers have a long distribution time, strong strength and considerable sales volume. Considering the removal of provincial dealers and the change to prefecture level city or county-level agents, the sales volume does not necessarily increase, and the risk is greater

second, distribution in prefecture level cities. The authorized area includes the urban area, which governs county-level cities, counties and towns outside the township. This channel model is adopted in some remote areas in the central and western regions, mainly considering the economic aggregate and distribution issues. Large paint enterprises such as Zhonghua paint, garberry, Bauhinia and so on only 20% of the prefecture level city dealers. In some small and medium-sized enterprises, there are relatively more dealers in prefecture level cities, accounting for about 70% of the dealer system. And the counties below prefecture level cities, county-level cities and larger Township networks need prefecture level city dealers to develop

third, dealers in counties or county-level cities. The area of these dealers only includes towns and townships under the jurisdiction of counties or county-level cities

strong paint brands such as garberry, sankeshu, etc. this mode accounts for about 70% of the whole distribution system and is the main channel mode. 3、 Fourth tier brands account for only about 20%

fourth, township dealers. This mode is the lowest level distributor of paint enterprises, which is only responsible for the sales of one township/town area. The ultimate goal of the channel strategy of coating enterprises in the past two years is to sink the channel terminal to villages and towns. Just look ahead a little. Suppose your brand accounts for only 60% of the 40000 villages and towns in the country, there are 24000 terminals. The annual sales volume of each terminal is only 100000, and there are 2.4 billion market sales. What an exciting number. Unfortunately, it is just a hypothesis that even the household appliance industry with the highest degree of marketization cannot achieve this goal. Huge investment (store decoration/advertising/labor costs, etc.), distribution problems, market capacity problems, etc. are all unsolvable by coating enterprises. Although the coating enterprises have declared to move the terminals down to villages and towns, at present, the first and second tier brands account for only about 10%, and the third and fourth tier brands may not even account for 5%. The biggest wave of bankruptcy occurred in 2014. Fifth, retail and engineering distribution were separated. Whether it is the authorized area of the dealer or the distribution category, the current coating enterprises plan to adjust in order to refine management and improve sales. The separation of retail and engineering distribution rights is now mainly primary and secondary brands. 3、 The retail and engineering of the fourth tier brand will be awarded at the time of signing the agreement with the dealer. For third and fourth tier brands, the problem of Engineering Agency can be solved through one channel. But for the first and second tier brands, professional people do professional things. In order to improve the sales volume of the project, it is necessary to separate retail and engineering and set up independent engineering dealers. However, this does not mean that retail dealers cannot do engineering. Some engineering information still needs to be obtained from retail channels. Retail dealers who need to do engineering can apply for engineering products from enterprises through engineering filing. If there is no conflict between the reported project and the project dealer, it is likely to obtain the project products and prices. And the engineering dealers in the same region do not need to be like retail dealers, only one can be set up. Because the project is relatively special, in most cases, it depends on information, relations and strength. Therefore, like brands that do well in the engineering field, there are usually two or three engineering dealers in a region. This channel management method is of great benefit to engineering oriented enterprises, such as ASI and crocodile paint, whose single project sales volume exceeds 200 million at least a year

six is the direct selling mode. The direct selling mode is also known as the key customer mode. This is of great concern among the first and second tier brands. It is also the main mode for large and medium-sized enterprises to improve sales in the future. The number of customers is not large, but the sales volume contributed is definitely quite a lot. These major customers, including large furniture factories, large national home decoration/tooling companies, large real estate enterprises, have annual sales of at least five million. Such as Zhonghua lacquer and country garden, sankeshu and Evergrande, etc. Most of the coating enterprises have formed strategic alliances with these major customers to achieve a win-win goal. This direct selling trend will become more and more important in large and medium-sized enterprises

II. Changes in terminal stores

from the paint grocery store since the 1990s, to the implementation of paint brand stores at the beginning of this century, and then to the promotion of building paint flagship stores in 2006, the changes in terminal stores of paint retail have been keeping pace with the times. Until now, there are various forms of paint stores, of which the form of exclusive stores belongs to the mainstream, and other forms coexist. For manufacturers, it is best for each customer to monopolize, which not only ensures the sales volume, but also improves the popularity and reputation of the brand. But for dealers, franchised stores are not the only choice. They have to face fierce market competition and need to survive, followed by development. Franchised stores do not mean sales. If a franchised store is built, its business will be booming. Therefore, most manufacturers strongly require dealers to build franchised stores, but dealers are not willing to build franchised stores. This contradictory state makes the storefront situation of paint sales terminals complex and diverse

1. Opening and closing branches

for dealers who operate first and second tier brands, or even third tier brands, they had their own large or small stores in the building materials street or the building materials market in the early stage

with the expansion of business, the situation of a store cannot meet the needs of sales growth. Whether for their own development or the requirements of manufacturers, it is necessary to find another store in other new building materials streets or building materials markets. The economic development makes the old urban areas of many prefecture level cities unable to meet the needs of population and housing development. Most of them will build new areas. A large number of new buildings and houses in the new areas have a strong demand for building materials. In this way, building materials street or building materials market came into being. If you can buy a berth in the new building materials market, or rent a berth and reopen a paint shop, it will be a happy thing for dealers and paint manufacturers. Therefore, generally, dealers with annual sales of more than 3 million will have more than two stores in prefecture level cities. Such dealers, which have long been divorced from the nature of individual or private enterprises, will print the words XX trade/limited company on their names to complete the transformation from businessmen to businessmen. But not every expanded new store will get rich returns. It is often seen that the new decoration market in some prefecture level cities is deserted. Once asked to open for half a year or even longer, business has not improved. Some merchants began to close their stores and evacuate, so the joint investment with the manufacturer in the early stage naturally could not be recovered

2. Oiler and owner

the owner is the actual buyer, and the oiler is the user. In the second and third tier cities, about 70% of the business of most dealers comes from the recommendation of oil workers. The dealer's attitude towards the oilers is love hate. What I love is that I can bring business to myself, but what I hate is that the oil workers are greedy for kickbacks and plunder their own interests. Before 2005, oil workers' resources were crucial to dealers. Without the support and recommendation of oil workers, dealers could hardly survive. In recent years, due to the increased brand publicity of manufacturers, the popularity of first-line paint brands has increased, and the attention of the media, the owners' awareness of oil workers receiving kickbacks has significantly strengthened. Some owners began to choose their own brands, and a few owners even deliberately did not buy brands recommended by oil workers. Dealers have just begun to do some paint retail businesses that don't give rebates or give less rebates, but they still can't be tough on oilers. It can be predicted that the abnormal business phenomenon of oil industry rebate will continue to decrease in the next five years

3. Husband and wife file/corporatization

husband and wife