Summary of Key Points
This article highlights the common challenges faced by fast-moving consumer (FMCG) brands today: The headquarters demand growth, but the market environment is harsh (with disruptions in distribution channels, shifts in customer traffic, and competition from proprietary brands), leaving sales teams at a loss. Behind this are the conflicting goals of growth set by executives and the reality of difficulties in achieving those goals. The article emphasizes that a short-term decline in sales is not the most alarming issue; what truly matters is the inability to adapt business capabilities. In a shrinking market, companies must focus on mastering fundamental skills such as product innovation, channel coverage, and brand value to emerge as the winners.
I. The Power Struggle Behind Growth Targets
Why do headquarters insist on setting growth targets despite a poor market situation? At heart, this reflects a conflict of interests between executives and professional managers:
- From the executive's perspective: They have invested in hiring managers with the aim of expanding and strengthening the business. Setting a target of a 5% decline would mean moving towards a smaller business model, which executives are unwilling to accept.
- From the manager's perspective: Their position makes it risky to suggest a decline; they must push for growth despite knowing the market challenges. After all, it's easier to set targets than to achieve them, and not mentioning growth could lead to their job loss.
As a result, sales teams are forced to overstock products and compete for customers, only to end up offending them without meeting their goals, leaving them with no choice but to complain.
II. The Challenges of Implementing Growth
Why is it so difficult to achieve growth? The article identifies three key obstacles:
1. Changing Distribution Channels: In the past, products were widely available in all stores; now, channels are more specialized and unstable. New retail models constantly evolve, and even large supermarkets require customized products (e.g., a particular supermarket may demand uniquely packaged drinks), making it challenging for sales teams to adapt.
2. Lack of Team Capability: Customized products require collaboration between production and research teams, but many companies struggle with this (either failing to produce the required products or selling them poorly), allowing competitors to seize opportunities.
3. Poor Organizational Coordination: There is a lack of clarity in responsibilities between headquarters and regional offices, slow supply chain responses, and outdated marketing strategies, all of which hinder growth.
For example, sales teams often complain that they cannot acquire new customers fast enough to compensate for the loss of existing ones, and the investment in marketing does not cover costs effectively—this reflects the dual challenges of distribution and financial pressure.
III. Short-Term Declines Are Not the Biggest Threat; Weak Business Capabilities Are
The article argues that a temporary decline in sales is not the real problem; what's fatal is the failure to build business capabilities. Why?
- The Market Has Changed: In the past, companies could still benefit from a larger market share even with poor brand management. Now, the market is more competitive, and with overcapacity, consumers and retailers are more discerning. Weak business capabilities can lead to elimination (e.g., retailers may switch to proprietary brands).
- The Core Business Capabilities Remain the Same, but Their Focus Has Changed:
- Products: Once-famous products (like Master Kong's braised beef noodles) dominated for years; now, product lifecycles are shorter, and innovation is essential to stay competitive.
- Channels: Distribution must now cover both offline and online channels, as well as community-based purchasing groups and customized offerings.
- Brand: Consumers are more rational, and brand premiums are harder to earn. Brands need to genuinely deliver value (e.g., by emphasizing health or quality).
If these capabilities are not developed, even if sales do not decline in the short term, the company will fall behind in the long run.
IV. Surviving in a Shrinking Market: Focus on Fundamentals and Avoid Mistakes
The article offers a solution: In a shrinking market, survival depends on avoiding mistakes and making informed decisions. Here are some steps to take:
- Don't Let Anxiety Overrule You: Avoid overstocking products or wasting marketing funds; maintain strategic focus.
- Master the Three Essential Skills:
- Continuously innovate products (rather than relying on hit singles).
- Deepen channel coverage across all platforms (to adapt to new market dynamics).
- Uphold brand value (to build customer loyalty).
- Lead Your Team: Go to the front lines to understand market needs; sitting in an office won't help. Ensure your team keeps up with market changes (e.g., by involving production and research in channel requirements).
In short, in a difficult market, those who focus on building a solid foundation will be better prepared for a recovery.
Conclusion
The challenges faced by FMCG brands are not isolated issues; they are part of an industry-wide cleansing process. Instead of complaining about unrealistic targets, it's more productive to focus on strengthening internal capabilities. In a shrinking market, surviving is the ultimate goal.