The competition among channels for domestically produced chocolate

The four or five months before and after each summer are the off-season for the candy industry. Chocolate, in particular, easily melts when the temperature exceeds 30 degrees Celsius. Therefore, every summer, regardless of the channel, sales terminal, or consumer, its attention will decrease. This causes many headaches for chocolate manufacturers, such as current arrangements for production employees, maintenance and upgrades of production equipment, and the development of new products in the second half of the year, the building of sales teams, and the maintenance of distributors. But looking at the bigger picture, the question being asked in the industry right now is: How should we approach our market in the second half of the year?

This question is actually a strategic issue involving corporate positioning, resource allocation, and the choice of competitive methods. However, judging from the current competitive landscape of the domestic cocoa butter substitute chocolate market, these companies are in a perfectly competitive market. In this market, the products of various companies are highly homogeneous, and they can even be completely substituted for each other, making market competition extremely fierce. For companies to maintain a state of parity with their competitors in the same market, they often need to devote all of their resources and capabilities. Therefore, "how to approach the market" here becomes a tactical issue of how to compete.

With the product, target market, and target customers determined, the main battlefield of competition lies in the channels.

I. Regional Competition

In traditional channel theory, channel construction begins with establishing the length and width of the channels. In fact, this implies a prerequisite condition: the regional market has already been selected before channel construction begins. In other words, the regional layout has already been determined.

In the case of highly homogeneous raw material prices, production formulas, production equipment and processes, products, and sales models, the company's competitive advantages mainly come from early market entry, maintenance of distributor relationships, and sufficient channel profits. Therefore, without considering factors such as the proportion of skilled production employees and the reduction in management costs due to the adoption of advanced management technologies, the layout of the regional market should be considered based on the above three factors. In other words, after comprehensively considering the cash advantages of its own company and various competitors, customer relationship status, and the allocation and structure of channel profits, the country can be divided into core markets, cultivation markets, and newly developed markets, and different resources can be allocated to participate in competition according to the hierarchical market division.

From the current situation, domestic cocoa butter substitute chocolate manufacturers mainly rely on advanced advantages and logistics cost advantages brought by geographical location to compete. However, these two advantages, due to the lack of mutual support and matching with competitive elements related to product research and development, management ability improvement, and brand building, cannot form sustainable competitive advantages. Therefore, when the peak season arrives in the second half of the year, we can foresee that the regional competition of domestic cocoa butter substitute chocolate will evolve into price competition.

II. Distributor Competition

With the continuous segmentation of the candy market, distributors are also constantly developing towards specialization. Now, various wholesale markets have gradually been subdivided into specialized stores for wedding candies, gift candies, chocolates, jellies, etc. These increasingly specialized distributors make it easier for manufacturers to find suitable channel members, while also intensifying the competition among producers of similar products for channel members.

From the perspective of manufacturers, they hope that distributors can both follow the company's guidance and achieve the company's market goals through their own development. However, the reality is often that distributors who can follow the company's guidance often lack sufficient experience and comprehensive strength and can only be the company's training targets in the local area. Those distributors who have already effectively achieved the company's development goals often have their own clear ideas for development, and the degree of fit with the manufacturer requires more and higher-level communication and coordination. This makes finding suitable distributors a significant problem for manufacturers, and the essence of this problem cannot be solved simply through distributor replacement, channel promotion, and other executive-level activities.

From the perspective of distributors, in addition to hoping that manufacturers can provide competitive products, they also hope that manufacturers can provide timely assistance or increase communication in many aspects, such as market planning, development ideas, and competitive methods. In fact, many distributors hope to find a manufacturer that can develop together with them. After all, under the current circumstances, no matter how big or good a distributor is, they are still isolated, and they still need the support and help of manufacturers in many aspects, and they have common needs with manufacturers. However, at the same time, these distributors have a better understanding of the regional competitive landscape, sales characteristics, and consumer psychology than manufacturers, and they also have their own understanding and opinions on the competitive development of this regional market. This understanding and opinion may conflict with the manufacturer's regional goals or development plans. In this case, if the manufacturer does not have sufficient channel management capabilities and a clear development plan, the result may be a lose-lose situation.

Lose-lose situations are common. Perhaps companies and distributors think it doesn't matter, but I believe that unsuccessful cooperative exploration under clear business ideas is beneficial to both parties. In addition to strengthening their respective development directions and ideas, they will also leave many lessons learned and other opportunities. If the ideas are unclear, what may be lost is not just one cooperation, but a rare market opportunity for both manufacturers and distributors.

III. Terminal Competition

Companies' products still come into contact with end consumers and achieve the company's goals through them, so the terminal is extremely important.

The candy industry has many terminal structures, such as large chain supermarkets, department store supermarkets, convenience stores, small shops, and large-scale stores. These different types of terminals target different consumer groups, cover different regions, and have different positions, and even the same type of terminals may differ from each other. This requires manufacturers to fully consider these factors when planning channels, to be targeted, to allocate resources rationally, and to effectively plan sales policies and methods. Moreover, there should be clear requirements and ideas for the selection, cultivation, and elimination mechanisms of distributors.

From the current situation of domestic cocoa butter substitute manufacturers, there are not many selectable regions, distributors, and terminals. The root cause lies in the high degree of homogeneity of their products, and even the homogeneity of companies. To truly solve this problem, it cannot simply stay at the level of products, channels, prices, or promotion, but needs to be considered at the company level. The development experience of Tianjin Yinong Chocolate may provide some inspiration.

----From "China Candy Magazine"