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Three trees paint: new countryside surrounds the city

three trees paint: new countryside surrounds the city

June 7, 2010

[China paint information] growth is the eternal theme of small and medium-sized enterprises. But how to grow, the choice of path is extremely critical

in 2010, the cooperation with Evergrande real estate was considered by Hong Jie, chairman of sankeshu coating Co., Ltd. (referred to as sankeshu) as a landmark event for enterprises to "counter attack" cities from the township market. Since then, under this "demonstration" effect, the company has reached cooperation with R & F real estate, Beijing Zhuzong and other major enterprises. Three trees want to enter the first tier cities through the "big money" way. However, it seems that the challenge is not small

in the past eight years, as a laggard in the coating industry, sankeshu has always focused on the township level market and chose to attack the rural market with a flat market channel strategy. From the sales of 20million yuan in 2002 to nearly 1billion yuan in 2009. Despite the reversal of the industry situation, the sales growth rate in the first four months of 2010 still reached 144%

now, he wants to find a new way to surround the city with rural areas

start with the secondary market

in 2002, sankeshu coating was born in Sanjiang Chemical, which was initially founded by Hong Jie. At the beginning of its birth, the coating industry has been occupied by big brands such as Nippon and Dulux. In addition, it is a situation of fish and dragon scuffle. The excitement of competition, whether it is product quality or after-sales service, can be seen from more than 8000 manufacturers and more than 10000 brands at that time. Hong Jie realized that if he couldn't find the market positioning and attacked blindly, what he would wait for sankeshu would be the same fate as many small brands: being eliminated

after market analysis and research, Hong Jie realized a remarkable feature of the coating industry: there are many regional strong brands, but few national brands; The influence of first tier brands is mainly concentrated in first tier cities, while many second and third tier cities are occupied by various regional brands. The weak three trees saw the opportunity and determined their market positioning: starting from the secondary market

the key to market competition is what kind of strategic layout is adopted in the secondary market. Then, according to the rules of the industry, in the initial stage of sankeshu, the channel mode generally adopted by the entire coating industry is still to develop provincial dealers, that is, each province finds a general agent, and then it develops prefecture level agents, which has become the "industry standard" at that time. Through the investigation, sankeshu found the disadvantages of this model: the long channel leads to slow market response, low regional market coverage, low quality of channels and terminal points, poor brand monitoring, and so on

in order to avoid these disadvantages, sankeshu decided to adopt a flat channel strategy: develop agents directly for county-level cities, adopt the strategy of "distribution to towns", cover the distribution network to all Township markets, and achieve the purpose of expanding market share, product sales and popularity through intensive distribution

sankeshu has shortened the channel from the traditional four level (province city county town) channel mode of its peers to two-level (city or county town), which has improved the management and control ability of enterprises on the end market and refined management, and realized the intensification of networks. Now, sankeshu has more than 5000 franchised stores and in store stores, building a three-dimensional channel network

but the questions of industry researchers follow. With such a flat channel, other peers may have 100 customers, and sankeshu may face 1000 customers. Won't management and terminal costs drag across enterprises? Wang Tongxiao, head of the marketing department of sankeshu, said that this was indeed a great challenge. At present, sankeshu's strategy is to take the province as the center in management. Now there are six direct sales centers, which take the province as the center to establish sales points and manage by segments. However, from the perspective of cost, flat hierarchy has more advantages than non flat hierarchy. If it is a long channel, the cost layer by layer must be converted into profit space, because there must be profits at all levels, from provincial agents to township agents. By flattening directly, this part of the profit space is saved and the cost is lower

in addition to the challenges from terminal management, Wang Tongxiao believes that another problem facing the township market is the "hidden rules of painters". In the third tier cities and township markets, many people choose to use coatings through the recommendation of painters. Many miscellaneous and small brand coatings, and even many products that fail to pass the standard, enter the owners' homes by bribing painters. "Such disorderly competition puzzles brand enterprises and is also an unhealthy place in the whole industry." Wang Tongxiao said

surround the city

as an enterprise with rapid development speed in the coating industry, sankeshu began to seek opportunities to enter the first tier cities in 2009, when its franchised stores were blooming all over the country. In the path of surrounding the city, sankeshu chose to cooperate with leading domestic real estate enterprises. Among them, those with Evergrande group often adopt the following methods: mix and add cooperation, which becomes the beginning of close cooperation between sankeshu and large real estate enterprises

at the 2009 ~ 2010 materials and equipment bidding conference of Evergrande real estate group, Evergrande required that the building materials partners selected for cooperation must be the top ten brands in the industry, and the excellent ones from high-quality manufacturers will be selected as supply partners. In order to be fair and honest, Evergrande group has specially established Evergrande equipment and materials company to purchase projects across the country and audit suppliers at all levels. Ten famous manufacturers at home and abroad participated in the bidding of coating products, including three trees. As each family has sent out elite soldiers and strong generals, the competition is very fierce. After several rounds of intensive evaluation from June 1 to 2, the three trees finally won

afterwards, the head of Evergrande purchasing said that the final selection of three trees was mainly focused on brand strength, management and cost performance. Hong Jie also believes that serving a major real estate enterprise such as Evergrande should not only sell products, but also services. Recalling the intensity of the bidding at that time, Hong Jie still laments the cruelty of the competition. He said that the gap between sankeshu and first tier brands is mainly manifested in first tier cities. Through the cooperation with large real estate developers, products can easily enter the first tier cities. Due to the successful cooperation with Evergrande, sankeshu then got the opportunity to cooperate with R & F real estate, Beijing Zhuzong, Blu ray and other companies

at the same time of rapid development, sharp Hong Jie realized that with the national macro-control of real estate, real estate will soon be cold, and the coating industry will face a big rout. Now the real estate transaction volume is declining. If the price drops significantly again, the impact will be very large in the second half of the year. No one can buy a house at this time. As a downstream coating, no one will buy it

Hong Jie said, "although the real estate transaction volume has shrunk in the first tier cities, the villages and towns will not be greatly affected by the macro-economy, because they build their own houses, so the defense strategy of sankeshu is to quickly implement the strategy of 'thousands of cities and towns'. In addition to the investment promotion of the blank market, the township market needs to be done more carefully, and only by seizing the township market can they survive the crisis safely."

however, it was found in the interview that although sankeshu has established its own brand in the secondary market, if it wants to compete with Nippon, Dulux and other international well-known brands for more than half of their market share in the first tier cities, it is not just for sankeshu to make efforts in brand communication and channel expansion, develop innovative products It is still a difficult challenge to establish a very soft hydraulic spring mode suitable for the sales of all hydraulic cylinders in first tier cities

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