Click the image for details I want to emphasize that against the backdrop of the "three worlds," the battlefield and methods of marketing have indeed undergone revolutionary changes, but one basic rule remains unchanged: sales are fought for. After the holiday, work usually begins with meetings. New and old executives discuss plans, set ambitions, define assessments, express determination, and sign military pledges. Of course, after meetings, over company or small group dinners, they toast to heroes again. But will signing a military pledge guarantee that 2017 will be better than 2016? Data from the past two years already shows that in 2015 and 2016, overall sales growth in most categories slowed, and even saw a "cap on volume growth" for two consecutive years, meaning leading companies in the industry were the first to see "total sales decline." From the end of 2016 to the beginning of 2017, the target achievement rate was only 50%, with negative month-on-month growth. If the leaders are declining and cannot achieve growth targets, how can most second- and third-tier companies guarantee they can turn things around in 2017? In this context, not only are military pledges not a guarantee, but so-called model innovation, management innovation, budget planning, etc., are likely just formalities. The method to treat a headache is not necessarily to operate on the head, but no matter where you start, you cannot substitute treating a headache with treating athlete's foot. That is, the prescription must still treat the headache. Similarly, the method to diagnose and treat sluggish growth must address the root cause of sales decline, not become a choice of organizational management or KPI assessment methods. What companies need to solve now is to recognize the real reasons for sales decline, especially to recognize their own blunders, so as to find ways to solve the decline and restart growth. Only with such unified effort and morale boost can they possibly carve out their own small trend against the overall pessimistic situation. Below, we analyze the root causes of sales decline, especially the blunders that lead to it. Companies can check themselves to see how many they have made. The root cause of sales decline, also the core symptom, is simply: products are not selling. That is, to dissect the root of sales decline, the only method is to look at "product sales data" and various "quantitative market performance indicators." Discussing sales issues without focusing on sales and market quantitative indicators is nonsense. Sales cure all ills; a rise covers a hundred ugliness. But a decline means someone must take responsibility, and every link wants to pass the buck to others to absolve themselves. Reasons for sales decline include: GDP growth slowdown (unfortunately, this reason doesn't hold), false statistics, bad weather, competitors also declining, reduced retail outlets (physical store closures), e-commerce impact, WeChat business diversion, reduced advertising budgets, lower promotional intensity, slow new product launches, bureaucratic financial processes, declining product quality, unreasonable assessment mechanisms, corporate culture issues... Summarizing sales decline reasons like this is what was mentioned earlier: turning headache treatment into treating athlete's foot, stomach disease, or psychological issues. In short, it sounds plausible and organized, but it's not treating the headache. Laozi said: "Words have a main point; deeds have a head." This means speech should have a main thread, and actions should have a brain. Don't beat around the bush, unclear, but get to the point. For a company, especially a top-ten brand in the industry, the root of sales decline is its own blunders, mainly manifested in the following three categories and ten types: Category 1: Decline in leading product sales What is a leading product? In a company's sales structure, a product that accounts for more than 10% of sales, especially the one with the highest sales share, is the leading product. All total sales declines first manifest as a decline in the sales of the product with the highest share. Therefore, an absolute decline in leading product sales is a major sign of company sales decline. Additionally, leading product decline has three accompanying symptoms. Symptom 1: The contribution share of the leading product within the company's product mix declines. Many people say the product structure should be balanced, i.e., not overly dependent on a single product. That's nonsense. They also cite trends like personalization and customization to prove the necessity of "not having a single standout," which is amateur talk from those who have never done large-scale sales. The only goal of a company is to create a leading product. Wanglaoji (JDB), Six Walnuts, and Feitian Moutai all conquered the market with a single product. Having many products is not a blessing but a burden, a drag on growth, and a profit black hole. Symptom 2: Frequent promotions for the leading product. If it's a leading product, especially one with high market share, it should be a cash cow that doesn't need promotions, not a star product that needs frequent promotions to drive sales. Frequent promotions for the leading product are usually a sign of decline. Symptom 3: Declining gross margin for the leading product. Many people accept the hint: high sales volume inevitably leads to lower gross margins because channels and terminals actively reduce margin space to compete for customers. This is the most common mindset in sales, but it's wrong. The real reason for declining gross margin is lax management will, just like being accustomed to the overall decline, share decline, and frequent promotions, which is one of the blunders that ultimately makes the sales decline unstoppable. The root causes of declining gross margin are two: first, not using "pricing strategy" to actively "adjust" (or "flirt with") the market, such as not daring to raise prices but habitually lowering them; second, lacking overall planning for reasonable margins at each level of the channel value chain. If you commit any of the above four blunders, you're putting the leading product on a "slow death" path. When all four blunders are committed, the next is a collapse like a mountain falling, beyond control. Category 2: New products "strike out" The phenomenon already contains the essential answer: big companies always don't launch new products, while small companies always launch new ones. A successful new product that achieves scale is like a change of dynasty, redistributing the market's hierarchy (brand structure), such as Yanghe Blue Classic; but most new products are fleeting, a brief appearance, or trading tactical time for strategic space. Therefore, in the second level of blunders causing sales decline, the new product black hole is a key point, with three symptoms: Symptom 4: New products cannibalize old product sales. When leading product sales growth is sluggish, many companies don't solve the leading product problem but try to boost sales by launching new products similar to the leading product (in price, quality, channels, etc.), and make it the annual marketing focus with budget allocation. This is treating athlete's foot instead of a headache. The result is often: the increment from new products doesn't offset the decline in old product sales, the ROI (return on investment) of new products is inverted, and new product sales may not even cover the costs. Symptom 5: Launching low-price new products. Many companies see launching low-price new products as a killer move to grab market share. We can see that low price only succeeds in one case: when it's a strategic behavior, and its strategic goal can form a monopoly in the product's "resource chain," effectively hitting competitors. Only such low-price products succeed. Otherwise, low price will only cannibalize sales of your own leading products, including damaging your brand's value positioning. Symptom 6: Low repeat purchase rate for new products. New products have two critical thresholds: the first is the launch spike, including creativity and marketing resource investment; the second is the natural repeat purchase rate. Most attention is on the first threshold, which is reasonable, but the real test is the second. Why have so many hits been fleeting in the past two years, and why haven't so many new products and entrepreneurs achieved a true hit product (except Xiaomi)? No other reason: the natural repeat purchase rate is too low. This is the problem of new products striking out. For industry leaders, this is the root cause of sales decline, including the gap in product updates. Category 3: Outdated operational systems Outdated includes two aspects: insufficient professionalism and reaction speed lagging behind the times. Specifically, it manifests in four aspects: Symptom 7: Declining terminal share, specifically the "seven-rate" indicators worsening. The effect of terminal management is reflected in the "seven-rate indicators," which I call "very 6+1": six external market performance rates: outlet coverage rate, exclusive sales rate (first display rate), sales share, product mix rate, visual merchandising rate, salesperson visit frequency, plus one internal terminal efficiency audit indicator: input-output ratio (ROI, terminal profitability). Symptom 8: E-commerce price chaos. E-commerce price chaos doesn't mean e-commerce products affect consumer purchases, but that it disrupts the price system for channel distributors. That's the core of e-commerce price management. Consumers won't stop buying a 10-yuan Coke in a restaurant because they can buy it for 2 or 3 yuan in a supermarket, or be influenced to buy a can online for 1.8 yuan with free shipping for a case. So, online and offline, retail price management isn't about managing consumers but about coordinating channel distributors. Many companies lose big for small reasons; e-commerce low prices affect the channel price system, a long-term dangerous blunder. Symptom 9: Mediocre brand messaging. For some reason, in the last three years, companies have become increasingly mediocre in purchasing creative services. This leads to a lot of brochure-style ads, lacking eye-catching big ideas. Big ideas don't rely on media placement; they rely on the leverage of the idea itself. For example, Uni-President's "Little Time Noodle House" series of micro-films is a big idea that can build a new product and brand. Symptom 10: Outdated marketing tactics. In today's era, outdated tactics mean lacking a clear development strategy for opportunities in e-commerce, community e-commerce, WeChat business, and new social media (Weibo, WeChat, official accounts, apps). Words have a main point; deeds have a head. Everything has priorities, order, and causality. The above 10 blunders are listed in descending order of importance. The first and second categories are the most critical and are the root causes of sales decline. I want to emphasize that against the backdrop of the "three worlds," the battlefield and methods of marketing have indeed undergone revolutionary changes, but one basic rule remains unchanged: sales are fought for. At the start of the year, I offer four suggestions for companies to fight for sales in 2017: First, focus on the natural repeat purchase rate. Whether for old or new products, pay special attention to this indicator; it contains all the answers to sales. Second, initiate scenario-activated marketing. Scenario activation means connecting and integrating sales forces across online, offline, communities, stores, e-commerce, and WeChat business. Activating scenarios activates the brand and activates sales. Third, bet heavily on a combat-ready team. Compare, learn, catch up, surpass; pass on, help, lead, train. The "team combat effectiveness eight-character formula" is still effective. Heavy rewards will bring brave men; reward those who achieve first. These two simple methods to boost morale must be used boldly. For champion teams, bet heavily, reward so heavily that those who didn't win the championship are shocked. Fourth, launch sales campaigns. Fighting for sales means getting ahead of competitors, controlling the situation rather than being controlled, so you can fight chaos without being chaotic. Following behind competitors puts you at a disadvantage. Use new weapons like VR red packets and mini-programs to launch sales campaigns, achieving low-cost online-offline linkage, which are efficient methods. Source: Bonarecheng (chief-wisdom) WeChat official account -END-