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Preface: Zhong Xue Gao, a name well-known in the innovative brand circle. According to founder Lin Sheng, after a year of effort, since its launch, Zhong Xue Gao has maintained the fastest growth, highest average order value, and highest repurchase rate in the ice cream category online. Zhong Xue Gao is not cheap, nor does it follow a cost-performance strategy; its prices may be several times higher than other brands, but maintaining such performance shows that its brand value is being recognized by users.

In just over a year, it has achieved such impressive results, worthy of study by everyone in the FMCG circle. On August 22, 2019, the "FMCG2019 China FMCG Conference" hosted by New Distribution specially invited Mr. Lin Sheng, founder of Zhong Xue Gao, to share "The Road to Brand Innovation." The following is a compiled version of Mr. Lin Sheng's speech for readers. (The article has been slightly edited and abridged.)

When discussing brand innovation, differentiation is inevitably mentioned, but I believe differentiation is never a single point; it is a path. In today's era, to do brand innovation well, you must think carefully before setting out.

When innovating a product or brand, if you think an idea is enough, be careful. Because from the moment you take the first step, every subsequent step of innovation is difficult. Differentiation must be continuously perceived by consumers; otherwise, a one-time innovation is just a flash in the pan, truly just an internet celebrity.

Inside Zhong Xue Gao, we do not call ourselves an internet celebrity. We believe that being an internet celebrity is just the basic goal that products must achieve today. The harder goal is how an internet celebrity can go further, become a long-term celebrity, and achieve sustainability.

Taking this opportunity at New Distribution, I want to share some simple truths that Zhong Xue Gao has figured out.

Changes in scenario conditions inevitably bring new opportunities

In the past, the three elements of retail were said to be people, goods, and places. That is correct, but all brands' reasoning methods start with studying consumers. In fact, such research is very subjective.

Brands think they know consumers well, push a product consumers might like, invest a lot of resources, and then consider channels and consumption scenarios. This has been the approach of most consumer brands for the past 30 years.

Zhong Xue Gao has a somewhat different view. The three elements of people, goods, and places must be considered, but the importance ranking of these elements varies at different stages. What Zhong Xue Gao initially thought about was not people or goods, but scenarios.

All ice cream in China in the past was an impulse consumption scenario on the street. What we looked at were scenarios different from traditional ones, such as the family snack scenario.

China's family "snack basket" is becoming increasingly rich, from the initial sunflower seeds, to later candies, then fruits, nuts, dried pork slices, and beef jerky. The rise of Three Squirrels has driven the enrichment of the family snack scenario.

With increasing household income, the family snack basket grows larger. Behind these rich products, there is a common demand characteristic: non-essential.

Consumers rarely decide to buy something because they need to eat it right now. More often, the consumption motive is: I don't know when I'll eat it, but I can buy it and stock up. This is a typical "family warehousing" consumption scenario.

As long as life gets better, consumers will stock more snacks at home, and the snack basket will grow larger.

Speaking of the snack basket, many products are at room temperature. Is it possible to have low-temperature or frozen products? Zhong Xue Gao believes that ice cream can be the low-temperature frozen product in the snack basket.

As life improves, ice cream will upgrade from the most basic need to relieve heat and quench thirst to a leisure dessert, an indulgent food. Therefore, Zhong Xue Gao can be sold to families, not on the street. This is the difference between Zhong Xue Gao and other ice creams.

Based on the family consumption scenario, we match corresponding products. Family consumption decisions are not made by one person; there are children, husband, wife, parents. When purchasing, they may care more about the feelings of the whole family rather than individual feelings.

In this context, product quality requirements are higher than outside the family, especially health. So Zhong Xue Gao made its products with zero additives.

This is a backward process: first the scenario, judge if there is an opportunity, then deeply study how to match products in the new scenario. With this thinking, the product "is about to emerge." This is the reconstruction of people, goods, and places.

A flexible brand strategy is more suitable for this era

We adhere to a flexible brand strategy; this is Zhong Xue Gao's philosophy and logic.

In the past 30 years, almost all brands have adopted a rigid brand strategy. The common approach is to first study consumers, then to cater to you, make you like it, create a persona for the brand: "Who am I." Then the brand will spend 3, 5, 10 years continuously strengthening the persona until consumers believe it. This is what all consumer brands have been doing in the past.

But now, it is increasingly difficult for brands to continuously strengthen their persona and expect to please everyone. Zhong Xue Gao adheres to a "flexible" brand strategy. We think of ourselves as a "sphere" rather than a regular square. Apart from the category (ice cream) and high quality, the brand does not set any other definitions.

Within this frame, anything is possible. For example, crossovers with Harley-Davidson or the Forbidden City. At these times, you can see that Zhong Xue Gao's brand personality is sometimes "tough" and sometimes "gentle."

Under previous brand theories, many would say this is wrong because it is fragmented and lacks precise positioning. But is this positioning correct? Suppose today we meet a young female user who likes reading "Dream of the Red Chamber" before bed, and during holidays, she likes car racing. She likes both. Why can a brand only cater to one side of her?

Zhong Xue Gao imagines itself as a soft "ball." Without breaking the upper and lower limits, it sticks to users through various young and interesting forms. The flexible brand strategy, at least based on Zhong Xue Gao's current practice, has yielded good data indicators.

In the past year, Zhong Xue Gao's pop-up stores had completely different themes and styles in different places. We have had various relationships with celebrities, public welfare, and internet celebrities. We believe a brand can have many faces.

From stereotyped consumer insights to labeled consumer insights

Regarding consumer insights, in the era without data and the internet, brands typically used physical classification: male or female, age, whether they have children, family income, job nature, etc. But now online, we can use many tools to tag users with different labels.

Therefore, today, when brands do consumer insights, they must be especially careful about one thing: do not stereotype.

In the past, we imagined that everyone present had some commonalities, such as kindness. Products A, B, and C all concluded that consumers like "kindness." Does that mean all brands should promote kindness?

Ice cream, candy, and chocolate have commonalities, all about "sweetness." In the past, brands placed in front of consumers all talked about "sweetness." In fact, this is a so-called pseudo-correct answer easily obtained under the stereotyped consumer insight of the past. It looks correct and impeccable, but it is useless.

Behind labeling, besides different physical classification labels, more importantly, even the same person in different scenarios will present different consumption views, values, behaviors, attitudes, etc. Each scenario's consumer behavior and manner is a label.

Labeling is a more granular way of consumer insight, and there are great opportunities in it.

What to be especially vigilant about—do not differentiate for the sake of differentiation

Finally, I want to emphasize the pitfalls Zhong Xue Gao has stepped into. The following pitfalls must be avoided:

  • Do not differentiate for the sake of differentiation
  • Beware of self-righteous differentiation
  • Differences based solely on vision, senses, and concepts will not last

What you think is different and what consumers think is different are two things. People who do branding are busy every day, sometimes older, and it is difficult to maintain a young heart. Energy allocation prevents you from feeling market trends firsthand.

Currently, 60% of Zhong Xue Gao's employees are post-90s, but we still think it is not enough. I told HR that the proportion of post-95s should increase from the current 30% to 50%. Because I believe that no matter how hard I try, my perception of many new trends is not as good as theirs.

Perhaps by the time many things become popular to me, it is already the tail end of the trend. If I get excited and think I have caught the trend, it is easy to make wrong decisions.

All differences based solely on vision, senses, and concepts will not last; this is our profound experience. Your difference must be connected, a continuous difference in the bones, not just appearance, packaging, taste, or concept.

Overall, in this era, you must make products to the extreme and continuously iterate and innovate. Consumers have a thousand labels; you must correspond to them with a thousand labels, or even a thousand and one labels. They change quickly; you must change faster than them. This is an attitude issue: do you follow consumers or lead them?

This is an era where internet celebrities frequently emerge, an era where a hundred-meter wave comes crashing down, each showing their skills.

We believe that being an internet celebrity is the only way to become a brand.

Just like 20 years ago, CCTV was the only way to build a brand. An internet celebrity is just a medium and carrier; today it is also the only way to a brand. We believe that an internet celebrity plus time will definitely equal a brand.

When Three Squirrels first appeared, it was also called an internet celebrity. Today, no one calls it that. If Zhong Xue Gao can continue for ten or twenty years, no one will call it an internet celebrity either.

So it doesn't matter what you are called today. Becoming an internet celebrity is an ability. I believe that in the next ten years, China's new generation of consumer goods will definitely be born from this year's many internet celebrities.

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