◎ 文 | 刘春雄 ∙ 刘老师论坛(ID:liuchunxiong1964) ∙
Traditional marketing ended in 2013!
That year, from an economic data perspective, three figures deserve attention. These are quantitative changes that triggered a qualitative shift.
∙ In 2013, sales in most FMCG sectors reached their historical peak and entered a downward trajectory. ∙ In 2013, the service sector's share of China's GDP surpassed manufacturing, marking the rise of the middle class. ∙ In 2013, China's internet as a whole surpassed the United States, indicating that while China had not yet completed its catch-up in industrial civilization, it had already entered a 'no-man's land' in the internet domain.
Some events and years only reveal their value in the future. 2013 was such a year. Moreover, many historic moments occurred in that year, seemingly unremarkable, yet destined for the history books. China's marketing history took a turn that year. It moved from past marketing inertia onto a new marketing track.
In the past, proposing Chinese-style marketing was based on several implicit premises. China's overall income was not high, so Chinese enterprises could only achieve scale at the low end. Brand is soft power; scale is hard power. First hard power, then soft power—this is the rule. The high end, which Chinese enterprises found hard to reach, was temporarily ceded to multinational corporations. This was also due to their first-mover advantage, determined by history, not something to be fought over. After all, the most important market should be: the domestic market, which is vast and rapidly growing. China's low-end market was sufficient to support a world-class enterprise in the domestic market. So we proposed: Fight brands with scale, and use scale to support brands. The path to branding was to be taken in two steps.
∙ In 2013, the path of scale for Chinese consumers encountered obstacles, losing room for growth. ∙ In 2014, most FMCG sectors experienced their first sales decline; many thought it abnormal and tried to salvage sales. ∙ In 2015, FMCG continued to decline, and people began to accept the decline as normal, with sales hard to recover. ∙ From 2016 to 2017, people considered the decline normal, and some enterprises shifted from sales growth to value growth. ... ... ∙ In 2015, agricultural output began to decline. ∙ In 2016, the three main agricultural indicators—total output, planting area, and yield per unit—all declined.
The declines in the above areas are logically connected. The growth in consumption volume driven by income growth has peaked. In the past, Chinese marketing was built on sales growth: 1. Continuous sales growth allowed scale to spread costs; 2. Channel sinking and intensive distribution brought products infinitely close to consumers in fragmented channels. A few years ago, I said Chinese-style marketing had failed because its premises no longer existed.
While volume stopped growing, value growth began. In 2013, China's beer industry saw sales volume decline by 11% from 2013 to 2017, but sales revenue increased by 21%. From 2013 to 2016, instant noodles dropped from 46.22 billion packs to 38.52 billion packs, a per capita decline of 5.5 packs, but prices upgraded from below 5 yuan to above 5 yuan. The mainstream price band for bottled water shifted from 1 yuan to 2 yuan, and is now moving into the 3 yuan band. Some companies are also positioning in the 5-10 yuan band. Chinese enterprises are shifting from earning wealth at the 'bottom of the pyramid' to earning wealth at the 'tip of the pyramid.' McKinsey predicts that China's middle-class population will grow from 47 million in 2010 to 472 million by 2020. Of course, different institutions have different forecasts, even with significant variations, but the conclusion is similar: the rise of a massive Chinese middle class. China's middle class will surpass the total populations of Japan and the United States, approaching that of Europe. This is the opportunity for value growth in China, a chance for Chinese enterprises to catch up in value and in the brand arena against multinationals.
In 2014, Mr. Shi Xianlong and I jointly proposed the concept of 'mainstream gear shift,' which is now widely accepted. What is mainstream gear shift? I once expressed it as: change the main course. At a dinner table, merely changing side dishes is not a mainstream gear shift; you must replace the signature main dish. Value-based marketing manifests differently in product, price, and packaging compared to the past. This includes the now-popular new retail, which involves both internet factors and industrial upgrading. For example, convenience stores are actually a standard feature of the middle class. Consumption upgrade + new lifestyle is the core of convenience stores. Japanese convenience stores are not just shopping outlets but also hubs for family life services. In China, although internet solutions have handled various fee payments, new consumption patterns have emerged, such as breakfast and dinner, and fresh food consumption, which can be fulfilled at convenience stores. Value marketing has also rendered the traditional sales model of 'distribution + promotion = sell-through' ineffective.
If the Chinese-style marketing proposed in the past was the initial stage of catching up, then value marketing should enter an advanced stage. However, China's internet surpassing the United States has turned the catch-up in marketing into 'catch-up + no-man's land.' Consumption upgrading was originally a catch-up process, but the emergence of the internet changed social lifestyles, and thus consumption patterns changed. The framework and presentation of marketing, which should have entered a brand value-added stage, have instead given rise to new marketing due to the internet. What is new marketing? It is hard to define now, but it is certainly different from tradition, including the traditions of multinationals. Although the basic logic of business remains unchanged, its manifestations have changed. 'No-man's land' is a concept proposed by Ren Zhengfei of Huawei, and it can now be introduced into many fields. Anything that has not occurred in developed countries but has happened in China can be regarded as a no-man's land. You cannot stay in the present, nor do you know the way forward, but you must keep going; the path you have taken is the no-man's land. Traditional marketing no longer works; what is new marketing? Only exploration can provide the answer. No matter how deeply you understand the essence of business, you cannot sit at home and think out the answer.