-01- Selling 'More' or Selling 'Pricier'? Business operations aim for profitability. In the past, the simple logic of profitability was "sell more products, make more money." Now, the logic may have shifted to "sell pricier products, make more money," and it may even become "only by selling pricier can you sell more." The shift from 'more' to 'pricier' reflects changes in social demand. Of course, 'pricier' does not mean that just being expensive will sell well; the essence of 'pricier' is being better. Selling 'pricier' is a more challenging marketing feat than selling 'more.' Selling 'more' products has become a habitual mindset for marketers. This is because China has been in a high-speed growth phase for over 30 years. Companies even took growth for granted until the inertial growth was interrupted in 2014. Of course, past growth was based on low-end mass-market products. The practices of some benchmark industries and companies have proven that 'selling pricier' has more potential than 'selling more.' Figure 1 shows the trend of the instant noodle industry by volume (packets). From the volume trend, it was growing rapidly before 2013, peaked in 2013 (which was also the historical peak for most FMCG industries), and then began to decline until it stabilized in 2017 with slight growth, but still far from the historical peak, or perhaps never to reach it again. Figure 1: 2011-2018 Instant Noodle Industry Sales Volume Trend However, despite the overall industry decline, except for 2015, Uni-President instant noodles still achieved growth (Figure 2). So, what drove Uni-President's growth? Its premium product, Tom Yum Noodles, contributed significantly. Imagine what would have happened to Uni-President without Tom Yum Noodles. Of course, Uni-President also has other premium noodles like "Duhui Xiaoguan," "Xiangban Yicheng," and "Manhan Dacan," all contributing as well. Figure 2: 2014-2018 Uni-President Instant Noodles and Tom Yum Noodles Sales Volume Trend Uni-President recognized this issue early and launched Tom Yum Noodles in 2008, but it only took off in 2015. Now, Uni-President has established a new department for premium "lifestyle noodles," distinct from traditional low-end instant noodles. Let's look at the beer industry trend (Figure 3). 2014 was a key turning point for the beer industry: low-end beer began to decline and has continued to decline. Mid-to-high-end beer grew rapidly, with market share increasing quickly. Imagine if beer companies had not adjusted their product structure in time; both volume and sales revenue would inevitably decline. Figure 3: 2002-2017 Beer Industry High, Mid, and Low-End Sales Volume Share Trend -02- Structural Growth Means Selling 'Pricier' The changes in the instant noodle and beer industries basically reflect the overall changes in the FMCG industry. From a growth perspective, 2014 and 2017 are two key time points. Before 2013: Strong growth in volume, weak growth in structure. The main goal for companies was to "get bigger." 2014-2016: Volume declined, but structural adjustment was weak. Offline retail growth fell from 13% in 2013 to 6% in 2014. Despite efforts to salvage, the decline in volume was the main theme and unstoppable; structural adjustment had not found its rhythm. This was the most difficult period for companies, as they could neither "get bigger" nor "get stronger." After 2017: Weak growth in volume, strong growth in structure. Many excellent companies finally acknowledged the reality of volume decline and strove to drive growth through structural adjustment. For example, the dairy industry performed well in recent years because premium products like Ambrosial and Pure Zhen performed excellently, driving overall industry growth (Figure 4). The goal for companies is to "get stronger." Only by "getting stronger" can they "get bigger." Figure 4: 2014-2018 Mengniu Ambrosial Sales Volume Share Trend Why has the pattern of "declining volume but increasing sales revenue" emerged? This is due to changes in Chinese consumer demand. Before the rise of the middle class, Chinese consumption was dominated by "wave consumption." "Wave consumption" indicates that mass consumption had remarkable consistency, with similar purchasing power across the board. However, after 2010, middle-class consumption rose, and consumption disparities widened (Figure 5). Figure 5: 2018 Per Capita Consumption by Chinese Population Segment From the consumption capacity categories above, the highest, "sophisticated moms," spend five times more than the lowest, "small-town middle-aged and elderly." Given this consumption demand situation, wave consumption is hard to achieve. The widening consumption gap results in a lengthened price band for demand. Bottled water was originally concentrated in the 1-2 yuan price band, but now 1, 2, 3, 4, 5 yuan, and even higher price bands coexist, with the mainstream price band gradually moving up. The upward shift of the mainstream price band corresponds to the rise of middle-class consumption, but two issues should be noted: First, although low-end consumption is declining in volume, its share remains huge. Moreover, due to significant regional and urban-rural differences in China, low-end consumption cannot be ignored. Second, China is still in the early stage of rapid middle-class consumption growth. This can be understood from two angles: 1) The early stage of middle-class consumption means that it will take multiple rounds of upgrades to gradually stabilize; currently, it is unstable. For example, the mainstream price of bottled water has just upgraded from 1 yuan to 2 yuan, and 3 yuan water is growing rapidly; 2) Even in the early stage, given China's massive population base, even a small share represents a large market. -03- Finding the Rhythm for Selling 'Pricier' How expensive should the 'pricier' products be? They need to be both pricier and achieve volume. Structural growth must achieve both goals simultaneously. First, seize the new mainstream price band and position for the next new mainstream price band. The mainstream price band is the price band with the highest sales volume. The new mainstream price band is the price band that will have the highest sales volume in the future. Consumption upgrade manifests as quality upgrade and also price upgrade. The largest sales volume will always be in the mainstream price band. Take bottled water as an example. The original mainstream price band was 1 yuan, which supported products like Master Kong mineral water and Ice Dew. The current mainstream price band is 2 yuan, supporting Nongfu Spring and C'estbon. The upcoming new mainstream price is 3 yuan, with Ganten growing rapidly and some new brands entering. The future mainstream price band will be 4 or 5 yuan, or even higher; Uni-President's 4 yuan "Aqua" water sells well in Shanghai. 2 yuan is the mainstream price band; if you miss it, you have no current sales. 3 yuan is the new mainstream price band; if you miss it, you lack future growth space. Without positioning in the 4 yuan and above price band, you may have no place in the more distant future. Only by judging the new mainstream price band and the timing of its arrival, and positioning in advance, can you seize future growth. Second, seize IP-based products in the same mainstream price band, or IP-based products in the new mainstream price band. Generally, IP-based products have greater pricing power than products in the same tier. For example, the mainstream price band for green tea is 3 yuan, but IP-based products like Chali and Xiaoming Tongxue are priced at 4 yuan. Note that products that truly achieve volume must be in the mainstream or new mainstream price bands; sales in other price bands are limited. -04- To Be 'Pricier', You Must Position Early First, structural growth requires "early positioning, late harvest." In wave consumption, as long as you dare to invest strategically when the consumption wave rises, even if you are a step late, you can catch up. The upgrade of the mainstream price band is a slow process; if you wait until the new mainstream price has formed, it's too late to enter. Early positioning means securing your position early. Once you find the breakout point of a new mainstream price band, you must "concentrate all efforts" and bet strategic resources. For example, in recent years, Yili's emphasis on the new mainstream price band product Ambrosial quickly left Guangming's Mosilian, the pioneer of new mainstream price band products, behind. Similarly, Tom Yum Noodles was positioned in 2008 and took off in 2015, following this pattern. Second, master the rhythm of structural growth. "Li Jiaoshou" Li Jing said that structural changes "seem slow, have huge impact, and are unstoppable." In the words of Jiang Xiaobai founder Tao Shiquan, "Don't overestimate the present, don't underestimate the future." If you want to seize the opportunity and go all out, short-term sales may not be large. When you ignore it, it suddenly explodes one day, and the volume is huge. Third, before the new mainstream product explodes, it must survive and find living space. Before Tom Yum Noodles took off in 2015, there was a six-year incubation period. How did it survive during this phase? What were the assessment criteria for employees? Before a new mainstream product explodes, it must not survive in mass channels. For example, Ganten is a 3 yuan bottled water; it cannot survive in mass channels. But it survived in special channels like airports and high-speed rail stations. Evergrande Spring Water was a typical structural upgrade product (4-5 yuan) when it launched, with immediate large-scale distribution. From a marketing rhythm perspective, "large-scale distribution, distribution equals returns" is a normal result. There are many articles reflecting on Evergrande Spring Water's marketing, but few elevate it to the marketing logic of structural shift. -05- Selling 'Pricier' Requires Marketing Expertise Early mass-market products relied on brand-driven or channel-driven strategies. Brand-driven mainly manifested as mass media advertising, while channel-driven mainly manifested as deep distribution. Brands supported by brand-driven strategies were limited; most relied on channel-driven. Therefore, after 2003, deep distribution became the best marketing practice in China. Deep distribution relies on customer relationships, display, merchandising, and promotions to sell products. For new mainstream price band products, this approach is extremely difficult. For premium products, some categories have simple cognition, such as beverages, where cognition can be completed through tasting. When promoting a certain beverage, we proposed the "pan-tasting" method, which was very effective. For products with complex cognition, such as baijiu, the cognitive process is more complex. Lidu Liquor solved the cognition problem through scenarios and user experience. Scenarios and user experience are low-efficiency cognitive methods, but they are also the highest-intensity cognitive methods. In marketing, the highest communication efficiency is achieved through media, and the highest cognitive intensity is through experience. Combining both, with both cognitive intensity and communication efficiency, becomes the most effective marketing means for product upgrades and structural adjustment. Especially when experience design has internet dissemination properties, the two truly become one, and efficiency is even higher. This topic is also elaborated in linked growth. Source: Teacher Liu's New Marketing (ID: liuchunxiong1964) Tips will be paid 400-2000 yuan upon adoption.