Today, I want to share my views on consumer brand building in 2023. In summary, there are three changes, four trends, and three suggestions. Because we often get immersed in the "tactical" level and forget the essence of things, before starting today's sharing, please join me in calmly and pragmatically returning to first principles to think about what consumption is really about.

Content Guide: 3 Changes

  • Change 1: Traffic Invalidation
  • Change 2: Intensified Channel Competition
  • Change 3: Consumer Rationalization 4 Trends
  • Trend 1: Product-centric, Two Types of Brands Win
  • Trend 2: Relationships Become the Core of Brand Building
  • Trend 3: Enterprises Self-operate Brand Content and Channels
  • Trend 4: Blurring Boundaries Between Channels and Brands 3 Suggestions
  • Suggestion 1: Value Level: Find a "Strategic Advantage"
  • Suggestion 2: Feeling Level: Positioning is Less Important than "Setting the Tone"
  • Suggestion 3: Build True "Iron Relationships" for Your Brand

3 Changes

Change 1: Traffic Invalidation Although many are still thinking about how to increase traffic, you will find that starting from 2023 (we can officially define 2023 as the post-era), the original traffic state will become invalid, and the pursuit of traffic will also fail. This change can be perceived from two points:

1. Funds for building traffic have decreased. This is from my observation from a capital perspective, based on the concept that when the big river is dry, small streams dry up. When analyzing any trend or change, we must look at the overall macro trend behind it. Don't think that personal daily efforts can change trends; we need to calmly and rationally consider that the money invested in traffic has decreased, and the era of wild growth is over. Traffic tactics and routines have become standardized, making it hard to find differentiation. In the post-pandemic era, brands will be a new angle to differentiate competition.

2. Traffic value cannot be commercially validated. What is the brand we keep talking about? Here I want to mention two points that all consumer brand friends should focus on: repurchase rate and net profit. Repurchase rate means that after many people know our product and brand, some can persistently show their love for you on a yearly or even decade-long basis. They buy the first time, then the second, and keep buying—that's repurchase. Repurchase rate is a very strong indicator of whether your traffic value is effective. Net profit refers to the profit after deducting all investments in doing this. These two points should be clear before you start a consumer goods venture or investment. Doing consumer goods is hard, dirty, and long-term work. This industry is strange; its external form and internal reality are completely opposite.

Change 2: Intensified Channel Competition

1. In terms of channels, the previous unified channels have changed, and channel functions are being refined. In the time dimension, some things I need immediately, half-day delivery can satisfy; some things I don't care about time, waiting a few more days is fine, so I can use overseas shopping. In the category dimension, there are channels specializing in fruits and vegetables, trendy brands, etc. Various segmented channels are being created.

2. Channel brands themselves need positioning. We can see that in 2022, Douyin, Xiaohongshu, Pinduoduo, etc., are all finding their own brand positioning. Why did Liu Genghong and Dongfang Zhenxuan become popular this year? These phenomenal events must have official traffic support. Why would Douyin officials be willing to support this content? Because Douyin is also using this content to differentiate itself from other platforms; Douyin is positioning itself. This is a change in channels. Whether doing business or building a brand, you must know what's happening outside; it's not static, and the granularity of change is very fine.

Change 3: Consumer Rationalization

1. Expert-type consumers emerge. I see consumers in various live-streaming rooms and on Xiaohongshu starting to analyze ingredients, compare prices, showing an increasingly rational expert-like research temperament. Why do so many people like Li Jiaqi? Because he himself is an expert-type consumer. The current channels are like large intestines wrapping small intestines: large channels wrap small channels. Expert-type consumers become channels themselves; Taobao has Li Jiaqi within it. This year, Li Jiaqi's sales during Double 11 accounted for half of Tmall's total sales in the cosmetics category. This is the change brought by expert-type consumers.

2. Consumers become channels. Li Jiaqi is the earliest representative of consumers (shopping guides) becoming channels. Now more and more community group buying and individual product promotion appear. Main consumers themselves have the ability to feed back, showing channelization characteristics. This year, I came into contact with a very large dairy brand that has been deeply involved in the dairy industry for decades. Its fan base is clearly labeled, mainly mothers. So they transformed into a channel and added many fresh food products to sell. These are manifestations of brand channelization and consumer channelization. When analyzing trends, we must see the first principles and changes behind them. We are in a major transformation unseen in a century, and consumption changes are enormous.

4 Trends

Trend 1: Product-centric, Two Types of Brands Win.

1. Cost-effective brands. China is a manufacturing powerhouse. A brand like Laifen directly made a product resembling Dyson for a few hundred yuan. I've been thinking about whether this is a brand. I am a person with clear values and have a obsession with brands. My understanding of brands is deeply emotional, so I tend to reject many things. But recently, I realized that all brands fall into two categories: one is the cost-effective type, relying on low price and high volume. You'll find some brands sell better on Pinduoduo because consumers focus on affordability. The various gimmicks merchants come up with, after one, two, three times, no one wants to see them anymore. The masses have sharp eyes. This type of cost-effective product is the strongest part of Chinese manufacturing.

2. Functional or value innovation. Products with quality, value, or functionality that have insurmountable innovation will win. What is insurmountable? A simple example: many features of Apple phones are insurmountable innovations for their fans. Such innovation itself can bring a premium. The purpose of building a brand is, of course, to command a premium. If a product doesn't command a premium, isn't it just selling goods? Isn't that just trading? There are many people in trading, but in the end, they still yearn to build a brand. Why? Because trading is too bitter, but at the beginning, trading isn't bitter; you just lower prices, offer high quality at low prices—that's the essence of trading. Let me give more examples: Regarding category innovation, is the wire-free bra that has been popular in recent years an innovation? Yes, but it's not insurmountable. Milk tea brands keep adding various toppings, making it more like eight-treasure porridge. Is this product change an innovation? Yes, but these are micro-innovations, easily surpassed. Functional or value-innovative products must be impossible to surpass in the short term; this must be distinguished.

Amazon has a famous saying: Managers should not be infatuated with the perfume on their own bodies. The same applies to people in consumer goods. Most people in consumer goods will say how good their products are. It's natural to think your product is good, but whether it's truly good, how good, and where it's good, still requires rational judgment.

Trend 2: Relationships Become the Core of Brand Building

1. Advertising fails: Advertising is the initial stage of brand building 1.0. After reform and opening up, advertising became prevalent, with simple routines and no need for much design. As long as you became the bidding champion of CCTV, you immediately gained influence. At that time, influence equaled brand and revenue. Because the market was unsaturated, people worried about not being able to buy things, which is far from the current market situation.

2. Traffic fails: Why does traffic fail now? Because traffic is saturated; there are only so many people. Different brands repeatedly attract their attention, and their attention has been scattered into powder. What use is it to get this powdery traffic?

3. Experience fails: In the past, experience in many enterprises manifested as a people-pleasing personality, over-service for commercial purposes. Experience becomes routine, operations become routine, and insincerity becomes increasingly obvious.

4. The era of "nurturing" brands arrives: In relationships, who you are is your brand. Advertising, traffic, and experience will all fail one by one. I believe the era of nurturing brands will eventually come. Future brands will show this characteristic: who you are in a relationship is who your brand is. You don't need to show off like a peacock; you just need to deliver sincerely, delivering the value you should deliver.

Trend 3: Enterprises Self-operate Brand Content and Channels

1. Brand-specific expressions emerge endlessly. Let me explain with examples. To summer, a fragrance brand that became famous through content. In the past, to do content, brands had to go to CCTV or various mainstream media. But today, enterprises can build their own platforms and traffic, so various expressions from different enterprises appear.

Lao Xiang Ji (a fast-food chain): The chairman interacted with the editor in the official account comment section, saying he was slacking off during work. Over time, the interaction between the chairman and the editor formed a silly and cute style. To summer is completely different from Lao Xiang Ji; every poster, even the letter spacing, is carefully designed, fresh and refined, showcasing the characteristics of oriental plant notes. These are their brand content's distinctive expressions.

If you want to build a consumer brand and truly create your own content, you must have your own content tone. Where does this tone come from? Content tone comes from brand design, which originates from the concept system, which must rely on brand strategy. This is a whole set of things, part of enterprise management processes and strategic architecture.

2. The significance of content labels and characteristics becomes prominent. Always learning from others is not enough; don't be part of the herd. You must create your own characteristics. In the era of brand competition, your brand's characteristics are unique and charming; this is a matter of charisma. In the end, a brand is the charm of a thing.

Change 4: Blurring Boundaries Between Channels and Brands

1. Channel-owned brands: This is easy to understand. Brands like Sam's Club and Fudi were originally channels but are now launching their own private-label brands.

2. Brand-owned channels: Brand-owned channels refer to brands that are growing larger and have many fans. They create audience profiles and then start doing channel work. Now everyone wants to be a platform; everyone thinks a platform is a good thing, so brand-owned channels will also appear. Next, large consumer groups will launch various sub-lines, some self-developed, some acquired. Many new consumer internet celebrity entrepreneurs are crossing the river by feeling the stones, while large consumer brands are crossing the river by feeling the heads of new consumer brands.

3 Suggestions

Suggestion 1: Value Level: Find a "Strategic Advantage"

1. If you can't find a strategic advantage in "brand," it's better to do "business" on Pinduoduo. You might think this is nonsense, but sorry, many times truth looks like nonsense. Those flashy things are likely to be superficial. In the triangle, the center is the super product, which is the core of an enterprise—what you deliver. The top corner is called the proposition, your brand's character. As a brand framework, what value do you design to provide others? The bottom left is called the hit product, which I call "making things happen"; the bottom right is called sales, referring to having free and self-owned distribution channels. Emphasizing free and self-owned is because if you rely on other channels for development, it's hard to build true sales. Three Squirrels' failure to quickly establish its own free distribution channels after traffic is a typical example. In such a triangle, if a brand can't find a strategic advantage, it's better to do business on Pinduoduo. This is my very sincere suggestion: if you don't have a strategic advantage, if you want to drive traffic and sell goods, just follow the logic of business; that's more straightforward.

2. Advantage is your unique weapon, hard to surpass in the short term. Whether Laifen can surpass Dyson depends on whether Laifen users truly get the same experience as Dyson, and whether Dyson will be surpassed by Laifen in the short term. We'll have to wait and see. Many phone models come out, but Apple's advantage, its unique weapon, is hard to surpass in the short term. Don't be greedy for a big advantage. It's no longer a time when one product can make all users cheer. You must find your unique weapon for a specific group of people. As they say, if you have 100 loyal fans, your business is done. If you don't even have 100 loyal fans, then sorry, your advantage hasn't been established yet.

3. The consumption golden triangle is built on two legs: sales capability and influence. I've already mentioned the brand triangle model. Enterprises missing a corner cannot move forward healthily.

Suggestion 2: Positioning is Less Important than "Setting the Tone"—This is About Feeling

1. Positioning defines "competition," and competition is now everywhere. The brand triangle just mentioned provides value; this suggestion is about feeling. Nowadays, we often talk about positioning, but my feeling is that positioning has failed. Positioning defines competition, and competition is now everywhere, impossible to defend against. BMW can hardly say its competitor is Audi or Mercedes-Benz, because BMW's competitors might be NIO, XPeng, Li Auto, or even Wuling Hongguang or some flying vehicle. When you position yourself against absolute competition, the foundation of positioning is lost.

2. Setting the tone defines "audience." For example, in today's content, some people will like my style, some won't, thinking it's too dry, too harsh, and don't want to listen. I can't change my style to please everyone because I want to build a brand, not traffic. My tone is set here; I want to find like-minded people. Setting the tone defines your audience.

Suggestion 3: Build True "Iron Relationships" for Your Brand

My studio is called Relationship Brand Office. Why relationship brand? Because I believe a brand is the sum of all relationships. Borrowing a line from Zhang Ziyi in the movie "The Grandmaster": Martial artists have three realms: see yourself, see the world, see heaven and earth. A brand also has three relationships: internal, external, and world relationships.

Seeing yourself is the hardest and is the key among the three relationships. 90% of enterprises cannot achieve the level of "seeing yourself." When making strategy, they are greedy and want everything, unable to reach the state of "selflessness." On the other hand, they fail to handle internal relationships well. Internal relationships are not just with employees but also with various stakeholders. We often cooperate with third-party companies. If you cooperate with a mindset of guarding against thieves, they will never serve you sincerely, and you won't be able to truly make them stand with you. Besides employees and third-party partners, stakeholders include your investors, your board of directors... and why the founder started the venture.

I remember an investor friend once shared an experience: he had never seen a founder succeed because they initially wanted to be big. Those who start a business for the sake of bigness never truly succeed. This kind of sulky entrepreneurship is twisted; they do things to prove their ego rather than bring real value to others. Often, those who fail to handle their relationship with themselves find it harder to handle other relationships.

Seeing the world is easier. External relationships refer to relationships with external brands and customers. The current popular brand collaborations, customer profiles, competitor research... these are all external relationships. This layer is basically done by every enterprise, but many lack refinement. Because most people, when doing this, study routines and users' biological actions: when they place orders, when they click, what they do at certain times... This has some scientific basis, but if you don't study users' conscious and tonal aspects, and only study routines, it inevitably shows arrogance. This is not the true state of building relationships.

World relationships correspond to seeing heaven and earth. This is the relationship with society, culture, government, and media. The brands I just mentioned—To summer with oriental plant notes, Florasis with oriental makeup and flower-based skincare—are related to our cultural rise. Many origin-brand emergences now reflect local culture; the rise of women's power, so don't talk about women's workplace lying flat culture. After researching social culture, government policies, media, and culture, then set your brand. This stance is higher and more stable.

4 Reflections

Finally, let me summarize with four reflections:

1. All speed must be exchanged for slowness. This is aimed at the past great leap forward era of new consumption. I think all speed must be exchanged for slowness. If you don't believe me, just wait and see.

2. "Slowness" is not stupidity or foolishness; slowness is the ability to put down big moves and kneel down to sharpen the knife. I recommend you learn about a Japanese sake brand—Dassai. Also, I recommend a book written by Dassai's founder, "Management in Adversity."

3. Doing consumption is not a glamorous and lively thing; it's a slow, hard job. This must be recognized.

4. True consumer brands can transcend time and be passed down through generations. Your brand philosophy and the tone you convey should not be based on "getting big."