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In the previous sections, I spent a lot of space discussing the principles of sales: the basic concepts of models, systems, channels, customers, and consumers; the composition of models; the development process of models; the six major sales systems; how systems cover channels, etc. I also used the Jiangsu market as an example to explain how sales organizations coordinate with models and systems. I have been emphasizing the effectiveness and economy of models, systems, and structures. I believe that those of you who have been following along now have a basic understanding of these concepts. The presentation might have been a bit messy, and I apologize if it was hard to follow, because I wrote without a draft or outline, just as thoughts came to me. However, I did write with sincerity. The early part had some lightheartedness, but the latter part was more serious. If something is not clear, I suggest reading it a few times. These topics may not be something you think about much in your daily work, especially for those of you in execution roles. But I hope you can elevate your perspective. As the saying goes: "One who does not plan for the whole cannot plan for a part; one who does not plan for the long term cannot plan for the short term." Understanding these basic principles can greatly help your work, enabling you to know not just the "what" but also the "why." Of course, the key is to apply these principles flexibly. I would be delighted if you can draw inferences and apply them broadly.
At this point, some of you might say: "You've been talking about marketing issues. Is Huiyuan's current predicament solely due to marketing?" My answer is a definite "Of course not." Today, let's discuss the low-level mistakes of the juice leader from a product perspective.
Now, let me ask: Can anyone tell me how many SKUs Huiyuan currently has? How many sub-brands? How many packaging specifications? How many variations exist for the same specification produced in different factories? Are these products organized into series? How many series are there? Even though Huiyuan has done some product sorting, to fully answer these questions, even the juice leader itself, with all its staff, might not be able to.
If we were to place all of Huiyuan's products side by side, one bottle or box of each, it would basically be a century-long history of world beverages. They come in all shapes and sizes, tall and short, fat and thin, each different. If you gave a supermarket to Huiyuan as a specialty store and asked to display all products on shelves by series, item, and specification, the merchandiser would be at their wit's end. Oh heavens! Which genius did the product planning for Huiyuan? My admiration for you flows like the Yangtze River.
First, look at juice content: 10%, 20%, 30%, 40%, 36%, 50%, 100%...
Then, look at packaging specifications: 125ml, 128ml, 180ml, 200ml, 240ml, 250ml, 268ml, 290ml, 310ml, 320ml, 330ml, 355ml, 365ml, 400ml, 420ml, 448ml, 450ml, 470ml, 490ml, 500ml, 600ml, 750ml, 1L, 1.25L, 1.5L, 1.88L, 2L, 2.5L...
Then, look at brands: Huiyuan, C him V her, Quanyou, Guoxianmei, Yizhongren, Zhonghua Guocui, Xianshengdai, Leleyuan, Bailiwa, Guoliwang, Qiyi Wangguo, Chaoji Xuanguo, Jiabishuang, Zhenguoyin, Zhen series, Xian Guoyin, Xiqing, Shuiguo Liren, Ruguo Liren, Guo Zhi Guo Le...
Then, look at categories: 100% pure juice, medium-concentration juice, low-concentration juice, pulp juice, fruit and vegetable juice, juice milk, plant protein, peanut milk, tea, water, carbonated juice, fruit pulp, mixed juice, milk, juice vinegar...
Then, look at packaging materials: Combibloc, Tetra Pak, metal packs, multi-sided packs, gable-top packs, PET, glass bottles, cans, stand-up pouches... Oh my god! My head is spinning.
The list above is certainly not exhaustive. What do you think after seeing this? Just packaging specifications alone number at least 28. Each specification likely requires different molds, not to mention that different factories have different bottle shapes for the same specification. How much money was wasted on mold development? Do you really need so many specifications? Is it that hard to do product planning? And then there's the issue of different bottle molds for the same specification across factories. The number two in the US (likely referring to a competitor) shares molds among several factories. They coordinate monthly production plans: the 2L mold is used in Shanghai for 10 days, then sent to Nanjing; Nanjing spends the first 10 days producing 600ml, receives the 2L mold, and sends the 600ml mold to Wuhan. They use the 2L mold for 10 days, then send it to Wuhan for another 10 days. Production lines and molds operate at maximum efficiency. How do they do it?
Now, about bottle shapes and labels. In sales, there's an old saying: "Good packaging sells the product." Country folk say, "Buddha needs gold plating, people need clothes." Both emphasize the importance of packaging. You might say your product quality is good, but if consumers feel like they're holding a Shandong pancake while standing on Nanjing Road in Shanghai, you, as the juice leader, might say, "I just like Shandong pancakes." But are you sure all consumers like Shandong pancakes? Have you ever wondered why, after all these years, Huiyuan hasn't succeeded with any ready-to-drink product? Is it all because the sales team can't sell? Have you thought about who buys ready-to-drink products? What is the key factor in their purchase decision? Of course, you can say, "I just like Shandong pancakes." Persistence and not forgetting your roots are admirable qualities, but blindly persisting while ignoring environmental changes is stubbornness and rigidity, not a good quality. A 500ml low-concentration bottle design has been used for over a decade. Do you think consumers have no other choices? Guo Zhi Guo Le (a Huiyuan product) has novel packaging—droplet-shaped, streamlined, indeed beautiful—but have you thought about how to place it in refrigerators for sale? What is the spacing of the shelves in market refrigerators? The bottom of the Guo Zhi Guo Le bottle is so small; can it stand upright in the fridge? The whole-box packaging is shrink-wrapped; do you know that by the time it reaches the distributor's warehouse, it often falls apart? Have you considered how distributors and customers will store it?
With so many products, excluding foodservice items, there are at least 100 SKUs for normal channels. How many factories can produce the full range? Or have you planned how to achieve product complementarity within a certain region? If you can't achieve product complementarity within economical delivery distances, how can distributors stock up? Have you built a nationwide logistics platform to ensure that distributor orders are efficiently fulfilled by the nearest factory? How do you ensure no stockouts in modern trade? The same product, "Guoxianmei," has 30% juice content in 500ml but 36% in 1.88L. How can consumers choose?
These are all obvious problems. Has Huiyuan tried to solve them? If you ignore consumers and distributors, how can you achieve your market goals? Here are my suggestions for the juice leader on product sorting and planning:
- First, organize the main product lines: 100% juice, pulp juice, mixed juice (Guoxianmei), fruit and vegetable juice (Quanyou), low-concentration juice, fruit pulp, children's products, tea, peanut milk, purified water.
- Make these product lines systematic: ready-to-drink packs and sharing packs. For sharing packs, don't have too many specifications, but consider regional preferences. For each item, try to have a comprehensive and rich range of flavors.
- If regional products have genuine market demand, they can be produced at local factories, but not promoted nationally.
- Plan foodservice products separately, but control the number of items. Sales demand must meet production cost requirements, and production plants should be strategically located nationwide.
- Integrate factory production lines to ensure that within a certain region, all main product lines can be produced. Factory lines within the region should complement each other, and a regional logistics platform should be established so that products ordered by distributors can be delivered within the specified time.
- For national KA channels, only main product lines should be listed, and ensure they are available. Regional products should not enter national chain KA channels, and the company should not pay any fees for them.
- Products with small sales volumes should be phased out. Even products like Guo Zhi Guo Le require the courage to "cut off a wrist to save the body." Continuing against all odds is unwise; admitting mistakes and correcting them is a great wisdom. Otherwise, I dare say, this product will eventually drag Huiyuan down.
- Immediately develop products in categories with good market momentum, such as sports drinks, and launch them in February or March next year.
- Redesign the bottle shape and label for ready-to-drink packaging to be attractive enough to trigger impulse purchases, at least comparable to other brands.
- For 100% juice, Huiyuan is the market leader with full pricing power; it can adopt a high-profile strategy. Medium-concentration juice is in a high-growth phase, especially large packs, which will replace low-concentration juice drinks as a table beverage for consumers. Huiyuan should leverage its brand and scale advantages to guide and cater to consumers in taste, packaging, and price, and win the upcoming sales boom. For low-concentration and other products, Huiyuan should learn from Wahaha's strategy: based on product homogeneity, create price advantages, leverage production strengths, and maximize sales, cash flow, and factory utilization.
Earlier, I mainly discussed Huiyuan's product defects and mistakes, and I offered my improvement suggestions. From a competitive perspective, a good product is far more important than a good team. A good product has its own selling power because, as a fast-moving consumer good, consumers will repurchase. The consumption experience of each individual consumer cannot be changed by any marketing tactic. Huiyuan's current marketing difficulties stem from the fact that the upstream product design and quality lost from the start. No matter what they do downstream, there is little room for improvement. But the juice leader has a blind narcissism about its products and never reflects from this angle. They keep looking for reasons at the sales level, constantly changing marketing tactics and personnel, leading to a vicious cycle in the market.
Below, I repost an article by Lao Niu (Ni Genfeng) of Mengniu for your sharing. I have always admired Lao Niu's professional competence. I believe he and Zong Qinghou of Wahaha are the entrepreneurs in the FMCG industry who best understand the Chinese market and human nature. Of course, I mean professionally, not personally.
The Terminal is the "Second Brain"
Where does terminal capability come from? The effort lies both "inside the poem" and "outside the poem." When the terminal thinks, it is alive; when it wanders, it is dead. The terminal should be a company's "second brain."
"Terminal capability" comes from "starting capability"
In marketing, there is a saying "win at the terminal," which leads many to misunderstand that "terminal capability comes from the terminal." The terminal is indeed the "last battle," but the birth of the "victory baby" does not depend on the "cradle." There is a classic joke: A hungry man ate five pancakes and felt full. Then he lamented, "If I had known the fifth pancake would fill me up, I wouldn't have eaten the first four!" Winning at the terminal is like eating that "fifth pancake." All competition begins at the design stage. The outcome at the terminal is partially determined at the start. The "kinetic energy" of the terminal largely comes from the "potential energy" of the start. If the start produces a pack of spoiled milk or a bitter ice cream bar, no matter how you struggle at the terminal, how can you win? If the procurement, production, and logistics costs at the start are 10% higher than competitors for homogeneous products, no matter how hard you try at the terminal, how can you triumph?
In fact, marketing is "systemic." Victory does not depend on one stage or one point, but on the entire process and all aspects. It is economic, political, and cultural. It involves the terminal, the middle, and the start. Marketing is like the snake of Changshan: ideally, "strike its head and the tail comes, strike its tail and the head comes, strike its middle and both head and tail come." Any "structural absence" of an element can bring total defeat to the entire marketing effort. In the brand's hundred-mile breakout or long march, the terminal is just the "last mile." Before it, there are 99 miles or 9,999 miles.
Thousands of lines converge at the terminal.
The terminal is a huge "needle's eye." Every line a company deploys must eventually converge there. But if done well, the terminal is also a giant "magnetic field": thousands of lines, each is a "line of magnetic force."
The most important are three lines: the product line, the brand line, and the character line. For each line, the correct approach varies. Here are a few examples of directional errors to illustrate the point.
On the product line, the most fatal error is positioning.
Once, a company launched frozen dumplings, targeting high-end consumers, priced several times higher than ordinary dumplings. But as they continued, they incurred losses. Analysis revealed the mistakes were mainly in positioning: First, product positioning was wrong. Frozen dumplings are convenience food, which is inherently a "busy person's product" for ordinary working-class people. As for the wealthy, they usually have nannies at home; if they want dumplings, they can make them fresh. Second, channel positioning was wrong. These dumplings were sold in ordinary supermarkets, meaning 90% of the shoppers were not their target consumers, effectively putting themselves in the "cold palace."
On the brand line, common mistakes are overemphasizing advertising and neglecting news, or overemphasizing soft news and neglecting hard news.
We say advertising can tell people the "what" but not the "why." Therefore, a brand built solely on advertising is not solid. It does not provide consumers with enough basis for trust. At the first sign of risk, it will collapse and shatter into pieces—a "glass brand." News, on the other hand, can detail the ins and outs, rights and wrongs. When people know more, they love more, and their ability to withstand risk is greatly enhanced—a "diamond brand." As for "soft news" and "hard news," their effectiveness is distinguished by whether they achieve deep communication with consumers and touch their souls. What truly spreads a company's fame is "hard news," not "soft news." Many soft news pieces go unread, leave no impression, or the impression doesn't last. But the story of Haier smashing refrigerators has been told for 20 years—that is "hard news."
On the character line, the common mistake is short-sightedness.
First, the sales assistants at the terminal should be "helpers," but many have degenerated into "butchers": forcing sales, chattering endlessly, greeting warmly and seeing off coldly, making customers want to avoid them. If we divide sales assistants into three types—merchandising, selling, and consulting—relatively speaking, the consulting type helps customers without making them feel pressured, which is more conducive to building the brand. Second, the complaint handlers in after-sales service: many, to keep today's "bowl of rice," lose tomorrow's "half acre of field." In the milk industry, a 0.01% defective pack rate is common worldwide; it's a problem modern technology cannot avoid. If the manufacturer and seller cannot communicate well with consumers who bought such products, reach mutual understanding, and turn them into loyal customers, then a company producing 20 billion packs a year will lose 2 million direct consumers annually. If each person influences 10 potential consumers, that's 20 million consumers lost in a year, and 200 million in ten years! How terrifying! If this continues, not to mention a "century-old shop," even a "decade-old shop" is impossible. Of course, this is theoretical. In reality, as the milk champion, Mengniu holds a 35% market share. In the other 65%, there are both some large brands and many small ones, and small brands have much higher defective pack rates than large ones. Thus, dynamically, more and more people will shift to large brands.
The terminal is the "second brain."
There is a saying: "The butt decides the head." From this, we can derive another saying: "The head decides the butt." The former emphasizes objective determinism; the latter emphasizes subjective initiative.
For a company, its decision line is actually reversible: The first level of decision line is from the start to the terminal, equivalent to "the head decides the butt." The second level is from the terminal to the start, equivalent to "the butt decides the head." In this sense, if the start is the "first brain," the terminal is the "second brain."
How should the terminal play the role of the "second brain"? On one hand, it should be a "thinking terminal." The terminal is execution, but it is creative execution. It should achieve two sets of "three thoughts": think of danger, think of change, think of goodness; let yourself think, let customers think, let the media think. In 1999, when Mengniu first entered the Shenzhen market, large malls were impenetrable, and small shops rejected us. What did we do? At a community trial sales point, we wrote a "provocative" slogan: "When you think of Shenzhen, you think of skyscrapers and high-tech; when you think of Inner Mongolia, you think of blue sky, white clouds, little sheep, and the fragrance of milk drifting from ancient times... We came thousands of miles: Not tasting is your mistake; tasting but not buying is our mistake... Good milk speaks for itself." This sparked people's thinking and whetted their appetites. They tasted, and indeed tasted quality and charm. The milk went from street stalls to small shops, from small shops to supermarkets, all green lights. That is a thinking terminal.
On the other hand, the terminal should influence the start. The terminal is the place with the most concentrated and comprehensive information. Whether it's customer analysis, competitor analysis, environmental analysis, or trend analysis, it has the effect of "a drop of water reflecting the sun." It should be the basis for the company's "re-decision."
In summary, the terminal and the start influence each other, determine each other, and complement each other. A company where both ends think is like the mythical "two-headed eagle." When hail strikes, the "one-headed eagle" has only one life; the "two-headed eagle" has two. When food is scarce on the ground, the "one-headed eagle" has only one opportunity; the "two-headed eagle" can find two.
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