This article comes from an industry insider who worked in the FMCG market for ten years, sharing observations and reflections on market changes over the past decade.
In 2007, Beijing was steeped in Olympic atmosphere. That year, among the 10 Olympic sponsors, FMCG accounted for 5, beer for 3: Budweiser, Tsingtao, and Yanjing. Snow Beer, which had just boldly entered Beijing, was also fighting with a "grassroots" approach. Sponsors' Olympic rights bombarded various outdoor media, and the beer war in the capital was in full swing: the promotion "Da You Wins Olympics, Open the Cap to Win Big Prizes" made Tsingtao Beer's three Beijing factories reach full capacity for the first time in history, while Yanjing Beer quietly drove its trucks to the front of Tsingtao's factories for close reconnaissance. Back then, you knew who your competitors were. In 2017, we all moved to our social media feeds. Occasionally looking up, waiting halls, buses, and subways were dominated by Tmall, JD.com, Xiaomi, Meituan, Toutiao, and Guazi; topics were all about AI, blockchain, O2O, GP, LP, sharing, young idols, Bitcoin... We seem to be only one Baidu search and one Zhihu question away from any unknown thing, only one app away from any product. We record our lives on social media, hold meetings in WeChat groups... Apart from our phones, nothing seems essential in life. Time flies fast; just after finishing Double 11 shopping, Double 12 arrives. We've become accustomed to disruption, gossip, and the emergence of any new species. We've never been so happy because life has never been so convenient; we've never been so anxious because tomorrow has never been so unpredictable. We talk about competition, but often, the opponent is the one just an app away that you haven't noticed. Over the past decade, mobile internet has stood at the forefront, basking in glory; but what about instant noodles? What about the familiar beers, beverages, and mineral water? What have they experienced over these ten years? Who changed first, the brand or the consumer? What other changes have occurred in this industry that is somewhat distant from the internet?
From "Consumers" to "Users" This is the first thing I want to say, and it's the strongest feeling. In the FMCG context, we usually call the end customer a consumer. The internet, on the other hand, calls those who use its products and services users. This is actually two kinds of thinking and two models. Let's talk about FMCG first: calling customers consumers keeps a distance; they are basically free-range, occasionally communicated with, interacted with, or rewarded, often using probability to solve problems, like the "open cap (scan code) to win" promotions, where the winning probability is hard to make large, unlike the subsidies of Didi and Kuaidi that were almost universal. Internet companies, however, are different: acquiring customers, new users, active users, and activity levels are monitored daily and in real-time, essentially internalizing customers (consumers). Under these two thinking and operation models, the pros and cons are immediately apparent. Thanks to this decade, Jiang Xiaobai appeared. I won't comment on other aspects of Jiang Xiaobai; many people see the expression bottle, the novelty, the good copywriting, but I think the most fundamental thing is that through the external form of the expression bottle, the brand has achieved an internet-userized consumer management and operation model; it can better understand users and know users better. This expression bottle actually forms a community, letting users inform users and move users. Changes in the social environment have made people's self-awareness unprecedentedly strong, elevating the inner need for respect, attention, and a more perfect experience to a new height. This proudest user mentality has also fostered admiration for craftsmanship, a pursuit of novelty, and expectations for innovative niche products. "No Middlemen to Earn the Difference" Distributors (agents), in the past long period, mainly functioned to bear the capital flow and warehousing logistics. Now, capital flow has been taken over by mobile internet: scan-code payment, money can reach directly without transfer or interception. Warehousing and logistics have been socialized, and SF Express and JD.com are respectively attacking from logistics to commerce and from commerce to logistics, squeezing from both sides. If the original big customers don't transform, it's hard to say they won't be disrupted in the future. The slogan "no middlemen to earn the difference" may be an insightful voice, but in essence, it means there is only an app's distance between users and manufacturers, and logistics efficiency should match. Personally, the essence of commerce has always been logistics; merchants are all movers. The current new retail, office unmanned shelves, and vending machines are the new version of "winning at the terminal," the child of the original small shops and internet payment. Miniaturization, automation, terminal forward placement, and scenario-based approaches are common opportunities and challenges for FMCG companies and channels. Previously, distributors were independent links entering the terminal from upstream, locking in terminals, and occupying them; now the situation is distributors becoming terminals — the terminal is me, and I am the terminal; recreating terminals — going into buildings and cars; tech terminals — with a code, you can scan the world; without a code, you can't move an inch. This is the trend; traditional channels need to get on board quickly. Customers, Terminals, or Partners? When I first heard internet friends talk about the concept of "partners," I thought arrogantly that this was what we in FMCG had left over from years ago; in our terms, they were agents and distributors. But upon careful consideration, I found it's not the same thing at all. Distributors and agents often participate in the sales promotion part, and even often play an execution role, while "partners" need to start from the market side and demand side; they start with community-based and group-buying approaches, transmitting information and orders to manufacturers. The two are completely different in process. Even when doing the same thing, partners often have greater creativity and deeper insight. We Spend Money on Brands While Users Secretly Love IPs The term IP (intellectual property) hasn't been around long, but extending its meaning to look at some marketing phenomena is very interesting. I often like to see I as fans (similar in shape), and P as person, thing, or story (person). IP has several major characteristics: it brings fans (traffic), has emotion, has scenarios, has plots, and has sentiment. For example, Haier is a brand; the stories of smashing refrigerators and delivering refrigerators over mountains, and the Haier Brothers in swimsuits are IPs; Gree is a brand, Sister Dong is an IP; Coca-Cola is a brand, the famous saying about a big fire burning Coke is an IP; Nongfu Spring is a brand, "nature's porter" is an IP; Huawei is a brand, Ren Zhengfei is an IP, and the overseas bestseller that boosts Chinese pride is an IP. This is an era of falling in love with IPs and forgetting brands. This is also why many products on supermarket shelves now have large slogans and enlarged celebrity faces on their packaging, while brand names are almost invisible. If you talk about how good your product is, users won't listen, won't believe, won't spread; but if you speak the words in their hearts, users feel "you understand me," and immediately they'll be awesome and fly with you. Brands, after all, are a bit cold; they are self-congratulatory, but not often moving. In the current communication environment, building a brand is hard work, while building an IP is clever work. Let's restore the consumer's purchase psychology and behavior: often the brand is a guarantee factor, but the decision to buy is the effect of the IP. The die-hard fans of Nongfu Spring around me, ten years ago they were absolutely loyal consumers, either admiring Zhong Shanshan's entrepreneurial story, applauding "nature's porter," or loving the packaging design; using 17.5 data science to create an IP for oranges, letting oranges be the IP for orange juice... Why do they love listening to your stories so much? If the story is that good, not buying can't prove I believe it. Accumulating IP assets, giving birth to warmer, more spiritual, and more heartfelt IPs from the brand, is a new requirement for FMCG brands. Production Scale and Execution Are Double-Edged Swords I won't talk much about the advantages of scale; let's talk about the other side. When scale is large, pressure is high, which may cause brands to only focus on the 80% big market and look down on small markets, thinking that 100 million is a small goal, or even not a goal at all. But the problem is that many cases in marketing history show that the 20% of people in that 20% small market may be the ones who trigger the 80% big market to follow, recreating the 80% big market. Staring at the 80% big market can only handle and think about today; tomorrow's 80% is hidden in today's 20%. Break the shackles of scale, see small goals, and we'll be different from now on. An internet friend told me a case about kitchen knife R&D, and I felt suddenly enlightened. Let me share it: To develop a kitchen knife, the ordinary idea is to survey the 80% mainstream market — people who cook — and then get data on how to improve and make it. But the successful case is to survey two groups of people: one is chefs, letting these most professional people give the most professional opinions; the second group completely surprised me: children who have never seen a kitchen knife. This second group is completely outside the 80%, and their opinions are completely breakthrough and revolutionary. When the product born from these two groups is presented, will the 80% reject it or be surprised? On this point, I think Nongfu Spring and Wahaha are equally remarkable. Before Nutrition Express was born, was it a small goal of a few hundred million? Whether or not Beer Tea Shuang and Kvass succeeded, I think they were successes of innovative spirit and big strategy. When channels are flattened to just delivery, economies of scale have been redefined. Consumption Upgrade Is a False Proposition Over the years, the word I've heard most from FMCG clients is consumption upgrade. At first, I didn't reject this view, but now I think it's a false proposition. When brands say "consumption upgrade," the subtext is that consumers' demands are higher now, so they need to cater, satisfy, adjust... But look at Apple: it's often Apple that leads product upgrades, followed by consumption and experience upgrades. When a brand feels "consumption upgrade," it's actually the result of the brand's own lack of innovation, the result of staying in the comfort zone for too long. If I have what others don't, others can feel "consumption upgrade"; if others have what I don't, I feel the need to cater to the so-called "consumption upgrade." Take the beer industry, for example. Why have the ingredients been "water, rice, malt, hops" for years? When imported beers with "water, malt, hops" and craft beers with various ingredients and flavors like "water, malt, blueberry, hops" arrive, is it a real consumption upgrade, or is it a slow insight? Is it a consumption upgrade, or was the original marketing version too old? Desiring better, replacing the suboptimal with the optimal, is a law, and it's hard. Are 4P, 4C, and IMC Still Effective? Why Is No One Mentioning Them? It feels like FMCG and the internet are like two major martial arts schools, practicing different martial arts and secret manuals. First, FMCG: FMCG loves to talk about and must talk about 4P (Product, Price, Place, Promotion), and the basic strategy is often Michael Porter's competitive strategy and Kotler's marketing management. The internet, on the other hand, loves to talk about product, experience, scenarios, and insight. Let's look at each item. Channels are evolving and constantly producing new species. The earliest traditional channel structure was nothing more than agents at various levels to terminals and then consumers. Now channels are flattened, diversified, platform-based, circle-based, and socialized. Traditional channels are being diverted by new channel species in various forms, such as e-commerce, micro-commerce, express delivery, automated unmanned terminals, and so on. The emergence of new channel species puts forward new requirements for channel management: channel planning and design capabilities, channel development capabilities, multi-channel coordination and control capabilities, channel incentives, and other software systems must be upgraded. Price and promotion. Product pricing can have enough confidence in market consumption capacity; the internet can precisely navigate to find the target group. Promotional forms have become more diversified, platform-based, and cross-border. Skillfully using joint marketing promotions can achieve twice the result with half the effort. Product, the first of the 4Ps. Ten years ago, it was winning at the terminal; now it's winning with the product, aiming for blockbusters, and its position is more consolidated. People often say "good products speak for themselves"; now we should say, "good products need to chat by themselves." FMCG product packaging has huge audience coverage. Each package only needs a QR code to open a new world. Previously, packaging was a label; with a QR code, packaging can be an advertisement, a documentary, or a library. So now products are empowered by the internet and blessed by QR codes. The product is the first medium. Products can do more and more: they can tell stories, chat, promote, interact, and even cross borders. Product packaging as media is the biggest asset the internet has unearthed for FMCG. Craftsmanship, handmade, ancient methods — these concepts are prevalent, which is actually users' rebellion against over-marketing and aesthetic fatigue with large-scale industrial products. What is over-marketing? I want to buy a car, and you say driving it will lead the era; I want to buy a bottle of water, and you say it can give me aristocratic temperament; I buy a loaf of bread, and you say it's royal special supply... You say it, and I listen, but I don't want to listen, because we're increasingly not in the same world. How does aesthetic fatigue come about? All car ads are basically the same, with a tone of cool, flashy, and awesome; beverages and beers use parties to express the product; one celebrity endorses n products; in TV ads, you can count the male lead, female lead, male supporting, female supporting. Really, thank you, Sister Dong, for endorsing Gree, bringing a bit of difference to the idol-style ad series... Recognizing these two points is the boundary for making good products, especially on internet media. Crossing these two lines, you can basically only be self-congratulatory. In short, products need to meet the increasingly refined and dispersed diverse needs of consumers. Now, product uniqueness and differentiation need to be based on deeper insight into users. Refining product concepts increasingly tests marketers' sense of proportion. The way of expression has changed, and the communication channel with users has changed, but for product communication, the original one-way, instilling, peddling style of informing can still be done, but it's clearly brute force. How deep your insight into users is, how much you polish product differentiation, is hard work and real skill. On the product issue, I'd like to share a saying with peers: "How much effort you put in, how much reward you get." Source: Huxiu.com -END-