Click the image for details Text | Liu Chunxiong / Teacher Liu's Forum (ID: liuchunxiong1964) There are many bad companies in China. Why are they bad? There are many reasons. Since we are in marketing, let's limit the discussion to the marketing field, not other areas. I have a group with Teacher Jin Huanmin called "Liu Jin · Marketing Circle." Recently, in this group, Teacher Jin and I had a disagreement on this topic. Teacher Jin has always focused on products, and I don't object to that. I talk more about marketing, but of course, I also pay attention to products, such as mainstream shifting, etc. The point we debated is roughly: Are those bad companies bad because of their products or because of their marketing? This is a provocative article; Teacher Jin and I have been arguing for decades. 1 Bad Companies: Bad Products First? "Bad companies start with bad products." This is my summary of Teacher Jin's core viewpoint. Let me quote a few of Teacher Jin's remarks from the group. ... ... "In the past decade or so of Chinese marketing, today, and for several years to come, the main contradiction is not about which channels or tactics to use to sell things, but how to create products that meet the needs of different levels and groups through innovative R&D." "Discussing brands, channels, and tactics without studying demand and product development is a politically correct and easy way for marketers." "The key to upgrading Chinese marketing lies in products; everything else works through this." "Products with creativity or new products, or products facing sales resistance, or products that are selling well, are more valuable to share and discuss." ... ... Teacher Jin's words seem fine and reasonable at first glance. But there are big problems! I particularly respect Drucker, not because his principles are profound, but because he turns upside down what most people take for granted and tells everyone: this is wrong. Teacher Jin has deep theoretical and practical foundations, and his arguments are usually logically consistent. But the above statements are hard to withstand scrutiny. 2 Bad Marketing: Dare to Make Good Products? When bad companies remain bad for a long time, a symbiotic structure forms with mutual causation. Because products are bad, even good marketing is useless; because marketing is bad, even occasional good products are proven ineffective because they don't sell. If we ask which has more decisive influence, bad products or bad marketing, I think it's marketing. Good marketing cannot make bad products good, but bad marketing will definitely kill good products. Imagine: if those bad companies had good products, wouldn't they still be bad? My conclusion: They might be even worse unless their marketing improves. What is a good product? That's hard to say, but at least one thing: good products are not cheap to make. If costs are high, prices naturally won't be low. Don't talk to me about "high quality and low price"—that's advertising language. If prices are high, will those bad companies sell at high prices? A basic feature of bad marketing is the desire to keep prices as low as possible. Being able to sell at high prices is the beginning of good marketing. To defend the R&D department, bad products are often forced by bad marketing, and long-term forcing becomes entrenched. The logic of forcing is as follows:

    1. Because marketing capability is poor, they dare not sell at high prices. Teacher Jin often quotes Kotler: Marketing is not selling products; marketing is selling prices.
    1. Because they dare not sell at high prices, product cost becomes a hard constraint for R&D. High-priced products are rejected at various marketing stages.
    1. Because cost is a hard constraint, R&D can only proceed under cost conditions acceptable to the marketing system. Either they dare not use real materials or good raw materials, substitutes and fillers prevail—how can they make good products? Long-term price constraints create inertia in the R&D system. Once R&D forms a cost-constrained mindset, they truly lose the ability to develop good products. When bad companies make products, they usually benchmark. They anchor a best-selling product as a target, then the marketing system demands: better quality, more beautiful packaging, lower price, better policies, more advertising. In the end, R&D inevitably delivers: the price is lower, but they are definitely further from a good product. My conclusion: Companies with bad marketing lack the courage to make good products. 3 Bad Companies: Is Differentiation the Way Out? There is a widely criticized phenomenon: the worse the company, the more product homogenization. Why don't they differentiate? I think there's a false cause-and-effect illusion here. Bad companies also try to differentiate, but differentiation requires stronger marketing. Because marketing capability is poor, differentiated products die, while homogeneous products barely survive. We cannot infer cause from effect; the result of homogenization does not mean they didn't try differentiation. I even have a viewpoint: small companies often over-differentiate, leading to niche paths. At the annual Sugar and Wine Fair, I have three sentences to summarize: Look at products at small companies, look at marketing at large companies, and look at trends at forums. The smaller the company, the more motivated it is to differentiate. But differentiation requires strong consumer education capabilities, more time, and more investment. So differentiation demands higher marketing capability. Bad companies precisely lack this ability. Instead, homogeneous products survive better by leveraging the complexity of Chinese channels. That's why people criticize homogenization. So, whether to differentiate depends on whether you have the marketing capability for it. Even if differentiated products succeed locally, bad companies' overall marketing capability is poor, so they cannot quickly replicate. When large companies discover this, they often use their marketing capability to quickly cover the market. A common phenomenon: many successful products from large companies are actually imitations of small companies' results. They quickly promote small companies' locally successful products nationwide, and then people say: See, large companies have strong R&D capabilities. I often say, "First trial and error, then trial and right." Some say trial and error is easy to understand, but what about trial and right? Small companies repeatedly trial and error; large companies discover good products and replicate them on a large scale quickly—that's trial and right. 4 Good Products Rely on Marketing Proof If we get stuck in the "chicken or egg" debate, we'll never find the answer. Based on my experience serving small and medium enterprises, I have a basic requirement for products: they can be homogeneous, but they must be at least medium quality. That's the bottom line. Since they are small or bad companies, don't demand too much. Just like a doctor shouldn't blame the patient for being too sick. As for companies with products that are rotten to the core, they may be companies that deserve to die; there's no need to pay attention or waste words. Daring to sell at high prices is the beginning of a virtuous cycle. Good marketing gives the confidence to sell at high prices. If you don't dare to sell at high prices, you will exhaust R&D, exhaust the company, and finally exhaust marketing itself. Good products need marketing capability to prove them, and only through marketing can they be proven. Once marketing breaks through, you can demand more from the boss and R&D, and then everything will get better. Marketing affirms or denies all company work. Only when marketing is done well do other company work have value, and good products are recognized by the world. Now is an open society; for example, big brands are selling factories, while small companies are building their own. I jokingly say that small companies only prove their existence by building factories. How do good products come about? If you can't do it yourself, you can import from outside. This phenomenon has become normal. How does good marketing come about? If internal breakthroughs are impossible, you can seek external help. Arguing with Teacher Jin is not my goal; finding the breakthrough for companies to turn from bad to good is key. Systematic statements may be correct but useless. Where is the breakthrough? Basic product assurance is the premise, and marketing breakthrough is the key. Many of the counterarguments in this article are not my core viewpoints but are for argumentation purposes. I hereby note this. -END-