Click to read the original text for details Source: FBIF Food & Beverage Innovation (ID: FoodInnovation) "Drink Wanglaoji when you're afraid of getting heaty," "Premium snacks from Liangpin Shop," "0 sugar, 0 fat, 0 calories from Genki Forest," "Making good Chinese tea, doing it well (Xiaoguan Tea)"... Food and beverage brands with clear positioning and precise focus on subcategories often capture consumer minds faster, making consumers fall in love at first sight or better "enter their eyes and hearts," enhancing brand recall. As consumer demands become more segmented and more players enter the food and beverage market, categories are infinitely subdivided: functional, health-oriented, 0 sugar 0 fat 0 calories, low salt, clean labels... The food and beverage track has entered an "era of category awakening." It seems that all points worth promoting and valuing have already been "carved up" by first-mover brands, making it increasingly difficult to find a category that stands out. Continuously subdivided beverage categories Image source: FBIF production With category awakening, how can food and beverage brands establish a distinct "memory point" in consumer minds? With infinite subdivision of categories in the food and beverage track, how can brands find the precise category to enter? How can positioning and category theories, which have guided brand innovation and growth, better help brands cut into the right track in the new era? With the rapid rise and growth of domestic brands, will we see the birth of local world-class marketing theories? With these questions, we chatted with Xiao Yao, China partner of Ries Strategic Positioning Consulting. The food track is infinitely "fine," how will future brands "divide"? With technological progress, continuous improvement of infrastructure, and upgrading of people's needs, market environment changes have created more opportunities and conditions for brands to open up new categories. In the high-frequency demand food and beverage track, many brands like Genki Forest, Zhong Xue Gao, Zihaiguo, and Heytea have emerged in recent years, creating and leading categories. New categories continue to be opened and develop rapidly, attracting more brands to enter. To better occupy consumer minds, brands are racking their brains to cut into a newer or more subdivided category to gain an advantage, leading to increasingly "fine" categories in the food and beverage track. We can't help but ask: how can future brands find a better entry point? Al Ries, founder of positioning theory, believes that positioning ultimately lands on category, and category strategy is not a substitute for positioning theory but its latest development. He said that category subdivision is a crucial step in brand positioning for every enterprise, and different eras have different requirements for brands to enter subcategories. In positioning theory, Mr. Ries proposed three stages of business development: the factory era, the market era, and the mind era. In the factory era, the secret to brand success was leading productivity—being able to make what others couldn't. In the market era, brands needed leading channels or insights to meet needs others hadn't yet satisfied. Genki Forest creates the "0 sugar sparkling water" category Image source: China.com In the mind era, what matters more is not just production and market satisfaction but cognitive advantage. To gain an advantage, you need to create a new category that is clearly distinct from existing ones, making consumers feel they are choosing something new, and the brand represents that category. Like Genki Forest, it created a new "0 sugar sparkling water" category and led it, so Genki Forest represents sugar-free sparkling water. "Afraid of getting heaty" is the positioning of the herbal tea category Image source: Wanglaoji official website "Finding the right positioning may not be enough today; more importantly, it's about creating a new category," Xiao Yao said. Brands should value category innovation to open new tracks and become leaders of those tracks. For example, Genki Forest and Xiaoguan Tea, in the fiercely competitive beverage and tea markets, have brought rapid growth to category-leading brands by opening new categories. Just like Wanglaoji back then, it was herbal tea, different from original beverages, and "afraid of getting heaty" was actually the positioning of the herbal tea category, not just Wanglaoji's positioning. So today, brands finding a small need or function may not be enough; they need to create a category to build stronger consumer awareness and bring relatively stable development to the brand. Regarding some brands on the market adding special functions to products, such as yogurt with collagen or hyaluronic acid, Xiao Yao believes that product innovation is necessary for creating new categories, but it must be complete at the cognitive level. For example, cheese-flavored yogurt and cheese yogurt are two different concepts. Cheese flavor might just be one flavor among many yogurts, like strawberry or durian. But cheese yogurt tells consumers that cheese is nutritious and different—ten catties of fresh milk refine one catty of cheese—so cheese yogurt means a relatively high-end subcategory within yogurt. Xiaoguan Tea creates a new category through "small cans" and "tea masters" Image source: Xiaoguan Tea official website For instance, Xiaoguan Tea has good category innovation points, whether it's the "small can" category or the mind resource of endorsements from tea masters, providing a good foundation for high-end tea. Luckin Coffee, on the other hand, has well grasped the concept of "local Chinese coffee brand." "Chinese brand" is a major trend, and Luckin has followed and seized it. With the continuous improvement of infrastructure like cold chains and logistics, as well as upgrading and segmentation of consumer demands, more new brands are emerging in the food and beverage industry, and more new tracks are being opened. Food and beverage categories are infinitely subdivided to meet consumers' changing and refined needs. Xiao Yao believes two factors promote the continuous birth of new categories. One is the development and popularization of the internet, which, from channels and media, creates better soil for new brands; the other is cognition—today's consumers, especially young ones, are more willing to accept new brands, and their cognition is more open. In the business context of infinitely subdivided food and beverage categories, future brands need to differentiate better in products, channels, insights, and especially consumer minds. Xiao Yao said brands have two tasks: put products into the market and put the brand into users' minds. In today's environment where making products is relatively easier, brands need to invest more effort in building unique consumer awareness. Just as no two leaves are the same, brands must find their "only" and "first" and continuously strengthen them. How can brands find the right category positioning to promote efficient growth? Choosing the right category is as important for a brand as a racing car entering the correct track. But some brands have deep-rooted images in a certain subcategory, or because positioning is too narrow, it may sometimes limit their development. So how can brands find their category positioning without "fixing" themselves? For example, Master Kong has a strong impression as a instant noodle brand; if it does other brands, consumers may find it hard to shift their perception. If some new brands "fix" themselves too narrowly, could it limit others' imagination? For instance, Zhong Xue Gao has been very successful in the ice cream category, but its "Ideal State" (dumpling brand) hasn't received as good market response as its ice cream. Addressing our doubts, Xiao Yao said that Master Kong and Zhong Xue Gao represent two different stages of a brand. Consumers first think of instant noodles when they see Master Kong Image source: Yangcheng Evening News Master Kong, whether in consumer awareness or market share, is a successful and powerful brand, especially its dominance in the instant noodle category. Because it represents instant noodles so strongly, it's hard for it to represent other categories. If Master Kong wants to enter other categories, it should create new brands, especially in categories representing new trends where more brands will enter. Master Kong should enter with a "new business card." Zhong Xue Gao products Image source: Zhong Xue Gao Tmall flagship store For Zhong Xue Gao or other new brands creating new categories, their current task is more about positioning the category. Because it has created a new category, the work needed is to make the category bigger. Category growth means brand growth. Like making a cake and cutting it, the more important work now is making the cake. For Zhong Xue Gao, it should focus on expanding the category it created, doing well in the high-end ice cream category, getting more people to accept it, and making consumers regularly and continuously choose to buy this category. For brands in the start-up stage, the more important task is to grow the category, not to emphasize what the brand is within the category, nor to rush to create the next brand. Because its category influence and brand influence are just starting. In the food and beverage battlefield, many brands have recently launched sub-brands or sibling brands. Referring to the growth history of international brands, how should we view this layout during the brand's growth period? Xiao Yao said, The first brand to create a new category is very important for dominating that category. Of course, brands need a multi-brand, multi-category layout, but how high the first brand can go largely determines its future development potential. These new brands should still have deeper layouts in product innovation, iteration, distribution channels, etc. In recent years, some new brands have become popular quickly through marketing tactics like recommendations from internet celebrities on live streaming e-commerce platforms, celebrity endorsements, and social media KOL seeding, in an era where making products is relatively easy, by quickly building brand mind concepts. But in Xiao Yao's view, new brands still have a long way to go and cannot be satisfied with temporary success. Internet celebrities can only accompany the brand for a part of the journey Image source: Taobao Live screenshot Live streaming or social e-commerce has allowed some brands to achieve from 0 to 1 faster, but this channel is fair to all brands, meaning more brands may compete for relatively few live streaming big V resources. "A brand may fade as quickly as it rose. Today you quickly become an internet celebrity, tomorrow someone else will," Xiao Yao said. After crossing the gap from 0 to 1, brands need to go from internet celebrity to long-term popularity, ultimately building consumer awareness, which is a relatively solid moat for the brand. In today's decentralized environment, it's hard for a person or brand to "control" traffic to empower it, because traffic also empowers other brands. At the "tactical" level, such as live streaming and social media seeding, it may bring temporary sales boom. Only by building consumer awareness can brands avoid being a flash in the pan and quickly forgotten or even abandoned by consumers. Even Viya and Li Jiaqi are constantly updating, so after they bring new brands to a certain position, the next stage of brand development needs to find new paths. Each stage has its own tasks and needs. The core that brands ultimately need to build is consumer mind. "Awareness" is the starting point of positioning theory, and the mind is the final "battlefield" for brands. For example, Cai Hongliang, founder of Zihaiguo, once said that in the early days, Zihaiguo focused on brand awareness through extensive media platform marketing. After establishing awareness, it shifted more energy to creating targeted quality content based on different media platform attributes and consumer circles, to build brand reputation and better seize consumer minds. Which category will the next super food brand "eat" out of? The story of brand innovation continues, and new categories are constantly being opened. When "all business is worth redoing" is repeatedly mentioned, everyone focuses on "where the next super brand will be born." In the food and beverage track with huge market potential, which category will give birth to a new super brand? In Xiao Yao's view, the next super brand may be born in the health sector or categories that follow consumer upgrading trends. Genki Forest, which focuses on "0 sugar 0 fat 0 calories," follows the "healthification" trend of consumers increasingly paying attention to health. Under healthification, other categories and brands may emerge, such as sports drinks and functional drinks. Categories that meet consumers' ever-upgrading consumption needs may give birth to the next super brand. Based on the large population base and long history, rich and splendid Chinese culture, Xiao Yao believes there is a great opportunity for the rise of Chinese brands. China also has many categories with "strong mind" resources, such as tea, health preservation, and local cuisine. Chinese-style tea drinks Image source: All-net news Tea is not just the tea leaves, tea powder, or tea dregs we used to brew, but based on the powerful mind resource of "tea," category innovation may promote the birth of more new brands, even a super brand, Xiao Yao said. In markets like coffee and alcohol, there are international giants. Chinese tea drinks also have great potential to give birth to new giant brands. But these concepts ultimately need to be turned into categories. If they are just concepts, anyone can say them. Trends are visible to everyone; the most important thing is how to seize the trend and create a concept in consumer awareness that belongs only to "you" and a factually differentiated product. New categories will eventually subvert old ones. How can big brands "subvert" themselves? New categories will continue to emerge in the market, and the goal and requirement of new categories is to subvert traditional categories to win market access and foothold. Traditional big brands, including century-old stores, must also continuously innovate and upgrade with market and consumer changes to adapt to the needs of consumers in the new era. Giants in corresponding categories like Coca-Cola, Nestlé, Wahaha, and Nongfu Spring launch innovative measures every year, such as updating and iterating their products, or continuously opening new categories and launching new brands. For brands that have achieved initial success, Xiao Yao suggests starting from two directions: one is evolution, the other is differentiation. Evolution means evolving and optimizing on the original track, still using the original brand to continuously iterate and innovate products; differentiation means creating new categories, preferably creating new brands. Some brands under Nongfu Spring Image source: Nongfu Spring Tmall flagship store We see that Nongfu Spring, the domestic drinking water giant, has successively launched tea drink brand "Chapi," sports drink "Scream," carbonated coffee "Tan Bing," and lithium-containing natural mineral water "Lithium Water" in recent years, continuously expanding its brand territory and maintaining brand vitality and strong market competitiveness. Xiao Yao emphasized that for a new category to succeed, it needs to subvert old categories, seizing consumer mind share and market share from old categories. It's hard for an elephant to turn around or dance, but it's easy for an ant or a more agile small animal to turn. This is the difference between large and small enterprises. Large enterprises must have the courage to "subvert themselves," otherwise others will subvert you. Will China give birth to its own world-class brand strategy theory? Currently, new brands in various categories are emerging like bamboo shoots after rain, especially in the food and beverage market closely related to people's lives. Combining Chinese unique tastes and eating habits, new and old brands "take turns on stage." On this basis, will we give birth to our own world-class brand strategy theories similar to positioning and category? "We think it's highly likely," Xiao Yao answered firmly. With the rapid growth of the Chinese market and brands, we have made world-leading practical achievements in areas like brand practice, brand growth path exploration, and consumer communication, not only feeding back and enriching brand strategy theories including positioning but also cultivating many brand growth cases for the birth of local theories. Positioning, known as "the concept that has had the greatest impact on American marketing in history," was born in the 1960s. Advertising madmen and marketing giants emerged then, using positioning theory to guide the rapid growth of a batch of American brands. At the same time, it has deeply influenced the Chinese brand marketing market, guiding more and more Chinese brands to create a marketing path of "winning competition." Some books related to positioning theory Image source: Tmall APP Today's market environment has changed greatly, and positioning theory itself is constantly evolving, from "positioning" to "business war," from "focus" to "category," especially today's category innovation, which has been elevated to the level of corporate strategy in both theory and practice. Brand strategy theory originates from brand innovation practice and in turn guides more brands. Today, China's brand innovation, especially in digital innovation and category innovation, is at the forefront of the world, creating soil for the birth of local theories. With more and more Chinese companies entering the Fortune 500, we may also give birth to world-class brand strategy theories. Xiao Yao shared that there is another great opportunity rarely seen before but now placed before us: Chinese brands are rapidly going global. By tapping into the mind resource of "China" and then amplifying it globally to build global influence and harvest global markets, it is a huge opportunity for Chinese brands. Japanese, American, and German brands have all gone through such a globalization process, and Chinese brands will also have such room for upgrading and growth in the future. Xiao Yao said that our standards and rules will also be introduced and adopted by other markets worldwide, and the birth of world-class marketing theories in the Chinese market has both subjective and objective foundations. The applicability of a theory has two evaluation criteria: first, whether its explanatory power is sufficient; second, whether it can promote successful cases. Category innovation still has strong explanatory power for many business cases today and can help brands continue to grow. At present, category innovation still has strong vitality and is a widely adopted brand strategy theory in the market. The enrichment and improvement of category innovation at the theoretical level, as well as optimization in methodology, are ongoing, which is also positioning theory's self-upgrade and innovation. "Each generation has its talents, each leading the way for hundreds of years," and the same is true for the brand market. But for brands, "their rise is sudden, and their fall is abrupt," especially in the high-frequency demand food market, where requirements for brand and product iteration are higher. Brand ups and downs are more common. Only by adapting to the ever-changing needs of consumers and actively innovating and seeking change can brands ensure long-term prosperity and not be "slapped on the beach" by newer brands or abandoned by consumers. In the fiercely competitive brand war battlefield, choosing the right track before starting can help brands avoid many detours. Direction is more important than method. Different theories have different concepts and methods. "There are no fixed strategies or tactics in war." Whether it's positioning or category innovation, for food and beverage brands to better innovate themselves or open new categories, "the best way is still to strive to become the category representative in consumer minds, which is the most sustainable competitiveness for long-term brand development," Xiao Yao concluded. PS: From August 24-26, 2021, the 2021 (4th) China FMCG Conference hosted by New Distribution will open in Shanghai. Focusing on industry trends + practical cases + growth connection as the core, 3,000 FMCG practitioners will gather at the event. 10 themed forums cover new retail O2O, community group buying, short video live streaming e-commerce, distributor transformation, rise of new consumer brands, interpretation of new alcoholic drinks, distribution B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc., with operators from various segments bringing the latest case interpretations. Confirmed heavyweight guests so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, e-commerce general manager of Gold Hong Ye Paper Group... A grand gathering for FMCG professionals, you must be there! Are you "watching" me?