△ Add friend, please note "inspection" to register ◎ Text | Liu Chunxiong 1 Although not everyone agrees, deep distribution as the best Chinese marketing practice in the consumer goods industry, especially the FMCG industry, over the past fifteen years is a fact. The essence of deep distribution, according to Shi Wei, one of its proponents, is "staying close to customers." However, with the technical means at the time, brand owners could not achieve B2C, so staying close to customers became "staying close to terminals," because terminals are close to customers. The above logic seems natural to us. So, we must ask: First, why is "staying close to terminals" effective? Even for companies without brand driving force, it is still effective, with low barriers and universality; Second, is "staying close to terminals" effective in Western countries? Third, why does deep distribution manifest as a "human wave tactic"? Is it really because labor is cheap? Understanding the logic behind deep distribution becoming the best Chinese marketing practice is of great significance for finding its replacement and discovering new best Chinese marketing practices. At the beginning of 2018, Mr. Shi Wei proposed the marketing feature of the Internet era as "trinity" (cognition, transaction, relationship) in his book "Connection." This concept inspired me greatly. Isn't deep distribution just utilizing the "trinity" of Chinese terminals? 2 Terminal "Trinity" In traditional marketing, there are two independent bridges between supply and demand: one is the mass cognition chain; the other is the product (service) transaction chain. The mass cognition chain manifests as mass communication, resulting in brand cognition and product cognition, and is the function of the marketing (brand) department; the product (service) transaction chain manifests as channels and distribution, and is the function of the sales department. In traditional marketing, there are concepts of brand-driven and channel-driven; brand-driven is cognition-driven, and channel-driven is transaction-driven. In Western countries, the function of channels is mainly the transaction (service) chain, while in China, channels simultaneously have cognition and transaction functions. Channels are not only the forward movement of products but also the transmission of relationships. Especially the "acquaintance" relationship between terminal store owners and residents within the business circle. In other words, Chinese channels simultaneously possess the three functions of cognition, transaction, and relationship, and they are trinity. Trinity, where the three major marketing functions are integrated into one point or platform, is naturally the most efficient marketing. Because in the Western marketing system, the cognition chain and transaction chain are basically separated; without the cognition chain, the transaction chain cannot survive independently. Chinese channels have the three functions of cognition, transaction, and relationship, making them an independent marketing unit. Even with only channel driving and lacking brand driving, it can still work. According to Mr. Shi Wei's "trinity" theory, looking back at deep distribution, it is precisely deep distribution that achieved the "trinity" of the traditional marketing era, and "trinity" is the most efficient marketing system. 3 The "Trinity" of Deep Distribution Although the essence of deep distribution is "staying close to customers," its ultimate manifestation is: win over the store owner, and you win everything. Therefore, "customer relations" has always been an unavoidable hurdle in deep distribution. Normalized marketing starts with cognition, which is why brand value is important. So, the normal order of trinity is: cognition → transaction → relationship. First cognition, then transaction, and the process of cognition and transaction deepens the relationship. In the terminals of deep distribution, the order of trinity is: relationship → cognition → transaction. First relationship, then cognition, and finally transaction; cognition and transaction strengthen the relationship. Chinese terminals (stores) as community business units have a living radius almost overlapping with the business radius. In daily life, they are "acquaintances"; in business, they are "regular customers." Even without business, they are acquaintances. Acquaintances are established community relationships. This relationship may exist before business. Transaction is the result of cognition. Because there is a relationship, the cognition formed through relationship-based recommendation has trust endorsement, different from cognition formed through communication. Cognition formed through information dissemination requires repeated reinforcement. This is why advertisements need to be played repeatedly. Cognition formed through strong relationships with acquaintances only needs to happen once, just one sentence. This is the reason why "winning over the boss wins everything." 4 Single-Store Breakthrough Constructs the "Minimum Marketing Unit" Deep distribution as a stage-specific best Chinese marketing practice has the characteristics of low barriers and universality, unlike CCTV which has high barriers, precisely because of the terminal's "trinity." Because of the terminal's trinity, even without cognition formed through communication, as long as you win over one boss, you can achieve transaction (sales). This forms a phenomenon of deep distribution: single-store breakthrough is possible. Single-store breakthrough makes the marketing threshold extremely low and universal. One by one, single-store breakthroughs form lines, such as winning over a street. Line by line breakthroughs form surfaces, such as a district or a base market. Surface by surface breakthroughs form volumes, such as contiguous base areas; three to five contiguous base areas can make you an industry leader. Point → line → surface → volume, this is the breakthrough path of early deep distribution. What is the value of the above marketing logic? We propose a concept of "minimum marketing unit" to explain this phenomenon. In Western countries, cognition and transaction are two different chains. The mass cognition chain is a huge system, and the product transaction chain is also a huge system. Starting either system means huge resource investment, so starting both systems simultaneously is very costly. This is also why many Chinese marketers appreciate the Western marketing system but do not practice it. In the Chinese business environment, the terminal's "trinity" means that each terminal is an independent marketing system, which I call the "minimum marketing unit." Therefore, deep distribution personnel are more like starters of minimum marketing units than product transaction personnel. They need to form cognition with terminal owners and also form transactions. Of course, the premise is to establish a relationship (customer relations) with the owner. Each terminal owner is a "minimum marketing unit," so the investment to start a "minimum marketing unit" is very limited, and it is premised on establishing customer relations (relationships). Thus, it is not surprising that deep distribution has become a low-barrier, universal marketing model. Through the minimum marketing unit, single-store breakthroughs are achieved, then forming point-line-surface-volume. When a certain scale is reached, it has the ability to "use channels to counter brands." Therefore, we see that in China's dual-wheel marketing, channel driving is indispensable; brand driving can be temporarily abandoned when resources are scarce. Even when brand driving is strong, channel driving is still needed. A multinational company once faced this problem. Around 2000, sales continued to decline. Each round of sales decline was attributed to brand problems. As a result, brand investment increased, but sales were not saved. Later, while doing well on the brand, the company returned to deep distribution, and sales quickly recovered. Therefore, deep distribution is not only a path choice for local enterprises but also for multinational companies. It is not only the best choice for the rise of small and medium enterprises but also strongly promoted by multinational companies that do well in China, such as Coca-Cola, P&G, and Taiwanese companies like Master Kong and Uni-President. Conversely, some well-known international brands that entered China, relying on their strong brands, have mostly disappeared in China precisely because they did not understand the mystery of deep distribution. 5 High Intervention in Chinese Consumption Ten years ago, McKinsey conducted a survey in China: 65% of respondents said they usually leave the store carrying a brand product that was not originally planned. Additionally, about the same number of respondents said they almost always buy promotional items, even if these products are not their preferred brands. McKinsey's survey also showed that on average, only one in three consumers who want to buy a famous brand actually uses that brand. Regarding this survey conclusion, I published an article in 2008 in "Sales and Market" magazine titled "Consumers Always Change Their Minds at the Last Moment." This survey revealed two characteristics of Chinese consumers: first, high intervention in transactions; second, high inducement in consumption, i.e., policy-induced inducement. Cognitive intervention before the transaction makes it easy for consumers to change their consumption intentions. In "Chinese-style Marketing," I and Mr. Jin Huanmin called this phenomenon "interactive marketing," which is the "first core element" affecting Chinese-style marketing. Interactive marketing means both buyers and sellers are marketers, each being the other's marketing target. For example, bargaining during the transaction process. The interaction process between the two parties is not uncommon in "one-on-one" negotiations, but in the purchase process of consumer goods, it is a distinct Chinese characteristic. The interaction process is actually a process of intervening with consumers, such as shopping guides and tasting, which in marketing is called terminal interception. The interaction process is the process of transmitting cognition to consumers; because of information asymmetry, consumers are naturally at a disadvantage in interaction. The high inducement of consumption is also like this. There are few other countries in the world with as many promotional activities as China, with a wide variety. Some describe it as "promotions every day, changing every week." 6 "Relationship" in Deep Distribution If the terminal interaction in KA stores is interaction between strangers, then the interaction in distribution terminals is interaction between acquaintances, based on customer relations and relationships. Some say that the reason China needs deep distribution is the fragmentation of Chinese channels. If that were true, the key to deep distribution would be distribution, which is the sinking of goods, with less dependence on people. In fact, the key to deep distribution is not the forward movement of goods but the forward movement of relationships. The core is relationship. Therefore, deep distribution forms not only a product chain, not only a transaction chain, but more importantly a human chain, because the carrier of relationship is people. No matter how deep distribution advances, it cannot avoid the word "customer relations," which is relationship. Deep distribution also manifests as a human wave tactic because in the inefficient process of deep distribution, only relationships established by people are strong relationships. Only cognition formed by relying on people is strong cognition. This is completely different from Western pure communication cognition and the forward movement of goods formed by third-party channels. The phenomenon of inventory pressure formed in the later stage of deep distribution damages deep distribution. A senior executive said: "Customer relations are conducive to inventory pressure, but inventory pressure damages customer relations." My comment on this: If customer relations are only for inventory pressure, it is better not to do it. The customer relations of deep distribution can only be effective if the terminal store owner transmits them to consumers, turning strong relationships into strong cognition. Because the acquaintance relationship between store owners and people within the business circle is innate and easily converted into cognition and transaction, deep distribution for small and medium enterprises lacking brand cognition not only has low barriers but also low cognition and transaction costs, so marketing efficiency is naturally higher. 7 The "Relationship" of Agrarian Civilization In Western traditional marketing logic, there are cognition chains and transaction chains, but no relationship chain. Even in the e-commerce field, the interaction between buyers and sellers is not as frequent as in Chinese e-commerce. The "trinity" of Chinese store owners can simultaneously solve cognition and transaction problems precisely because of natural relationships, because there is relationship-based cognition transmission. So, is the relationship issue in business a Chinese characteristic? I think it is. And this characteristic is related to history and culture; we need to discover traces of relationship from history and culture. Before modern civilization (industrial civilization), there were four typical forms of civilization in human history: agrarian civilization, commercial civilization, nomadic civilization, and natural civilization. Before modern times, China was a representative of agrarian civilization. Chinese civilization originated in the Yellow River basin, which happens to be located between the 400-800 mm isohyets, suitable for dryland crops. After the Song Dynasty, the 800 mm isohyet moved south, and Chinese civilization gradually developed southward. The specific geographical environment suitable for agriculture produced relatively developed agriculture at that time, along with corresponding agricultural production methods and agricultural economy, so Chinese civilization manifested as agricultural civilization. The characteristics of agrarian civilization: first, low migration. Unless there is turmoil or natural disaster, people stay in one place for a long time, which is conducive to interaction and stable relationships; second, mutual aid in farming, such as the "exchange of labor" during busy farming seasons that still exists today; third, community autonomy, manifested as gentry autonomy; fifth, the "ren" (benevolence) of Confucian culture, meaning "two people," emphasizing the norms of interpersonal relationships. For example, Chinese people handle interpersonal relationships with reason, emotion, and law. European civilization is commercial civilization. European civilization originated in the Mediterranean, which was fragmented into city-states, unsuitable for agriculture but suitable for trade, and developed commercial civilization through maritime convenience. The social ecology of city-states emphasizes the normative relationship between people and society, manifested as contractual social relations. At the same time, commercial civilization has high migration characteristics, different from the long-term coexistence of agrarian civilization. For example, Americans move an average of six times in their lifetime, with frequent migration. North of the 400 mm isohyet, the civilization form has always been grassland civilization, such as the Huns, Turks, and Mongols who shook Europe and Asia, all belonging to grassland civilization. North of the 400 mm isohyet, rainfall is insufficient for agricultural production, and grassland resources do not provide stable and sustainable security, so migration is the normal way of life in grassland civilization. Between people, except among family members, there is a lack of stable social relationships. In areas near the equator, food is easy to obtain, survival is easy, and tropical areas are not suitable for high-intensity labor because physical labor consumes too much energy. It is a lifestyle of following nature and being well-fed, with low migration and stable relationships among social members, but commerce is not developed. From the above review of civilization origins, it can be seen that closer community relationships are indeed a characteristic of Chinese agrarian civilization, and this characteristic is also reflected in commerce. 8 Preferred Brand and Recommended Brand In low-intervention Western countries and Chinese metropolises, transactions follow the "preferred brand" principle, meaning that before the transaction, consumers have already formed established cognition through mass communication. Although decisions may change at the "last meter" due to various factors, they still follow the "brand ladder" principle, meaning the brand ranking in consumers' minds determines purchase behavior. Chinese consumer behavior follows both the preferred brand principle and possibly the "recommended brand" principle. What is a recommended brand? It is a brand that the store owner is willing to recommend. The store owner is willing to recommend a brand, on one hand, because of the maximization of the owner's interests; on the other hand, because of the owner's strong cognition. The owner's strong cognition stems from the relationship between the manufacturer's marketing personnel and the owner and the cognition (information) transmitted. The success of recommended brands is due to: first, the strong relationship between the owner and consumers, which constitutes trust endorsement. Sometimes, a single sentence from the owner completes the recommendation; second, because the owner and consumers are in the same community, there is no risk-avoidance psychology. Therefore, two different marketing logics appear in China. One is the preferred brand logic of low intervention in metropolises; the other is the recommended brand logic of high intervention in distribution channels. The difference between preferred brand and recommended brand lies in the difference in the relationship between the store owner and consumers. 9 What has been said above seems to complicate simple issues, but it is important for clarifying the characteristics of Chinese business. Below is a brief summary. Deep distribution became the best Chinese marketing practice because stores became the "minimum marketing unit," unlike the West where the entire society is a marketing unit. Therefore, the miniaturization of marketing units lowered the marketing threshold, giving deep distribution universality. Stores became the "minimum marketing unit" because they completed the two major marketing functions: cognition and transaction. The realization of cognition and transaction is due to the relationship between stores and community residents (consumers). Because there is a relationship, cognition and transaction are completed through it, which is the most primitive "trinity." The strong relationship between store owners and community residents is determined by the low migration and high stability of Chinese agrarian civilization. Because of strong relationships and trust endorsement, coupled with Chinese consumers' acceptance of high intervention and high inducement in transactions, it is natural for store owners to use their strong relationships with consumers to form cognition before transactions. Source: Teacher Liu's Forum (ID: liuchunxiong1964) The 10th B-end E-commerce Inspection -- "From Product to Scene" Activity time: December 10-13 Activity locations: Wuhu, Nanjing, Changsha Activity process:

Morning of December 10: Visit Three Squirrels headquarters + feeding store

Afternoon of December 10: Visit Nanjing Squirrel small store

Evening of December 10: Visit Nanjing Master Gao beer workshop store

All day December 11: Nanjing-Changsha, or free arrangement

Morning of December 12: Community group buying exchange salon

Afternoon of December 12: Kaola Select Heroes League launch event

Evening of December 12 to early morning of December 13: Field visit to Kaola Select logistics center——This time period is the peak of warehouse sorting, allowing direct observation and learning of the backend operation process of community group buying e-commerce Distributor friends who are interested are welcome to join us to understand and inspect on-site : Organization form 1. Big-name exchange salon************2. Company visit

  1. On-site explanation
  2. One-on-one exchange************5. Actual market case visit Friends who want to participate If you are interested in the content of a certain day, you can register separately Long press this QR code or click "Read original text" to register in one click! Add friend, please note the purpose -END-