I am Shi Yonggang from Tsingtao Brewery. Today, I'd like to talk about digitalization. Digitalization is currently at the forefront, and precisely because it's trendy, many people keep mentioning it. In fact, the concept of digitalization is very broad and extensive. ** △Shi Yonggang, Deputy General Manager of Tsingtao Brewery Innovation Business Division and E-commerce Director** What is digitalization? Currently, many companies invest millions or at least hundreds of thousands into digitalization, but most of them haven't even figured out "what digitalization is" during the process! The concept of enterprise digitalization is vast, encompassing supply chain, manufacturing, marketing, consumers, and many other levels. With so many aspects, what should brands focus on? Frankly, I believe that at this stage, digitalization still needs to let the bullet fly a little longer; there's no need to rush into it. Digitalization is different from the earlier informatization. Some say digitalization is a top-level project. When the top leader gets impulsive, they might install a big screen in their office and start digitalization. In fact, digitalization is entirely strategy-driven and cannot be achieved overnight. If you haven't thought it through initially, I suggest starting with a part, just like early informatization, beginning with the areas that can most improve business efficiency. As the strategy and direction become clearer, companies can continuously revise their digitalization plans. Today, from a marketing perspective, I'd like to share one aspect of the digitalization system—marketing digitalization. I believe marketing digitalization includes many parts, such as channel digitalization, consumer digitalization, brand digitalization, and so on. If you can't grasp all these yet, I suggest starting with channel digitalization. Goals for Enterprise Marketing Digital Transformation At the annual New Distribution conference, we've followed from B2B to O2O, from O2O to home delivery, and from home delivery to community group buying. The theme changes every year, but in my view, all these are supplements to deep distribution. On China's 9.6 million square kilometers of land, no model has yet been able to overturn the deep distribution model. Therefore, although there are many new models, don't look for shortcuts in the current market competition. Don't think digitalization can lead a company to success. Digitalization is an aid; don't believe that doing digitalization means survival, and not doing it means death. I think there's no rush; let the bullet fly a little longer. Recently, we communicated with several major brands. They invested tens of millions in digitalization, but in the end, nothing came of it; many systems collapsed or were shelved. Don't think that not doing digitalization is low-class when it's trendy; these are just concepts. Tsingtao Brewery was founded in 1903, with a century-long history. Currently, our market share exceeds 23%, and we are also the most exported Chinese beer brand. As Tsingtao Brewery or its e-commerce department, we tend to be pragmatic, pursuing tangible results with relatively high ROI. For things that are intangible, castles in the air, or highly speculative, we usually let the bullet fly first. For example, we might do three months of research, then discuss internally for two months, and proceed slowly. Of course, everything behind digitalization must be based on authenticity. If there's no authenticity, then don't bother with digitalization. Therefore, digitalization can start with data online, then achieve business online, and the ultimate goal is to integrate the organization into the business, making it agile and efficient. During digitalization, if a certain link isn't clear, you can set it aside; there's no need to put everything online at once. For example, the simplest is to put inventory data online. Some might find this amusing, thinking it's too simple. But in reality, if you truly do well in digitizing inventory, that's already quite good. Tsingtao Brewery has also been on the path of digital transformation, but after all this time, we haven't fully achieved channel digitalization. It's not that we can't promote it well; it's mainly because the project is too massive and needs to be done gradually. During this period, we've learned from many companies, such as Haitian, Uni-President, and Zhengxin Chicken Steak. These companies have indeed done well, with strong IT. Of course, their bosses know what they're doing and what they want, and their IT departments can persist. But for some companies, it might be tiring. If you set up a dedicated IT department, develop systems, and then there's no follow-up, IT costs are high, which is troublesome. If you don't keep an IT team and hire a third party, they might provide a standard process and software. If you don't use it, there are many pitfalls. We are also continuously researching and learning. I've found that compared to informatization, digitalization is about doing the right things, while informatization is about using processes and systems to make employees do things right. These two dimensions are completely different. Informatization is the E-ization of business processes, while digitalization starts from strategy—marketing strategy, corporate strategy—what do you really want? Informatization is pushed from the bottom up, while digitalization is pushed from the top down. Many brand owners might be thinking about having users online, transparent and visible, with personalized experiences, and how to monetize them. But if you haven't even done well in e-commerce, there's no need to think that far ahead. As a century-old brand, Tsingtao Brewery is also a deep distribution company. Even though we've achieved TOP1 in e-commerce, I believe our e-commerce success doesn't rely on any digitalization data. Even though we're TOP1, it only accounts for 3% of Tsingtao's total volume. With such a small business, don't think digitalization can overturn anything; it can't overturn anything. In terms of digitalization, Tsingtao's biggest pain point is still channel digitalization, because offline channels carry about 97% of Tsingtao's deep distribution business. Therefore, I believe if you can figure out channel digitalization, understand it thoroughly, and implement it solidly, you'll be a leader and already very advanced. Consumer-Centric Reshaping the New Marketing System Many people talk about audience profiling, but I also think we shouldn't be overly superstitious about it. Although we can get analysis results for Tsingtao's online audience profile through platforms, it cannot determine the company's development direction. Online audience profiles cannot represent the entire consumer group. Consumers drinking at street-side stalls are hard to reflect in online profiles. Almost everyone talks about "delicate moms" in online audience profiles. Whether it's Tsingtao, Budweiser, Mengniu, or Yili, the first audience is always delicate moms, because in this society, men simply don't have money. The concept of audience profiling is subjective. It's very possible that our consumers are those people eating skewers with bare arms. Of course, this doesn't mean audience profiling is useless. Tsingtao still focuses on the mainstream group, but for the segments identified by internet e-commerce, we will create a new product to meet their needs. For example, Tsingtao launched Tsingtao White Beer two years ago, and it has become the domestic TOP1 in the white beer segment. Its audience profile is new and senior white-collar workers in first- to third-tier cities. Around this group, we will build a consumer-centric new marketing system. Find, connect, operate, and mine consumer value. Focus on the specific group identified and make it a hit. For instance, Pinduoduo and Kuaishou can cover users in fourth- to sixth-tier cities. For these users, we have also developed some products with relatively high cost-performance. After locking in consumers, place the benchmark new product on e-commerce platforms, then look at ROI and conversion rates. In the past, if you put up a bus stop ad or elevator media, it was hard to know the conversion rate; there was no tangible output. Once you understand the product, consumers, and corresponding channels, you'll gradually form a set of brand upgrade strategies. Tsingtao also conducts online themed activities and scenario marketing, colliding the company's fans with the fans of new product endorsers, filtering them out, finding resonance, and then guiding them to our official flagship store for transactions. In these activities, our core logic is to capture the audience, use the audience, and monetize the audience. This is different from traditional advertising. Traditional ads were done and forgotten, making it hard to refine the audience and harvest, and the effectiveness of ad placement was difficult to measure. But now, after each round of activities, we "harvest" the fans from that round, bringing them back, which is also a process of data accumulation. In conclusion: In the e-commerce sector, we use 3% of the group's sales data for transformation and practice. Tsingtao has also become a leader in the industry, and it's ahead, achieving TOP1. The reason we can claim success is fundamentally based on business, ROI, and the brand's monetization capability. Regarding digitalization, you must be clear about your goals and business logic; otherwise, input and output won't be proportional. Digitalization is not that glamorous, nor can doing it well lead to perfect harvesting. Sometimes, doing digitalization might even put you in a difficult position. Therefore, I believe for FMCG companies, doing digitalization based on channels and business, step by step, is a long-term accumulation process, not a short-term project. PS: Mr. Shi Yonggang is the Deputy General Manager of Tsingtao Brewery Innovation Business Division and E-commerce Director. This article is from Mr. Shi Yonggang's keynote speech at the 2021 (4th) China FMCG Conference, organized and published with his review and authorization. Click** Read Original** to see more highlights from the 2021 (4th) China FMCG Conference... Are you "watching" me?