As Evergrande's first product in its cross-industry FMCG venture, Evergrande Spring Water, within just over a year, went from an initial hot topic to a somewhat bland, half-baked product in the eyes of the media, market, and consumers. A campaign that had sufficient financial firepower, product strength, and promotional firepower ultimately ended up with a worrying loss of 2.37 billion yuan in one year, and has now put itself in an increasingly awkward position. Why? ****With strength in funding, product, and promotion, why did Evergrande Spring Water become a half-baked failure? ****At the outset of operating Evergrande Spring Water, from a commercial perspective, it possessed multiple advantages. In terms of operational investment, financial strength, promotional intensity, and product features, it had strong capabilities and competitiveness. Yet, Evergrande Spring Water became a half-baked failure. 1) Financial advantage – In this regard, few FMCG companies can compare with Evergrande in financial resources. Ranked among the top 15 on China's rich list, with 2014 sales of 111.4 billion yuan and net profit of 18 billion yuan, real estate tycoon Xu Jiayin entered the FMCG sector with substantial investment, starting with billions of yuan. By the end of 2015, cumulative investment in the Evergrande Spring Water project exceeded 5.5 billion yuan. 2) Product advantage – Objectively speaking, Evergrande Spring Water had certain product advantages. The appeal of natural mineral water from Changbai Mountain was quite compelling. For water beverages, source resources are particularly valuable, typically located in naturally advantageous areas such as snow mountains, alpine lakes, or natural lake waters. In people's minds, good water comes from good places, and a good source implies premium value. For example, Evian occupies the Alps, and Nongfu Spring in China capitalizes on the Thousand Island Lake concept. Evergrande's promotion of the natural high-quality resource of Changbai Mountain was a significant highlight, and the name "Spring Water" was also well-chosen. This positioning even put pressure on domestic water beverage giant Nongfu Spring, which originally focused on Thousand Island Lake. Nongfu Spring shifted its main promotional message to Changbai Mountain, launching comprehensive campaigns on water source, process, and design. This indicates that Evergrande Spring Water's positioning was strong; if Evergrande had secured and held onto this concept, it would have had the strength to compete head-on, making the situation dangerous. As a result, we saw Nongfu Spring invest heavily, and now Nongfu Spring has essentially captured the advantageous concept of Changbai Mountain. A pity for Evergrande. 3) Promotional advantage – In product marketing, promotion is a key component. The greater the promotional intensity, the higher the brand awareness, and the more people who know about it, attracting consumer attention and interest, which creates potential for purchases. Of course, persuasion is another matter, but with traffic, there is possibility. If persuasion is also well-executed, and the product has distinctive features, opening up the market becomes inevitable. For a project operation, Evergrande Spring Water had multiple advantages, but the result was a half-baked failure. Evergrande's 2014 annual report showed cumulative investment of 5.54 billion yuan in Evergrande Spring Water by the end of 2014, with a loss of 2.37 billion yuan. The performance was exceptionally dismal. Why? Where exactly did Evergrande Spring Water fail? Why did it become a half-baked failure? Why did such strong strength lead to a half-baked result? Below is an analysis of the reasons that led to Evergrande Spring Water's failure. 1. Wrong mindset in entering a new field – intellectual superiority led to higher tuition fees All companies entering a new field will inevitably pay some tuition, as crossing from an original industry into a new one requires accumulation of operational experience and resources. If the mindset is correct, the tuition will be lower; if wrong, higher. Many industry giants, when entering a new field, often pay high tuition due to wrong mindsets. Their past successes give them a sense of intellectual superiority, believing that companies in the new industry operate at a mediocre level and that they can easily defeat them. Moreover, when making products, they often set their sights on the high-end of that field, which typically requires accumulation and strength to achieve. Consequently, these companies often fail, as seen with Guizhou Bailing Pharmaceutical entering beverages with a high-end collagen drink called Aitou, priced at 10.5 yuan, far above ordinary domestic drinks. Similarly, a domestic mobile phone brand, upon entering, aimed to benchmark against Apple, claiming to be the first in something, but the gap was too large, leading to poor sales and eventual price cuts. Guizhou Bailing's Aitou project was abandoned after investing several hundred million yuan. There are many similar examples. When entering a new field, one must adopt a reverent attitude, rationally assess one's own strength, and start from a relatively easier segment rather than attempting the most difficult part from the outset. Without sufficient strength or resources, choosing the hardest segment is a path to self-destruction. 2. Pricing error – lack of understanding of China's water beverage market, pricing too high This was the most critical mistake in Evergrande Spring Water's operation. Objectively, on November 9, 2013, at Evergrande's AFC Champions League victory celebration, when China won the title for the first time, the Evergrande Spring Water logo was unveiled, capturing widespread attention. Subsequent advertising also attracted enough eyeballs. However, a problem was exposed from the start, becoming a fatal weakness: the pricing was too high. Domestic beverage prices were previously within 3 yuan, even within 2.5 yuan. Coca-Cola and Pepsi at 2.5 yuan were considered not low. After years, prices only crossed the 3-yuan and 4-yuan lines, and anything above 5 yuan sold poorly or very poorly. In the public's mind, water is far less valuable than beverages, which is why water prices differ greatly from beverage prices. The two best-selling products in the market are Master Kong mineral water at around 1 yuan per bottle, and Nongfu Spring, relatively higher, at 1.5 yuan per bottle. Evergrande Spring Water, however, was priced at 3.8 yuan per bottle, more than double similar products. Perhaps it aimed to benchmark against Kunlun Mountain, which is positioned at the high end domestically, but Kunlun Mountain's sales are mediocre, and other high-end water brands in China have limited sales. Even with massive advertising bombardment, Evergrande could not expand this market. Evergrande's cumulative investment of 5.5 billion yuan is almost equivalent to the total sales of all high-end water brands in the industry. Kunlun Mountain, operating for years (since 2009), has not reached that figure. As a result, Evergrande Spring Water's 2014 sales were only 1 billion yuan. In the public's mind, water and beverages are two completely different value drinks. 3.8 yuan is already high for beverages, and even higher for water. In marketing, there is a saying: "Pricing determines the world." If pricing is not set properly, it can put a company in an awkward position. Objectively, after several attempts, Evergrande found its positioning: "Evergrande Spring Water – 30 million years of deep volcanic mineral water from the primitive forest of Changbai Mountain, one of the world's three golden water sources." This appeal was quite attractive, and if the price were appropriate, it would have had a strong impact on the market. In the summer of 2014, the peak season for beverage sales, Nongfu Spring took Evergrande Spring Water seriously and stocked up heavily at retail points. But by the end of summer, Nongfu Spring had no need to worry, as Evergrande had already put itself in an awkward position. 3. Insufficient promotional messaging – changing too frequently Promotional messaging must solve the "why should consumers buy" reason, persuading and attracting consumers. During the campaign, it is best to persist for a period to embed the purchase reason deeply into consumers' minds, forming a unique product personality. China's business god of war, Shi Yuzhu, once said, "Advertising fears change the most." It is an investment in consumers' brains. If your slogan changes frequently, changing every year or two, you lose all previous accumulation, and the earlier investment is wasted. So, try not to change the slogan. In Evergrande Spring Water's advertisements, we saw the messaging constantly changing. If the early empty slogans like "Evergrande Spring Water" were limited in appeal and needed change, it was understandable. But when Evergrande gradually found the appeal of "deep volcanic mineral water from Changbai Mountain, one of the world's three golden water sources," it was already quite attractive. However, later the messaging shifted to using it as a necessity for cooking, like using Evergrande Spring Water for all cooking (isn't that too difficult? How much extra cost would that add to a meal?), then "One source, supply the world," and now "One bottle, one code," moving further away from the attractive appeal. Nongfu Spring's two slogans, "Nongfu Spring is a bit sweet" and "We don't produce water, we are just nature's porters," have been used for many years, firmly building Nongfu Spring's brand image in consumers' minds, ultimately driving its sales. 4. Insufficient operational rhythm – too hasty Behind the frequent changes in Evergrande Spring Water's advertising messages was the team's excessive haste, possibly driven by the ambitious targets of "100 billion sales in 2014, 300 billion in 2016," leading to a desire for rapid volume growth. Hence, the ads changed frequently, hoping for a quick sales boost. But any brand has a growth process, and Evergrande's brand needed to transition from real estate to water beverages in consumers' minds, requiring an acceptance period. Once that transition is made, growth accelerates. Unfortunately, we saw Evergrande's haste. Perhaps Evergrande is the beverage with the highest frequency of advertising content and message changes in all of FMCG, resulting in growing confusion about what Evergrande is and why to buy it. Now, Nongfu Spring has increasingly occupied the Changbai Mountain concept resource, from the serious spirit in sourcing water to strict process requirements and humanized design, showing consumers how unique Nongfu Spring is. 5. Team insufficiency – higher exploration costs in the industry When Evergrande began operating Evergrande Spring Water, the core team came from Evergrande Real Estate. Real estate and FMCG have similarities in operation, and Evergrande's past strength in media promotion could still be leveraged. However, there are differences in channel resources and operational details. Later, Evergrande recognized this and began recruiting FMCG professionals, gradually reducing the original real estate team. In operating its football business, Evergrande was very successful, knowing to bring in professional football talents to do professional work. With financial investment, it brought in top football professionals, ultimately achieving a record of four Chinese Super League titles and one AFC Champions League title. But Evergrande did not do the same for Spring Water, resulting in higher exploration costs. Sometimes, a company's past experience and achievements become baggage in a new field! Objectively, Evergrande had pushed the new project to the brink of ignition: extensive promotional campaigns (whether the launch at the AFC Champions League celebration, attracting massive attention, or subsequent large-scale media promotion); a product and appeal with strong selling points (deep mineral water from Changbai Mountain, one of the world's three golden water sources) – all conditions for igniting the market were present. But it stumbled on price, which is a great pity. The subsequent series of changing promotional messages not only failed to persuade consumers but also confused the public. In market operations, the initial launch is crucial. If the first launch fails to build the market, the difficulty of a second launch increases. Evergrande Spring Water has now become a "one bottle, one code" appeal, making the operation of this project, which had many advantages, increasingly difficult! All this deserves deep reflection from marketers! 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