After more than three decades of reform and opening-up, China's market economy started from ruins and stumbled along the way. Today, it has become the world's second-largest economy, covering in less than forty years what took other countries centuries. The overly rapid development inevitably brought about an unregulated and immature market environment, and it is precisely this environment that gave birth to a uniquely Chinese marketing model. Although countless multinational corporations once scoffed at it, the fact is that they either adapt to this marketing model or retreat to a corner, becoming niche brands, or even fail. In this unregulated and immature market, countless pioneers, through trial and error, created a marketing approach that is equally unregulated and immature yet remarkably effective—what we call Chinese-style marketing.

With the impact of globalization, the severe overextension of all economic activities in China over the past three decades has finally led to the full onslaught of the 'new normal' dilemma, which is fierce and catches people off guard: consumption, exports, and investment—the three drivers—all face problems; GDP growth rate fell below 7% for the first time; latecomer advantages are lost, and the demographic dividend is gone; exchange rates and stock indices both decline; traditional industries contribute less to GDP growth. The crisis in traditional industries is evident: demographic断层, slowing demand release, declining consumer purchasing power, increased market saturation, and the reckless impact of new business models. Inevitably, almost all traditional industries experience declining sales and profits. Perhaps this set of data gives you a more direct sense of the severity of the crisis: in 2015, Wanda Plaza closed 35 stores; after closing 519 stores in 2014, Li-Ning closed another 1,200 stores in the first half of 2015; in 2014, Bosideng closed 6,000 stores.

In summary, Chinese-style marketing exhibits the following characteristics: rock-bottom prices, quality at the minimum; emphasis on channel construction over brand building; competition-driven rather than consumer-driven; follow and imitate, win by scale. Low prices, homogenization, barbaric guidance, and terminal interception—these tactics suddenly stopped working. Let's see how traditional Chinese marketing is retreating step by step:

The most formidable weapon of traditional marketing is the price war Competing companies, in order to grab market share, do not hesitate to undermine their own profitability. If you lower prices, I lower mine; there is no lowest price, only lower. But consumers attracted by low prices undoubtedly lack loyalty. Consumers' pursuit of good quality and low price has no limit. Although low prices can bring higher market share, obviously your competitors think the same. Thus, consumers in the price depression continuously flow to new price depressions, and the depression deepens.

In China, there is a lack of mutual trust and tacit understanding among merchants, and competition completely lacks a bottom line: In 2003, the instant noodle industry agreed to raise prices, but Master Kong held back, leaving others caught off guard; in 2007, the price increase list published by the Instant Noodle Association did not include Uni-President; in 2013, Master Kong took the lead in the ham sausage war, and Uni-President joined, resulting in mutual destruction. Such examples are numerous.

Today, with the support of financial leverage, price wars have become even more lacking in bottom lines. In 2015, the total debt of the Chinese government, enterprises, and residents reached 2.5 times the GDP. High leverage makes it difficult for traditional profit models to support enterprise development, and the urgency to pursue market share is increasing. Subsidies and burning money are the most effective means to increase market share in the short term, but the result is destined to be 'one general's success over thousands of bones,' turning the market into a wasteland.

The second winning formula of traditional marketing is the pyramid-shaped distribution network From manufacturer—regional distributor—secondary wholesaler—retailer—consumer, this was once the main road for products to reach every household. Facing a highly fragmented Chinese market, the multi-level distribution system had its significance in specific periods. In the early stage of the market economy, information asymmetry and poor channel access were the main reasons for the birth of the multi-level distribution system, but undoubtedly, the more levels, the less profit each level can allocate.

For a long time, manufacturers have objectively lacked control over terminals. The direct problem brought by the multi-level distribution system is that between the manufacturer and the terminal, there are multiple layers of networks. On one hand, manufacturers lack control over terminals and have to rely on regional distributors, leading to dependence on distributors; on the other hand, distributors, relying on their control over terminals, make various demands on manufacturers, causing manufacturers to distrust distributors. Manufacturers and distributors are both partners and enemies. Due to too many levels, manufacturers lack first-hand information about consumers, and often misread consumer preferences due to erroneous feedback from distributors.

The pyramid-shaped multi-level distribution system further intensifies price wars, leading to price wars not only among manufacturers but also among distributors at every level. The expansion of the battlefield makes price wars more intense and bloody. Each level of distributor has its own profit bottom line, and ultimately, it is the manufacturer who pays for the price war. Due to differences in promotional policies across regions, cross-regional selling (channel conflict) occurs frequently, increasing manufacturers' management costs.

The third magic weapon of traditional marketing is advertising Once upon a time, when the ad sounded, gold poured in, leading companies to spend heavily to brainwash consumers repeatedly. A hundred years ago, the legendary advertising figure Wanamaker said: "I know half of my advertising budget is wasted, but I don't know which half." In today's highly fragmented information age, wasting only half of the advertising budget has become a luxury. Let's look at what happened to the communication methods that used to work every time: municipal TV station advertising rates are basically zero; the average open rate for email ads is 0.2%; the consultation rate for newspaper ads is less than 0.005%; the actual readership of online soft articles is often only a hundred. Promises don't work, celebrities don't work, comparisons don't work... Advertising, which once had immediate results, is now increasingly like a bottomless pit; billions are thrown in, but not a sound is heard. Manufacturers suddenly find that they can no longer locate consumers...

Celebrities are fragmenting, and mass idols are disappearing. In the era when celebrity endorsements had immediate effects, you might not like a celebrity, but it was hard not to know one. Today, not only do audiences of different ages have their favorite celebrities, but even within the same age and region, idols are clearly distinct. You can't recommend Bigbang to Pu Shu's fans, and vice versa; you can't recommend Kris Wu to Jiang Wen's fans, and vice versa; he doesn't know who Cui Jian is, just as you don't know who TFBOYS are. Worse, even if you find the right audience, people only know that "Xie Na endorses weight-loss tea," but they don't remember "the weight-loss tea endorsed by Xie Na."

Ideas are fragmenting, and consensus is disappearing. In this era where everyone can become an opinion leader and express their views, consumption has become a very personal act. The consensus on aesthetics is gone; the only consensus is that I am different from them. The consensus on health is gone; some pursue all-natural, others pursue high-tech. The consensus on price is gone; some seek cheap, others seek expensive. Any single idea can only cover a portion of the population.

Media is fragmenting, and authoritative media is disappearing. Once, in the era when TVs had only four channels, and when each city had only two or three newspapers, countless brands and even categories became famous overnight through advertising. "Yanwu" cassette recorders and "Laifuling" pesticides are common memories for those born before the 80s. You may hate Nao Bai Jin, but you cannot ignore it; it demonstrates the weight of authoritative media. Today, TV media has split into nearly a hundred struggling channels; newspapers are not available in rural areas, and urbanites don't read them; online media has fragmented into millions of information units. Indiscriminate full-scale投放 can only lead to a fiasco like "Evergrande Spring Water."

Helplessly, the flowers fall. There is no doubt that the old era of Chinese-style marketing is gone forever, and new marketing has arrived in a high-difficulty, leapfrog manner. In this special new era, the transformation of marketing methods is like changing tires on a car traveling at 100 kilometers per hour—extremely challenging. Let's look at new marketing:

Brand Atavism Before the industrial era, brands were often named after people: "Zhang Xiaoquan" scissors, "Goubuli" buns, "Wang Zhihe" stinky tofu, "Laoganma" chili sauce... In a society of acquaintances, information was highly symmetrical, and personalized product naming served as a quality endorsement. In the industrial era, people entered a society of strangers, where information between producers and consumers was highly asymmetric, and personalized brands no longer helped build trust or emotional communication, gradually fading from the historical stage. But the advent of the internet era has once again achieved information symmetry. Personalized brands, on one hand, can use the credibility of real people to endorse product quality; on the other hand, they can use virtual characters to achieve emotional communication between producers and consumers, giving brands personality and fashion elements.

Channel Flattening The internet has achieved flattening of communication, highly developed logistics has achieved flattening of distribution, B2C e-commerce has achieved flattening of transactions, and B2B e-commerce has achieved flattening of circulation. The pyramid-shaped distribution system of old marketing has become a liability for enterprises in today's highly developed commodity economy. The flat channel of manufacturer—platform—consumer has initially taken shape, and the irreplaceability of shopping malls and specialty stores is weakening. If price wars are inevitable in the low- and mid-end sectors, then the winner will definitely be the manufacturer with the lowest intermediate costs.

Product Customization Once, products were homogeneous and channels were differentiated; now, channels are homogeneous and products are differentiated. Production in the mass industrial era was based on the assumption that everyone's needs are the same; production in the internet era is based on the fact that everyone has specific needs. The differentiation of economic capabilities has led to the emergence of a large class willing to pay for quality—the middle class. When products are given personality and purchasing behavior is given warmth, product pricing is no longer determined by cost. Competition has also shifted from red ocean competition in a single category to blue ocean competition that meets differentiated needs. The original competition-driven model has upgraded to a consumer-driven model.

Word-of-Mouth Communication The greatest change the internet has brought to Chinese commerce is the reshaping of China's commercial credit evaluation system. Merchants openly admit their product flaws to avoid negative reviews after purchase. Consumers spontaneously spread the word about products they love to gain more recognition in their communities. In an era of highly symmetrical information, the value of the product itself is infinitely amplified. Without a good experience, even huge traffic can only accelerate a product's death. As advertising effectiveness declines, a high-quality product can attract a lot of attention effortlessly.

Marketing Entertainment and Interaction Today's society is an information desert occupied by information. The so-called "information blindness" means you are exposed to unlimited information, so you feel that any information lacks sufficient value. Only two types of information will not be drowned out: either it is interesting enough to make you remember it, or it is interesting enough to make you participate. Happiness and self-realization are the most urgent needs of this era.

Big Data is Widely Applied in Marketing The biggest difference between YouTube and Chinese video sites is that ads can be closed. When you close an ad, the second you close it, what kind of ad you closed, and how many times you closed such an ad are all recorded by the system and then deeply mined. As you browse more, you will find that the ads in videos become more and more tailored to your needs—this is the power of big data. Through big data, websites, manufacturers, and users achieve a win-win situation, and the image of more consumers becomes clearer. Market research is gradually being replaced by big data. In China, big data marketing is still at a very early stage, but in the near future, big data will take the lead in marketing.

The world changes so fast that even with all efforts, one may not keep up with the pace of the times. The transformation of Chinese-style old marketing is by no means as light as "the swallows return, familiar as before." Every epoch-making change signifies the rise of a new batch of industry upstarts. Traditional Chinese enterprises, are you ready!

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