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Successfully establishing a model market and then quickly replicating it is one of the magic weapons for the rapid rise of Chinese companies.
As long as you advance steadily, that is high speed; only by first becoming a local leader can you possibly dominate the world. The leading enterprises in various industries in China have basically been formed through the construction and replication of base markets. The path is as follows:
Build a base market → Replicate the base market → Expand the base → Become a regional or national leading enterprise.
Upon further investigation, we find that "market bases" can be divided into three categories:
First, those naturally formed in remote areas forgotten by large enterprises, gaining a foothold by seizing an opportunity. Such bases cannot be replicated and mainly contribute stable sales volume to the enterprise.
Second, base markets formed by the strong market control of distributors, not by the enterprise's own efforts, and equally non-replicable. Some enterprises' base markets appear as "isolated islands" because they rely on the capabilities of distributors.
Third, the truly valuable bases are those that an enterprise can quickly build in the short term and replicate in other regional markets. We can call these "model bases."
The value of a "model base" lies not only in its immediate performance contribution but also in its greater value as a "model market" that provides a replicable template for the enterprise.
Many people may think JDB's success is due to marketing, but in fact, JDB's success is due to focus. The entire company is committed to two focal points: first, the whole company promotes canned herbal tea; second, market focus, initially only doing business in Guangdong, Fujian, and Zhejiang provinces, then gradually moving north, and finally to the national market.
When expanding markets, enterprises should not seek to do everything at once; they should concentrate resources on doing hot or model markets first. Deepen and thoroughly penetrate a single market or region until becoming the leading brand in that market or region—not only achieving the number one sales volume but also making consumers "think you are the brand," ultimately realizing "my territory, my rules" and entering all channels (conventional, special, modern), and all product categories (high, medium, low product mix), leaving no opportunity for strong brands to attack. Only then can it be considered a successful model base.
We can use the following principles to focus markets and easily create model bases.
1. Radius Focus Principle
Expand from a central market to surrounding markets. This principle is suitable for industries and products with relatively low gross margins. If the transport distance is too far, profits will be eaten up by freight costs. It is better to draw a circle with oneself as the center and gradually build regional influence.
For example, small and medium-sized enterprises producing mid-to-low-end water, beverages, low-end liquor, instant noodles, puffed foods, grains, flour, etc., can all do this.
When Simite initially formulated its market strategy, it adopted the radius focus principle. Since its largest production base was in Wuzhi County, Jiaozuo City, Henan Province, it formulated a focus strategy centered on Jiaozuo, Henan, with a radius of 500 kilometers, making Henan, Shaanxi, Shanxi, and Handan and Xingtai in Hebei the first batch of market construction priorities. Because the average gross margin for instant noodles is around 27%, freight costs have a significant impact on profits. Beyond 500 kilometers, even if there is sales volume, profits are minimal or even losses.
2. Avoid the Strong and Attack the Weak Principle
The ultimate purpose of doing business is not to compete with competitors but to create profitable sales. Although wherever there are people, there is consumption, and wherever there is consumption, there is a market, every enterprise should have its own base to grow stronger. The best strategy is to avoid competitors' base markets and develop our own base in their weak areas.
Furthermore, for blank markets, whoever develops first owns it; whoever has the largest sales volume owns the base, regardless of brand awareness. By "planting nails" in competitors' weak markets, any enterprise has a chance to rise.
Vipshop developed this way. Before online giants like Tmall noticed, Vipshop launched limited-time sales of genuine brand products, establishing its leading position in the discount market. Tmall wanted to grab this piece of the pie but found it difficult because by then, online giants including JD.com and Tencent had also noticed this market. Moreover, in this market, quietly developing Vipshop already had the capital to compete with giants.
Vipshop's success gives many small and medium-sized enterprises confidence: no matter how weak you are, as long as you precisely target customer groups, gather all your strength, and make point breakthroughs, you can still grow strong.
3. Easy First, Difficult Later Principle
During market construction, different markets have different levels of difficulty. Every enterprise wants to generate maximum sales with minimum investment in the shortest time, so whether expanding markets or building bases, it is best to adhere to the principle of easy first, difficult later.
If you have good meat to eat but insist on gnawing on hard bones, in the end, the enterprise suffers. Some bosses might say, if we can't build this place, we'll go elsewhere; China is vast. That's easy to say, but have you considered whether the confidence of your employees will decline? Will distributors still have confidence? When everyone's confidence drops, no matter how good the product or market, it cannot be built well. Moreover, after one failure, two failures, the market will not give you another chance.
As the saying goes, "Victory is decided at the beginning." In war, why do both sides say we must win the first battle? Because it is crucial for boosting soldiers' morale. Whichever side loses, their morale will drop; whichever side wins, their morale will rise.
At this point, enterprises are required to do market analysis as thoroughly as possible, study which markets are easy to build, which regions are easy to develop, and thus fight a beautiful battle.
Of course, if an enterprise can find a market that everyone ignores or dig out a new market, it will surely win the first battle and eventually bloom step by step.
When the "Starting Line" children's walnut milk product I once served was launched, we determined the area south of the Yangtze River as the major market expansion region. Because north of the Yangtze, especially in Henan, Shandong, and Hebei, Yangyuan's Six Walnuts was too strong. A micro-enterprise directly competing head-on with a giant enterprise to grab market share would be suicide. But the market south of the Yangtze was very clean. Here, Yangyuan's market development difficulty was the same as Starting Line's. For consumers, both were new brands; whoever entered the market first would own it.
So, we focused on developing five provinces: Hubei, Fujian, Zhejiang, Jiangxi, and Yunnan (note: Fujian had a customer base). While many small and medium-sized enterprises were fighting head-on with Yangyuan in Hebei, Shandong, and Henan, Fengzhiyuan Starting Line walnut milk quietly rose south of the Yangtze, and within three years became the first brand of plant protein in Henan and the first brand of children's plant protein beverage in China.
4. Featured Product Focus Principle
This mainly refers to focusing the market based on product characteristics. A product cannot meet the needs of all consumers; featured products have their fixed target consumer groups. Therefore, in market selection and construction, enterprises should not engage in fantasy expansion but should focus on their own hot spots and bases according to product characteristics. The higher the fit between a company's product and the market and target consumers, the easier it is for the product to occupy the market.
For example, beverages include carbonated drinks, fruit and vegetable juice drinks, health drinks, mineral water drinks, milk drinks, protein drinks, and other categories. The category to which an enterprise's beverage belongs will determine the market and consumer groups it faces.
Another example: the market for agricultural three-wheeled vehicles is in rural areas; children's medicine and adult medicine are different, so manufacturers of children's or adult medicine will target different markets. These differences are mostly determined by product characteristics.
5. Special Channel Focus Principle
What are special channels? They usually refer to non-mainstream channels other than traditional channels such as restaurants, supermarkets, and wholesale, abbreviated as special channels. For example, internet cafes, schools, gyms, beauty salons, bus stations, highway service areas, parks, hotels, clubs, etc., are all special channels, as well as wedding banquets, holiday group purchases, etc.
The special channel focus principle is very suitable for small and medium-sized enterprises. Because SMEs have limited financial resources, forcibly entering traditional channels requires a lot of manpower and material resources. For example, the entry fee for entering supermarkets is a considerable amount. Therefore, it is better to start with special channels, gradually accumulate capital, and when the enterprise has influence in these special channels, entering other channels will be relatively easier.
"Afraid of getting heaty? Drink Wanglaoji." Initially, Wanglaoji, based on product characteristics, chose hot pot restaurants, Sichuan restaurants, and Hunan restaurants as its special channels to open the market. At that time, the cost of developing these special channels was extremely low, and Wanglaoji's "afraid of heaty" characteristic perfectly matched the requirements of these channels, because diet is an important cause of heatiness, especially "spicy" and "fried" foods, and Wanglaoji's most important function is to reduce heatiness. The success of this channel can be said to be the key to Wanglaoji's success. After drinking Wanglaoji in hot pot restaurants, people went to supermarkets and other places to buy the product. From special channels to supermarkets, Wanglaoji finally went from a local market—Guangdong—to the whole country, establishing a huge marketing network.
In this era of big data, the market potential is infinite, and various new possibilities constantly emerge, stimulating us and tempting us. At this time, we must dare to let go, make rational judgments, and not ignore the effective strategic decision-making power of "focus."