Follow and star ↑↑****「New Distribution」 See how many friends are with you following industry trends**** Preface: Covering 230 cities in China, with over 2.6 million terminals, reaching 300 million urban mainstream people daily, and 700 million daily impressions, such marketing scale and point-of-sale coverage have established Focus Media as a core entry point for offline traffic, as well as its value in radiating to brand consumption opinion leaders and word-of-mouth audiences. Elevator media is both a scene, content, and channel. It aligns with the brand communication needs of China's 'new consumption' era, playing an irreplaceable role in leading and igniting consumption upgrades and the rise of traditional consumption. Leading Chinese traditional industry brands such as Zhongyan Soda, Langjiu, and Feihe Milk Powder have chosen to advertise on Focus Media. Relying on Focus's extensive offline reach and digital platform, traditional consumer goods have achieved significant sales growth. In an era of scarce attention, consumers actively engage with media but also actively avoid ads. How can brands quickly capture consumer mindshare? On August 21, 2019, at the 'FMCG2019 China FMCG Conference' hosted by New Distribution, Jiang Nanchun, founder of Focus Media, was specially invited to deliver a keynote speech on 'China's Consumption and Communication Market Trends'. The following is a compiled version of his speech for readers. (The article has been slightly edited.) The entire Chinese consumer market faces significant challenges this year, with retail growth slowing to 3.5%. In this context, there is a stark contrast: high-end milk like Telunsu and Jindian sell very well, as do low-end white milk, but mid-range products face major challenges. Pet food and yogurt maintain rapid growth, while selling other products has become very challenging. In the Chinese market, the wave of consumption upgrade is evident, as is the basic demand at the bottom. But what truly drives change in the consumer market? 'The three-high group.' They are high-income, highly educated, and high-position individuals who generally favor innovation and trends, are willing to pay a premium for brand quality, and are more receptive to user-centric products. So who are the originators of consumption upgrade? Who is leading it? They are people aged 20 to 45 who prefer mid-to-high quality, chase trends, and are willing to share. China has about 225 million new middle-class consumers, and between 2020 and 2025, there will be 500 million new middle-class individuals. What do today's new middle class love, fear, and lack? They love beauty, fun, and health; fear aging, death, and loneliness; and lack love, mood, and stimulation. So any business that addresses these 'three loves, three fears, and three shortages' is very promising. What is the consumption psychology of the middle class today? Low prices are increasingly untenable; quality and brands seek spiritual satisfaction; essential needs are replaced by taste, style, and labels; pragmatism is replaced by emotion, atmosphere, and scenes; necessary items are replaced by desired, trendy items. Products must not only provide function but also soothe the mind and emotions. This consumption upgrade has two directions: 1. Self-compensation and self-reward after hard work by the middle class. This upgrade is not about buying an LV bag to flaunt status, but as the Didi Chuxing ad says, 'If reality is always tough, at least find peace in the car. You who strive hard today deserve a better ride.' Is the middle class easy? In today's difficult times, after hard work, they need compensation and self-reward. 2. Becoming a better self. Does having money mean eating lobster and seafood every day? Not only that, but they also eat only vegetables for 365 days, have light meals daily, and wake up early to clock in for running, yoga, and community activities. Why? Because only then can they become a better self. They are willing to spend money on 'Get' and 'Fan Deng Reading Club', perhaps never reading, but why buy? Because at the moment of payment, they feel a leap in personal growth, becoming a better self. So in today's Chinese market, while consumption upgrades, if brands continue price wars, promotion wars, and traffic wars in a homogeneous market, there is no way out. Brands must be reshaped and upgraded, symbolizing youth and trendiness. The core is to research and understand the trendsetter group in the consumer market, as many in Chinese society are followers. Brands need to capture the originator group. Consumer trendsetters are those who prefer high-end quality, try new things, and are willing to share. These people define brands and lead trends. Jiang Nanchun, Founder of Focus Media China's Media Market Trends In China's media market, the trend of the hundred-billion consumer market has entered a slow growth phase. By 2019, the entire Chinese media industry is in a downturn. Why? It correlates with economic development. Meanwhile, the landscape has changed dramatically, with traditional media declining about 7.2%. 2015 was a turning point. After that, elevator media, cinema video, and the internet continued to rise, while traditional media continued to fall. Why this change? The explosion of mobile internet information has moved from diversification to fragmentation, to a world of dust. What is a dust-like world? Information is everywhere like PM2.5, but China's mainstream population no longer watches TV; they go online, where consumers mostly discuss content. Internet viewing time in 2015 fully surpassed the total viewing time of all traditional media. 2015 was a watershed for Chinese traditional media; after that, traditional media never rebounded because the information model fundamentally changed. Six or seven years ago, we saw many great shows like 'The Voice of China', 'Happy Camp', 'Running Man', and 'Comedy Show', all with around 4% ratings. That's a good rating. China has about 1.3 billion people, 1 billion with TVs, so 4% means about 40 million viewers. How many of those 40 million have monthly incomes above 5,000 RMB? At its peak, 'Running Man' had about 11.9%, or 4-5 million people. So if you wanted to achieve consumption upgrade and brand rejuvenation on TV, six or seven years ago there might have been a slight chance. By 2018, there were no shows with 4% ratings; 1% was the champion. TV viewership dropped about two-thirds from before. Because the information model changed, people moved to Weibo, WeChat, and news apps, which dominate the mainstream market. In this market, users mainly consume content, so creating content, PR, topics, and shareable content becomes a core capability. TV shifted to online video; young people's entertainment is video-centric. China has about 700 million video users, but there's a split: 280 million pay for memberships, meaning no ads; 240 million don't pay and see ads. But the 280 million paying members are the main consumers. Is someone who won't pay 20 RMB a month the mainstream consumer group? That's a question. So today, to reach the 200-300 million trendsetters in Chinese media, the biggest challenge is that mainstream people don't watch TV; they watch videos, but many pay for ad-free. Also, on Weibo, WeChat, and news apps, people focus on content, not ads. This creates a huge challenge: How can brands be ignited? 16 years ago, when I started my business, I had a basic judgment about society: China's biggest change is urbanization, which means building buildings, and every building needs an elevator. So I thought elevators are urban infrastructure. I believed an elevator media company would become the point to ignite urban mainstream people. I also had an insight: I had been in advertising for ten years, and advertising is an anti-human industry. No one wants to see ads; ads are an interruption. Who wants to see ads? Ads are negative for consumers. So when do consumers voluntarily look at ads? I found that when waiting for or riding an elevator, consumers voluntarily look at ads. When a person is in a time and space more boring than ads, they are willing to see ads. Also on planes, the headrest cover with Bosideng ads can be watched for two hours, leaving a deep impression. In such environments, ads become very effective; consumers actively view them. I have four keywords for elevators: First, elevators are for mainstream people. Those who use elevators in good apartments and offices are definitely mainstream. Second, elevators are a must-pass. Whether you use Kuaishou or Douyin, Weibo or WeChat, you must pass through elevators. Third, elevators are high-frequency. The essence of advertising is repetition; the essence of audiences is forgetting. You must tell them repeatedly. Advertising is a conditioned reflex: 'Fear of getting angry? Drink Wanglaoji', 'Tired and sleepy? Drink Red Bull', 'Slightly hungry and sleepy? Drink Xiangpiaopiao'. This is the psychological conditioned reflex created by high frequency. Fourth, elevators are low-distraction. A person passes many bus shelters and bus ads daily, but remembers very few. But if you put that person in an elevator they take home every day, they'll have some impression of what's shown. Making users have no choice is the advertiser's best choice. In the past, TV was without choice, so TV media was mainstream. Today, TV is chosen, and phones have all information, so TV is chosen. What is without choice today? Going home, going to work, watching movies—these have little choice. In Nielsen's 2017 report, elevators and cinemas are the moments when consumers see the most ads. Conversely, we are also affected by the ubiquitous influence of phones. The only places spared are cinemas where you can't use phones, and elevators where there's no signal once the doors close. The future of media has two directions: embrace change and bet on what doesn't change. What does embracing change mean? You must embrace mobile, which holds the main information time. Mobile consumers may not see hard ads, so you need to think about content, topics, placements, and creating shareable content. Second is passivity: consumers' passive living spaces and scenes are hard to change. If the target is a business person, use scenes like apartment buildings, offices, and airports. If the target is an FMCG product, use apartments, offices, and supermarkets. Life spaces are simple. Jiang Nanchun, Founder of Focus Media Case Studies
- Bosideng Many well-known brands face aging, like Bosideng. Many think Bosideng is a memory of the previous generation, of fourth- and fifth-tier cities. But Bosideng was a strong brand in its day, selling billions in down jackets when it listed in 2006. In this context, Bosideng repositioned: 'In the US, Canada, Italy, and France, everyone wears Bosideng down jackets, warming 200 million people globally, selling well in 72 countries.' Bosideng's competitor is Uniqlo, which sells everything, while Bosideng only makes down jackets, so it positioned itself as the global down jacket expert. Uniqlo is a global brand popular in China; Bosideng is a Chinese brand popular globally. How to increase momentum? Last year, Bosideng raised prices, revamped storefronts, and boosted advertising. A brand in decline turned around. Focus Media partnered with Bosideng in August last year. Now, Bosideng's storefronts say 'Selling well in 72 countries', looking fresh. After Focus ignited Bosideng in 60 cities, Baidu Index rose 225%, Double 11 sales hit 740 million, Double 12 hit 510 million, November sales about 2.5 billion, December about 3.5 billion—two months equaled the previous year's total. Bosideng's stock rose from 4.4 billion to 25 billion HKD. This year's financial report shows 10.4 billion in sales. Can a brand revive within a year? Yes, with repositioning.
- Feihe Milk Powder In the FMCG market, Feihe was ranked ninth in China five years ago. The market was 75% international brands, 25% Chinese. After the melamine scandal, how can Chinese milk powder rise? Go the opposite direction. For example, Coca-Cola says 'My grandfather's Coke, my father's Coke, my Coca-Cola—a century of heritage, authentic cola.' That's its strength. Pepsi must be the choice of the younger generation because if your grandfather and father drank it, that's exactly why I don't. So the second player's method is to turn the leader's strength into a weakness. The four major international brands position as 'international, professional, safe'. If you argue you're more professional and safer, will you succeed? No chance. Their brand advantage is international, so you must go opposite. Focus Media created a new positioning for Feihe: 'More suitable for Chinese babies' constitution.' After this slogan, over five years, Feihe's product price rose from 180 to 250, 350, and now 420, making it the most expensive milk powder in China. Focus Media supported Feihe across apartments, offices, and maternity stores.
- Luckin Coffee Luckin's Lao Lu and I discussed: Does Starbucks sell coffee? No, it sells coffee shops. A 28 RMB cup includes 12 RMB for rent and decoration. But 70% of Starbucks customers don't sit down; they grab coffee and leave. Why should they pay for the café? That's a good question. How to serve the 70% who don't sit? So Luckin only has 20-square-meter stores, with only 1-2 RMB of a cup going to rent. IT reduces costs; fully automatic top-tier coffee machines ensure quality control; no cashiers, no cash payments. In the afternoon, only one staff member is needed, saving labor. Many new retail innovations were made. These changes improved efficiency and advanced the model. Is Luckin just selling coffee? It sells Xiaolu Tea, whatever tea is hot. With 3,700 stores now and 4,500 by year-end, it sells juice and light meals, Mexican rolls in the morning, curry rice at night. Coffee is just an entry point; eventually coffee will be only 50%, with light meals making up the rest. As a new retail case, Luckin's model is essentially the same as Focus Media's. Focus Media captures the traffic entry of elevators that Chinese people pass daily, while Luckin captures the traffic entry of office building lobbies. With this entry, using coffee as bait, it enters a 7-Eleven that's infinitely close to you. That's essentially what it is. After understanding the essence, in 2018, Focus Media helped Luckin ignite. During the campaign, Tang Wei was the spokesperson. If you haven't tried Luckin, scan the code on Focus, and Tang Wei invites you with a free cup. After trying, if you like it, share via WeChat to a friend, and you get another cup. This viral loop via WeChat's relationship chain. So Luckin's ads are simple: Focus Media's brand ignition + WeChat's traffic fission, forming a core part of new retail. This unique brand ignition and fission method is very concise. After that, Luckin's app surpassed Starbucks on the iPhone overall chart, WeChat Index rose tenfold. Seven months later, it sold 18 million cups, with 809 stores. By end of 2018, it sold 89.68 million cups. Starbucks sells about 800,000 cups a day; Luckin sells over 700,000. In two years, it nearly caught up with Starbucks in cup count. In 2019, the most consumed coffee in China is no longer a foreign brand but Luckin. Luckin also won high recognition from capital markets, becoming the fastest listed company globally—18 months from founding to IPO, with a market cap of $5 billion. Miracles evolve every day across China. As long as you find the right method, anyone can be shaken. Payment of 400-2000 RMB for tips upon publication.