Source: New Consumption Think Tank (ID: cychuangye)
New Consumption Guide Wang Jingjing, founder of New Consumption Think Tank, shares how to build an innovative brand worth 1 billion yuan using a 'super hit product' mindset in the new era. The following is an edited transcript of the speech.
Why Are Men Starting to Wear Makeup? Good afternoon, everyone. Being the last to share is a bit awkward, commonly known as the finale. Mr. Wu spoke very well earlier, and after Teacher Zhibin's talk this afternoon, I felt there was nothing left to say. I met Zhixiang earlier this year, and this is my first time at Tongcheng due to the consumer acceleration event. The previous two speakers talked about big-picture strategies and broad visions. I'll talk about something smaller.
Everything I'm sharing today is related to these interesting consumer goods offline businesses. Before I start, I want to share two of the hottest businesses this year.
I believe you all go to shopping malls and commercial real estate every day. Not long ago, I saw an industry analysis report from Winshang.com, and I was surprised by one thing: most commercial shopping malls are starting to convert to dining. In the past, many clothing stores in commercial real estate saw severe declines, while the fastest-growing segment was experiential consumption like dining.
Now, guess what the second fastest-growing business in commercial real estate is? It's closely related to you, especially for those around 30 years old: children's education. In recent years, the second and third floors of commercial real estate have seen the most education complexes.
Let me mention a third business. These three are the most explosive and have the best cash flow in all commercial real estate this year: the cosmetics business.
This year, the fastest growth data—the only industry in China with growth exceeding 10%—is cosmetics. Why did the cosmetics business suddenly explode?
A big reason, based on our research, is that today in China, all girls aged 13 or 14 start buying their first lipstick, lipstick, and skincare products. So in the past two years, the biggest new growth in the Chinese market has been domestic cosmetics.
This is quite alarming: all young girls in China start wearing makeup at 14. Another growth segment is middle-aged and elderly women who continue to use cosmetics brands. You'll find that cosmetics is a market where the first age group is getting younger and younger, which is counterintuitive.
We used to think women over 50 don't use cosmetics, but that's wrong. We've found that brands specializing in cosmetics for the elderly may have huge opportunities in the future.
Another segment is Chinese men starting to wear makeup. Many men born after 1997 or 1998 use face masks. These are all potential innovative structural opportunities in China's cosmetics market.
First, let me pose a small question: Why are Chinese men starting to wear makeup? What does this subtle difference relate to? Why are Chinese men spending thousands of yuan on trendy shoes? What's the purpose? These two questions can be studied together.
This is fundamentally related to one thing: in recent years, we've found that the number of male births in China far exceeds female births, and the gender ratio is imbalanced.
That means in the future, some men may not find suitable partners. Since there are more men than women, Chinese men must improve their appearance and grooming to be more competitive in courtship. So this phenomenon is discovered through demographic shifts.
You'll see that young Chinese men will start wearing makeup, taking care of themselves, and making themselves more handsome. Why have gyms grown so fast in recent years? It's related to changes in gender dynamics in courtship.
A man buys trendy shoes not because he really thinks they're cool. When I talked with some sneaker fans, one left a deep impression: he said buying trendy shoes damaged his relationship with his father. His father, a successful elite in his 40s, couldn't understand why his 18- or 19-year-old son wanted to spend thousands on a pair of shoes.
Another example: a programmer wearing Anta shoes was mocked on a blind date. What does this reflect? It reflects social trends and phenomena. In the past, we required women to be attractive and well-dressed. Today, as women gain a voice in new media, they're turning the tables and demanding the same from Chinese men.
So you see articles on new media platforms where Chinese women criticize Chinese men for not dressing well. These will form new consumption phenomena.
The evolution of these phenomena will cause a major reversal in consumption structure. Chinese men feel a sense of crisis: besides being rich, famous, and interesting, they also need to be good-looking. So they need to dress well, wear makeup, and take care of themselves.
Behind the Hit Product: Why Li Jiaqi Is the Chosen One
Now, following my PPT, I'll share some calm thoughts on China's overall consumption. Why do I talk about 'super hit products'? Here's my thinking.
Think back to when we advertised on CCTV. There was a landmark event: the 'CCTV Bid King Battle.' This marketing battle was very influential because the amounts were huge, often spending half a company's money. At that time, a group of marketing experts emerged. What special ability did they have? They dared to spend big and weren't afraid of bankruptcy. Even if the company had only 100 million yuan, they'd spend 90 million on CCTV ads. Once the ad aired, distributors would come knocking to place orders. That was their business model.
Not long ago, I saw data showing that TV screen usage has plummeted. Generally, young people no longer watch TV in the living room. As TV loses its status as a mainstream media channel, attention becomes fragmented.
People's attention has shifted to their phones. I think you spend more time with your phone every day than with your girlfriend. The phone has become part of your body, not just a tool. It's integrated with you.
Those of you playing with your phones right now have opened 4-5 different interfaces. Your time and attention are scattered across different public accounts. Your attention fragments are interrupted by all sorts of things. So you'll find that today, to build a super brand, monopolizing a single CCTV media channel no longer works.
Because traffic and attention are extremely fragmented, the first point of my theory today is that past approaches and routines for consumer goods are gradually becoming useless. That's why I mention 'super hit products.' Marketing is becoming increasingly ineffective, and the effect of marketing investments is being equalized by the overall trend.
Today is an era where everyone is selling. A public account might analyze international trends yesterday, and tomorrow it posts an ad link to sell products and 'plant grass' (recommend products).
Behind 'planting grass' is that the supply of goods is increasingly abundant. You'll find a group of savvy buyers constantly searching for good things for you. You don't need to find the best skincare product yourself; there are countless influencers and traffic owners recommending good products, and their taste is better than yours.
People's attention and time are limited. Some people start businesses every day but don't know how to dress. Others spend all their time studying how to dress.
So you'll find that the channels presenting products to you are becoming more complete. In the past, only a few big supermarkets offered products. Today, think about how many traffic ecosystems are constantly recommending good products in public accounts.
So we'll find an interesting thing: what happens after the marketing effect, especially with Douyin and the whole influencer ecosystem driving sales? Everyone learns similar tactics. You can 'plant grass' on Xiaohongshu today, and I can tomorrow, because the entire marketing knowledge structure and system have been leveled.
In the end, you'll find something interesting: since the price of buying traffic is equal in the market, how do we win?
You make cakes, I make cakes. Simply optimizing costs won't work. At that point, you'll find you can only compete on one thing: when marketing effects are equalized, you compete on the core product. How good is your product?
We used to say, 'Good wine needs no bush.' I feel that saying is coming back. Today, the world is very flat. If you have any good thing, any excellent thing, it will naturally be chosen because of its excellence.
So Li Jiaqi is very popular not because he did something right, but because he was chosen by Douyin as the chosen one.
Li Jiaqi previously worked at the L'Oréal counter with professional makeup knowledge. You'll find that Douyin or Toutiao's algorithm mechanism is a natural screening pool, naturally selecting people who meet the needs.
In the push model, especially after information shifted from search to push, you'll find an interesting phenomenon: if a person is meant to be popular, they'll become popular without needing too many actions. Just seriously make products or content.
Li Jiaqi didn't have any manipulation or need to buy traffic or fans. No, Li Jiaqi was naturally selected because he perfectly fits Douyin's audience characteristics.
So in the future, all popular IPs are not created but are chosen ones, because they universally meet the psychological needs and satisfaction of the masses. If you're not popular, you're not; if you're popular, it's because you deserve to be.
I think many people on the internet haven't realized what a good product means. That's why I've taken this long detour to explain why today is the era of 'super hit products.'
Only with Social Currency and Price Valve Can You Be a Super Hit Product
So what is a 'super hit product'?
The first element is that sales threshold is no less than 500 million yuan.
Why 500 million? Because I've studied the growth paths of Chinese and foreign consumer goods listed companies, as well as some product-selling brands. I found a phenomenon similar to the 'Great Filter' in the universe's life growth, and another theory called the Fermi Paradox.
I think brands also face these two phenomena. Have you seen the movie 'Nezha' recently? It has a strong philosophical sense. He encounters a heavenly tribulation, a natural law. When you reach a certain stage, you must undergo trials. If you overcome them, you break through; if not, you're destroyed.
When I talk about 'super hit products,' 500 million is the bottleneck we see for all consumer goods. Either you grow bigger or you hover around 500 million.
100 million is a threshold, but 100 million requires doing one thing well. 500 million might require getting channels, supply chain, product, brand, and traffic all right. When you break through 500 million to 1 billion, to 2 billion, you become a super consumer company. After that, the test is your organization and investment capability. I'll later explain how to break through from 500 million to 2 billion.
The second element is the price valve.
This is the key factor to test whether you are a 'super hit product.' The core is the price valve. How to understand it? You saw the Costco event recently. In Shanghai, many people rushed to buy Moutai. Moutai is a typical product with a price valve. Why?
Because all the economics theories we learned tell us that when you raise prices, demand decreases. But some products in this world are the opposite. You'll find Moutai is a product where the higher the price, the greater the demand. The more expensive, the stronger the demand. So to verify if your product is a 'super hit product,' I ask you one thing: do you dare to raise prices?
If you sell at 10 yuan today and raise to 15 tomorrow, and demand increases instead, then I can define you as a 'super hit product.' At Heytea's peak, when scalpers raised a cup to 15 yuan, more people bought it. So the second test for a 'super hit product' is the price valve.
The third element is whether you have become social currency.
New-generation social products don't just satisfy universal functional attributes. Do you think Heytea is really just a cup of tea? No, it satisfies two things.
First, it's about showing off. Taking your pretty girlfriend to queue and buying her Heytea proves you're spending time with her. The typical scene is a girl queuing with her boyfriend beside her, buying Heytea together.
Second, after buying Heytea, the first thing people do is not drink it but take photos. So my definition of social currency is: if a good product's first use after purchase is being photographed, you're a good social currency.
Social currency also has strong social attributes. Gifts exchanged between girls are social currency, like a boyfriend giving his girlfriend an YSL lipstick. That's social currency.
What's the core of social currency? It's a general equivalent, equivalent to money. You'll find that when you buy Moutai to give to others, Moutai can be stored and used like money. What other products have this function? Wine? Some vintage wines appreciate with age.
You'll find that 'super hit products' ultimately satisfy three attributes in one: first, investment goods—you can make money buying Moutai. If you'd bought it ten years ago, you'd have made a fortune, enough to change your life if your principal was large enough. Second, normal consumer goods. Third, general equivalent—can be used as money.
The fourth characteristic of a 'super hit product' is transcending cycles and demographics.
Through writing articles daily, I've noticed an interesting trait: friends who claimed they never drank Heytea, even the older generation, started trying it. Initially, they weren't the target audience, but because everyone said it was popular, they wanted to try it.
Use these four logics to test today's products. If these four conditions aren't met, your product won't explode. If it does, it must satisfy the four characteristics I just mentioned.
Second, I'll talk about why to build a 'super hit product.'
A 'super hit product' is the birthplace of a super brand. What is a super brand? High awareness × high reputation × high pricing power.
First, let's talk about the role of hit products. People love to choose products others trust. People naturally avoid risk, thus building social barriers.
Take Heytea again. Why is it successful?
Some say it's because He Boquan had good vision and gave him 100 million. Could I succeed with 100 million? Is that the reason? Not really, though to some extent, yes. Why?
When a socially show-off product forms social barriers in your circle, it's very easy to become a leading brand. That's a mouthful, so let me explain with an example.
This is closely related to Teacher Xu's 'small group effect.' You have four friends, and three close friends are drinking Heytea. If you don't, you become an outsider, and people find it hard to understand.
For example, if all word-of-mouth is good, any product must naturally build sufficient social density in a regional area. When your product comes out, it's crucial to penetrate enough density in small circles, like among close acquaintances.
Speaking of this, I want to mention a small point unrelated: why does China today have opportunities for new consumer brand groups? What's it related to? It's related to rising housing prices.
Why are high housing prices good for creating brands? We know Beijing has several important luxury residential areas. Wealthy residential areas are very concentrated because housing prices cluster people.
The rich live in the same neighborhood; housing prices segregate populations. Urbanization and high housing prices inadvertently clustered and filtered people: first-tier cities are one group, second-tier another, and lower-tier markets another.
Once this regional density forms, you'll find another interesting thing: commercial complexes are positioned for these target groups. Today's rising housing prices and population segmentation make it easy to filter out specific people.
Years ago, I met a small group commercial company. What did it do? It built a community where only mothers who gave birth at United Family Hospital could join.
Many were shocked when they saw this company. I said the company doesn't need to store users in IVP; it stores them in customer groups, segregating populations and selling to these specific groups. It naturally becomes a channel brand serving only specific people.
I've been talking about this to make one point: after any new product launches, the core is to build social barriers within a specific group—everyone around you uses it and says it's good.
People are herd-like and reluctant to try new things because they naturally seek security. Drinking Heytea is always safe. That's high reputation and price.
One day your girlfriend wants a drink, and you want to take her for milk tea, but you don't know which brand is good. What's your first choice? You trust ads because you think those who can afford ads are strong.
Second, you trust word-of-mouth. If others say it's good, it's good. Otherwise, you're unwilling to pick an unfamiliar brand from a group to try. I'm talking about Luckin Coffee's rise; many complain it doesn't taste good.
But its typical scenario is a group meeting. I want to buy coffee for everyone, but I can't brew pour-over coffee. I'd like to buy Heytea, but there's none nearby. So you naturally choose Luckin regardless of taste because it advertises heavily and is known to users.
Similarly, the second product is Xiaoguan Tea. It also advertised heavily on CCTV. For a while, I entertained clients in my living room. I thought, a group of clients came; I should show some respect.
I'd offer them tea, but I must let them know it's high-end tea to show my sincerity. People naturally choose more famous brands, not those tested by reviews. People don't have time to decide on everything; they prefer to follow what others say is right. Just follow the crowd.
In the Hit Product Era, Why Does Positioning Fail?
'Super hit products' have two major roles:
First, use products to find people: use 'super hit products' to find 'super users.'
What's interesting today? I once tried this. I have 5 WeChat accounts, each with 5,000 friends. I briefly did micro-commerce to test if my users trusted me.
I originally met people through lectures. One evening, I recommended a persimmon cake made by a friend. I said, 'Teacher Wang isn't lecturing today, not promoting any courses. I'm just selling persimmon cakes to show you.' That afternoon, I sold over 100.
I just posted about persimmon cakes on my Moments. Why did you buy from me? They said, 'We trust you as a person. Since you're reliable, everything you recommend is reliable.' People's judgment criteria are that simple.
If you've succeeded with one product, people tend to trust successful people, not failures. So success often leads to more success. Success is the mother of success; failure is never the mother of success.
You'll find that after a hit product, users trust all your subsequent products. They think your goods are good and buy many other products from you.
But there's an exception: if it's a highly professional product, like medical devices or products requiring high safety, the more related to health, the harder it is to gain trust. It's less likely that people will trust you for everything. Professional brands may emerge because user switching costs are high.
Second, build 'super relationships' between users and traffic channels.
This is Teacher Xu's 'small group.' You need strong relationships in the group. After finding a thousand seed users through a brand, develop them into super word-of-mouth people. Today's new consumer brands no longer go to distributors and cooperate with them. Instead, the first thing is to build your own private domain user traffic pool with core seed users.
The core is to reduce communication costs with stakeholders. New consumer products must go through three paths to grow:
First, make a hit product and find your first thousand seed users, called 'super users.'
Second, gain the trust of super platforms like Tmall and JD.com, becoming new traffic promoted by the platform.
Third, go down to offline channel markets and build good relationships with distributors.
You'll find all consumer goods growth paths must cross these three. Each step is ten times harder than the previous. Each time you achieve a step, your valuation should increase tenfold. When you find a thousand super users, you might be a company valued at 10 million or 50 million. When you become the top category on Tmall or Taobao, you should be a 500 million company.
When you fully establish offline channels and sales volume rises, you should be a 2 billion or 3 billion company.
When you're popular and a hit product, it's easy to negotiate with stakeholders. When you're not popular, have no traffic, and aren't a hit product, negotiating with channel partners is too hard. So people often say offline business is hard today. Offline channel costs are high, commercial real estate is expensive, hiring is expensive. How do I do this business?
I say, why can Heytea do it? After creating a very popular hit product, when negotiating with any commercial real estate today, it has strong bargaining power on core costs like rent.
When you have a bad product, negotiating with commercial real estate, they wonder where this product came from and want to open a store here. They'll charge you more.
To negotiate with stakeholders, including distributor channels, you must have a strong, outstanding point. More importantly, you need to become a 'USB' product that can seamlessly plug into others' systems. A super hit product is a useful USB. You've already proven that users like it and the product is successful. They just need to trust you.
Because in this world, the essence of running a business is building trust with employees internally and with consumers externally. How do you build trust? For example, I'm lecturing here today. In terms of communication efficiency, I'm reaching 300 people at once. If I post a product and say I need a partner in Suzhou, it's very easy to solve.
Because you in the audience have built a good trust relationship with me through my speech. But when you're not popular, I want to negotiate cooperation, and you think, 'Who is this person coming to talk cooperation?'
So being popular brings the benefit of infinitely reducing trust costs when dealing with any resource in society.
Our society is constantly building a credit system. I think that's very good and important for improving the business environment. The core is reducing communication costs.
A Good Brand Company Is Essentially an Investment Company
Finally, due to time, I'll focus on sharing the four forces to create a hit product.
Hit products need four forces. The first is product power.
Product power includes four points:
1. Appearance economy replaces naturalism.
In the past few years, there was a term in the center of the wave: 'sexually冷淡 style' (minimalist style). It was popular for a while. Not long ago, I visited a new unicorn company's offline store. What did they do?
They created a very colorful cosmetics and clothing store brand. In commercial real estate, foot traffic was 30,000. Next time, you might need to buy a ticket to enter. Its typical feature is colorism.
2. Moments faith is the touchstone for testing products.
Whether relationships are deep or good, I judge by whether people post on Moments. Products are the same.
3. Technologyism replaces practical consumerism.
I'm pained by one thing: after the last wave of internet revolution in China, a wave of so-called consumption upgrade products emerged, but I didn't see many consumer goods with high technology content. In the US, the consumer goods revolution is profound. First, the D2C brand wave rose, creating many billion-dollar companies.
So the hottest thing recently: after pork prices rose, you see the concept of artificial meat is very hot. I think the next trend will be applying a lot of technology and tech content in consumer products, including biotechnology in food.
4. Founder faith replaces opportunism.
I've found that in recent years, those who switch products—make a product, sell it after a year, then make another—basically can't achieve great success. Today's great successes are extremely determined. I firmly believe in making one product for five or ten years, doing it well.
So making consumer goods is tough. If you want to make Coca-Cola or P&G, without extreme founder faith, you're just speculating. If I were you, I'd likely fail because you can't persist. Making consumer goods is very hard.
Products above average become industry standard. After marketing effects are equalized, product capability becomes very important.
Hit products need four forces. The second is investment power.
Brand companies are essentially investment companies, seeking value troughs in the industry chain.
Let me talk about Nike. It's now ranked first globally with a market cap near $100 billion. What did this company do right? I recommend a book, 'Cultural Strategy,' written by an American. It's the bible of branding. Why?
It says Nike's rise is core to the rise of street culture. Any consumer product caters to the rise of a certain trend culture. That's the first thing Nike did right.
Second is Nike's ability to select endorsers. Nike very early used various evaluation systems to find suitable endorsement candidates.
I don't know if any Chinese brands are doing this when choosing endorsers. Do they have a system to predict who will become popular in the entertainment industry and sign them before they're famous? Because you're investing in a value trough.
Let me talk about Jiangxiaobai. What did it do? When it entered the market, China's liquor channels were already saturated. But it did one thing: it captured the value trough of mom-and-pop restaurants. At that time, no one helped these small shops put up nice liquor posters. Your cabinet should have two posters, but big liquor companies didn't do it. Jiangxiaobai did.
Jiangxiaobai had a large ground team with strong execution, sweeping hundreds of thousands of restaurants across China, providing excellent service to small merchants and stocking their liquor. It actually discovered a value trough in neglected channels.
I think a good brand in the future is no different from an investment company. It invests in everything. At the same time, all big companies today use internet innovation methods, internal project initiation, discovering good products, and incubating new products with investment thinking.
Nike and Jiangxiaobai both discovered value troughs. So you'll find that top brand companies are not primarily product-making companies. Products are just a way to find users. The second thing is becoming an investment company. Single-product companies find it hard to survive; they must revolve around a demographic and become super brand incubators.
If you make shoes today, making only shoes won't work. You must revolve around shoes for a specific elderly demographic, offering many services. You can make five products for the elderly. So China will definitely see female consumer goods groups that make many products for a specific demographic.
Hit products need four forces. The third is faith power.
Faith power: those who believe in the brand win. Today, all brand builders are no different from religious missionaries. You must believe in your own thing. If you don't believe in your product, you can't sell it. Every good brand founder I've met firmly believes they can succeed and that their product is excellent.
Where does your faith in a company come from? It comes from reflecting social reality and returning to the essence of entrepreneurship, finding things that align with the overall laws of humanity. Your thing must be positive with social trends and promote social progress. I think good consumer products have a huge role in promoting all humanity in some social sense.
If you feel you lack faith, how to build it? Look at your experiences, your original intention, your knowledge structure, your achievement motivation, and your views on social issues. Do what you believe in, believe in what you do. Faith is a good story. The most widely spread things in human history are stories.
All enduring traditions in human history are stories. Building a brand is telling a story. How do you tell a story that users are willing to hear?
Hit products need four forces. The fourth is insensitivity power.
Finally, I think for founders, especially brand founders, insensitivity is particularly important. Don't chase hot trends excessively. Instead, follow your heart and find what suits you. Every founder has no distinction between big and small businesses. What matters is doing what fits you. That's crucial. But there are always people who aren't suited for something but insist on doing it, and they fall hard.
Everyone should find their faith, mission, and sense of belonging. Do what suits you. Don't envy others. Often, if you follow your inner heart, you'll do great.
Are you 'watching' me?