--- title: "Good Products Sell Scarcity, Not Satisfaction!" description: "This article is a discussion between Mr. Fang Gang and Mr. Liu Chunxiong in a Chinese beer marketing management group about how to create products in the internet era. The views are very inspiring, and the editor has specially organized them for readers. The discussion revolves around the keyword \"scarcity\" and explores how to manufacture and utilize scarcity in today's world of material abundance." author: "方刚、刘春雄" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2016-07-22" language: "en" canonical: "https://xinjignxiao.com/en/articles/good-products-sell-scarcity-not-satisfaction-47d98780/" markdown: "https://xinjignxiao.com/en/articles/good-products-sell-scarcity-not-satisfaction-47d98780.md" original_source: "https://mp.weixin.qq.com/s/JjE8B5x6P51fTva7F3DJgA" translation: "https://xinjignxiao.com/zh/articles/%E5%A5%BD%E4%BA%A7%E5%93%81-%E5%8D%96%E7%9A%84%E4%B8%8D%E6%98%AF%E6%BB%A1%E8%B6%B3-%E6%98%AF%E7%A8%80%E7%BC%BA-47d98780.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/good-products-sell-scarcity-not-satisfaction-47d98780/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Good Products Sell Scarcity, Not Satisfaction! > This article is a discussion between Mr. Fang Gang and Mr. Liu Chunxiong in a Chinese beer marketing management group about how to create products in the internet era. The views are very inspiring, and the editor has specially organized them for readers. The discussion revolves around the keyword "scarcity" and explores how to manufacture and utilize scarcity in today's world of material abundance. This article is a discussion between Mr. Fang Gang and Mr. Liu Chunxiong in a Chinese beer marketing management group about how to create products in the internet era. The views are very inspiring, and the editor has specially organized them for readers. Mr. Fang Gang: Tonight's discussion revolves around the keyword "scarcity." Scarcity is a good thing! It is something dreamed of in the marketing process, but how to create and utilize scarcity has become a great knowledge, especially in today's world of material abundance. Whether there is a path to create scarcity has become a topic that needs to be sorted out and discussed. Let me first sort out the development history of the beer industry with you all, to find where "scarcity" lies. 1900 was the first year of China's beer industrialization! In 1900, Russians invested in establishing the first beer factory in Nangang, Harbin, operated by Russians. In 1939, the annual output of Harbin Brewery was 1.8 million bottles, equivalent to about 100 tons. In 1949, China's total beer output was 7,000 tons. In 1980, China's total beer output was 800,000 tons. There was a contradiction between growing consumer demand and backward production. In 1985, China's total beer output was 3.1 million tons. In 1988, China's total beer output was 6.54 million tons. In 1993, China's total beer output was 12.25 million tons, ranking second in the world, with a wholesale model. In 1997, the land grab began. Believe in the power of capital! In 2000, China's total beer output was 22.31 million tons. In 2002, China's total beer output was 23.86 million tons, ranking first in the world, and deep distribution began. In 2013, China's total beer output was 50.61 million tons. In 2014, China's total beer output was 49.22 million tons. In 2015, China's total beer output was 47.15 million tons. In 1949, China's total beer output was only 7,000 tons, a sales volume so small it could almost be ignored. As a new category, beer existed only thinly among foreigners or high-ranking officials. At this stage, there was no brand, only a category, and the existence of this category was in a thin state. From liberation to around 2000, the beer market always had a contradiction between strong demand and backward production capacity. The domestic market's demand cake expanded rapidly like beer foam, and demand always exceeded supply! Before this stage, it was a period of "good wine doesn't need a deep alley," with no marketing concept, or even a marketing department... Buying beer required connections and approval slips. This stage was mainly about solving backward productivity! Vigorous consumer demand created a group of enterprises aiming at fixed targets! Demand is here, I'm not afraid! This was the confidence of many enterprises at this stage! After that, the industry began to grab land, creating several giant enterprises! The strengthening of beer marketing actions began with emphasizing sales! Around 2002, the industry, represented by Tsingtao Brewery, began deep distribution, with channel competition and terminal grabbing as the core, and the deep distribution system began to show its power! From 2002 to 2013, the industry went from 23.86 million tons to the historical peak of 50.61 million tons in just ten years! During this period, the demand cake was expanding, but it was no longer as hot as before! Beer companies' sales relied on grabbing terminals, occupying territory, and building bases to form squeeze-type sales! Beer went from scarce, fashionable, and high-end to gradually sinking to a stage where it was everywhere and everyone drank it! Through this sorting, we will find: the reality we have to face today is oversupply, not just in beer, but in the entire FMCG industry! Ubiquitous supply, marketing that squeezes into every gap, and products with endless variety... Is there still scarcity? How do we create scarcity? Mr. Liu Chunxiong: The scarcity Fang Gang just mentioned is the scarcity of production capacity, which is a scarcity of a special stage. The scarcity we talk about today is definitely not this kind of scarcity. The scarcity we talk about is also not Xiaomi's hunger marketing. That is not true scarcity either. There has always been a misunderstanding about Xiaomi's hunger marketing, as if Lei Jun really wanted to do hunger marketing, but in fact, it was accidental and hard to plan. Industries like mobile phones are hard to predict. A phone that takes great effort may not be popular. A random product might become a hit. My articles on the official account are the same. Those I write carefully have low click-through rates, while casual ones have high click-through rates. So, the predecessors in the mobile phone industry told Lei Jun that in this industry, companies either die from overstocking or never from hunger. Lei Jun was very afraid, so he only took orders first, then placed orders. Coincidentally, Xiaomi was very popular, so it seemed like hunger marketing. This was actually formed unintentionally. So, hunger marketing is actually hard to plan. Therefore, the scarcity I talk about is not hunger marketing. The public easily attributes the success of public figures to their wisdom. This is media misleading. I have interviewed many companies, and it's not what the media reports. Back to the topic, the scarcity in the past was due to insufficient production capacity. Now that production capacity is excessive, how can there be scarcity? We can ask: In the past, when hungry, the first need was to eat enough. Now that we are full, what do we eat? Let's give a few examples: Chinese liquor, as soon as it sells well, immediately goes into full production, and eventually, there will be oversupply. Only Moutai doesn't do this. No matter what the market demand is, its annual output is only over 10,000 tons, and it must be stored for a certain number of years before going to market. What does Moutai's approach count as? I think it's creating scarcity. When products are not enough to sell, there are two options: one is to work overtime to produce, and the other is to raise prices. Moutai chose the latter. Moutai also gave a very reasonable reason for choosing the latter: first, building a factory elsewhere cannot meet quality standards; second, the production process determines that quality is not good without several years of storage. This reasonably formed scarcity. Economics tells us: as long as there is scarcity, prices rise. Increasing production keeps prices unchanged, increasing revenue; keeping production unchanged, raising prices, increases profit. These are two different business ideas. There is also French wine, which also sells scarcity. There are only so many bottles each year, for decades or even a century. They also give a very reasonable reason for scarcity: the best grape-growing belt. Now that the basic needs of various industries in China have been met, what remains are high-end needs and upgrade needs. I told some chamber of commerce people today that we need to learn how to increase profits while sales decline. The past thinking was: sales increase, profit grows. That era is over. We need to make high-end products. High-end is not only about good quality but also about a certain scarcity. As long as production is excessive, prices will fall. If prices fall, is it still high-end? When we talk about scarcity, there are several implicit preconditions: first, it is not aimed at ordinary consumers; it must be for relatively high-end consumers, or ordinary consumers occasionally trying something new. Second, it must have characteristics. What are characteristics? It means not easily replaced and not easily expanded in production capacity. Anything that can easily expand production capacity is easily copied and imitated. Third, we must find some natural factor. Natural scarcity is highly recognized by consumers. For example, if making milk, if you say it can only come from a certain area in Inner Mongolia, then there is a natural factor. Anything that can be solved with modern processes is hard to form scarcity. Now everyone is rushing to do high-end, and high-end production capacity is infinitely expanding. As a result, high-end is not profitable either. If production capacity expands infinitely, there is no scarcity. The example of the baked bun I mentioned on the official account, how did he create scarcity? He told us: first, my baking method, others don't know it, only the inheritor knows it; second, my oven is slow, and it can't bake many. This formed scarcity. This is scarcity produced by natural factors. Ethnic industries around the world can mostly explain scarcity with natural factors. A few years ago, I went to Fujian. The government has restrictions on the scale of tea planting on mountains. I think that's good. But tea farmers expand planting scale for business. It is said that when production capacity is insufficient, they even collect tea from Anxi. In a few years, the tea from Wuyi Mountain will definitely be everywhere. Chinese tea can completely create scarcity. Once scarce, prices will rise. A group member asked @Mr. Liu Chunxiong: Mr. Liu, I noticed a phenomenon this year. Fruit yellow peach farmers can sell at 12-15 yuan per jin, and yellow butter peach can sell at 20-30 yuan per jin. Is that scarcity? It is scarcity, but in a few years, it won't be scarce. You only have production capacity scarcity, which is easy to expand. You need to say that this butter peach only tastes good under certain soil and climate conditions, then it will be truly scarce. I eat a kind of soft pomegranate that can only grow in a small area, so it is scarce. Mr. Fang Gang: Going from scarcity to mass is the whole process of brand death. When something is everywhere, there is no need for a brand; only price is needed... Mr. Liu Chunxiong: Industrial products can only have short-term production shortages, not true scarcity. Let me tell a story I've told liquor companies. Liquor, new liquor is not good to drink within a year, even Moutai is the same. Although Moutai's base liquor is stored for several years, after blending, it is still not good to drink, mainly because it is a bit harsh and not smooth enough. Even good liquor, after blending, needs to be stored for at least a year to be good. The liquor the factory gives me, I must store in the basement for more than a year. But factories can't wait; new liquor goes out immediately, so the liquor is not good to drink. I gave a factory a few suggestions: take a good liquor, blend it, and store it for a year, say 10,000 bottles, then let everyone taste it. They will definitely say it's good. But tell everyone there are only 10,000 bottles. Each bottle sold is one less, and new liquor can only be drunk the next year. As the liquor decreases, the price rises. This created scarcity: telling everyone that to drink good liquor, you have to wait a year. A liquor distributor invited me to drink. He brought out a jar with half a jar of base liquor, stored for at least three years. I thought it was very good, so I told him: don't sell anything else, just use today's jar (5 jin) and sell only base liquor. Raise the price as you sell. It is said he hadn't made money for many years, but this method made him money quickly. Mr. Fang Gang: Let's sort out where the path to creating scarcity is? Scarcity is a good thing! High, big, and strong is a bad guy! Mr. Liu Chunxiong: The spirit of craftsmanship is also a reasonable reason to create scarcity. Mr. Fang Gang: When a brand tries to satisfy everyone's needs, that is when the brand degenerates into a category, or even dies! Mr. Liu Chunxiong: High-end demand cannot blow up like ordinary products. It must be laid out and cultivated slowly. Let me give an example of making high-end products many years ago. In 1998, I took a position at Shuanghui. At that time, Shuanghui and Chundu were in a price and quality war, both almost failing. Chundu launched Chundu King, and Shuanghui launched King of Kings. Both were high-end products with 40% gross profit, while ordinary products lost 800 yuan per ton. In 1998, there was a big flood, so we donated goods. Usually, companies donate unsellable inventory, but Shuanghui donated the highest-end King of Kings for people to eat for free. At the same time, the government requisitioned ham sausages, and we also sent high-end ones. After the flood receded, many consumers had tasted King of Kings and went looking for it everywhere. It sold out immediately. At that time, I personally heard rumors that Shuanghui King of Kings was made of human meat because it was so delicious. This year, there was another big flood, and I always think of this example. Back to today's internet thinking, isn't it just free experience? As long as it tastes good, why fear free experience? Now, the best way to promote high-end products is: select KOLs, let them experience for free, and then use the internet to spread. Now many promote high-end products by first distributing to channels, then promoting. The logic is wrong. If they eat for free and don't appreciate it, either the product is bad or the KOLs are wrongly chosen. Mr. Fang Gang: Yes, the logic is wrong... I'm afraid of this kind of scale thinking doing value. Key Opinion Leader (KOL) basically refers to those who have a voice on internet social platforms. Chinese name: 关键意见领袖, English name: Key Opinion Leader, proposed by Lazarsfeld, with influence types: single and comprehensive. Mr. Liu Chunxiong: Four conditions for KOL: love to try new things, love to spread, professional, and influential. Meeting two conditions is enough. Meeting all four is top-notch. Mr. Fang Gang: In traditional marketing, opinion leaders are captured through terminal control, especially catering terminals. Through stocking, promotions, exclusive agreements, etc., catering terminals are transformed into incubators for consumer representatives. This is also the original intention of buying stores... The eternal 28 rule, scarcity is not in the 8, the key is in the 2! Mr. Liu Chunxiong: High-end products cannot use channel promotion; they must use circle promotion. Mr. Fang Gang: Traditional marketing thinking cannot jump out of this, especially for those in the deep distribution system! Mr. Liu Chunxiong: A Tsingtao distributor gave me two boxes of "Red Luck Ahead." I took them out for friends to drink, and they all said it was good. I wanted to buy some for myself and only then learned the wholesale price was 30 yuan per bottle. Some people still drink it. Fang Gang is right. High-end must not use the logic of deep distribution and promotion. Drinking craft beer is addictive. I no longer want to drink ordinary beer and bring my own beer to restaurants. Mr. Fang Gang: Deep distribution is a sales artifact, but it will be a brand killer and the nemesis of scarcity! Mr. Liu Chunxiong: If beer wants to go high-end, it probably needs to learn from Germany. Mr. Fang Gang: The German model and the American craft beer model are what the domestic beer industry really needs to study hard. Mr. Liu Chunxiong: High-end liquor used to be "plate in plate," then "trunk," now there's no way. Mr. Fang Gang: KOL = internet "plate in plate." Mr. Liu Chunxiong: High-end is all about bringing your own liquor. The thinking of high-end liquor is worth learning for beer. Mr. Fang Gang: High-end products in traditional beer must be an independent force. The building of this force is not a cost but an investment! Mr. Liu Chunxiong: I think the price band of beer will greatly lengthen in the future, possibly even exceeding Germany. If beer companies want to do high-end, it's best to set up an independent team. Ordinary beer can't find high-end consumers at all. Mr. Fang Gang: Don't pick this team from the Red Army, otherwise, it's just changing the flag but not the medicine! Mr. Liu Chunxiong: High-end and ordinary beer have different distributors. Mr. Fang Gang: If today, beer sales remained at 7,000 tons as in 1949, today's beer price might exceed Moutai. Mr. Liu Chunxiong: Liquor, beer, and wine cannot be compared by absolute price. Mr. Fang Gang: Product: value + quantity control. Channel: circles + channels. Team: purebred Blue Army, independent operation! 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