The era of winning through a single tactic is over. Even a giant like P&G has failed to break the curse of brand aging. In March this year, 180-year-old P&G was delisted from Euronext Paris, citing "cost and management needs." The outside world tends to attribute this to the aging of the giant. Indeed, from fiscal 2013 to fiscal 2018, P&G's global net sales fluctuated downward, at $73.9 billion, $74.4 billion, $70.7 billion, $65.3 billion, $65.1 billion, and $66.832 billion, respectively, failing to surprise the capital market. In China, P&G used a combination of "channel + advertising + price." Its products took over a decade to cover all price points from high-end SKII to low-end Rejoice, Crest, and Tide, with channels spreading to supermarkets and small shops in villages and towns, and signing top traffic stars including TFBOYS. But this decline did not stop; in fiscal 2016, P&G's sales growth in the Chinese market was only 1%. "The market has no social security, no seniority, no old-age disability pensions. The market is a ruthless employer, and even the most loyal servant can be fired without a penny of severance." Peter Drucker, the father of modern management, said in his book "Managing for Results." The cruelty of the market is beyond imagination. More brands are integrated, sold, or simply disappear after aging. So what causes brand aging? Is it really an insurmountable threshold? Ineffective tactics and unavoidable brand aging Turning to the domestic market, from JDB to Dong-E E-Jiao, once-famous consumer brands have all fallen or are falling into the quagmire of declining performance.

  • In 2018, the "crash" between Zhonghong Co., Ltd. and JDB exposed JDB's performance report, which had been kept secret for years, to the public for the first time. Data showed that as of December 31, 2017, JDB Group was insolvent, with operating revenue of only 7.002 billion yuan in 2017 and a loss of 583 million yuan.
  • Dong-E E-Jiao ended 12 consecutive years of profit growth; in the first half of 2019, operating revenue fell 36.69% year-on-year, and net profit fell 77.62%. In explanations to the capital market, companies tend to attribute declines to a poor market environment. But looking at the global consumer market, it would be hard to find a better market than China. McKinsey defines Chinese people with annual incomes between 75,000 and 280,000 yuan as the middle class. This group has grown from 5 million in 2000 to 225 million today, and is expected to reach 275 million by 2020, exceeding the total population of Europe. On the other end, Pinduoduo, labeled as "consumption downgrade," is growing strongly. Its Q2 financial report this year showed that in the 12 months ending June 30, Pinduoduo's annual active buyers reached 483.2 million, a year-on-year increase of over 50%. So, Chinese consumers' demand is still there, and consumption potential is still increasing, but the market is more complex. On one hand, the domestic consumer market has huge consumption differences due to regional, urban-rural, and income differences; the consumption preferences of Beijing, Shanghai, and Guangzhou are vastly different from those of township markets. On the other hand, due to price wars and regional brands' monopoly on the market, some users' needs are not effectively met. Even if the environment is bad, why are competitors still growing and encroaching on your market share? As Jack Ma said, "It's not that the real economy is failing, but that your real economy is failing." When discussing why brands age and growth stagnates, the common view in the industry is that the market environment has changed, competitors have increased, and consumption habits have changed. Over the past 40 years of reform and opening up, China has released a huge demographic dividend, an era of easy wealth creation. Now that era is over, and companies have to face the situation of peak dividends, higher user demands, and increasingly fierce competition. Not only consumer goods, but many physical enterprises have encountered difficulties. Because of changes in the competitive environment, new knowledge or the integration of new knowledge is needed. But many entrepreneurs have not adapted to the new environment and still use the old tactics. For example, in the past 40 years, many companies have formed a set of habitual tactics: channel + advertising + price war. Offline distribution channels, online huge budgets for TV advertising, such coordination easily creates a national brand. But "once a tactic becomes routine, it can no longer bring competitive advantage to the enterprise; on the contrary, it only makes the enterprise more and more mired in a homogeneous confrontation," said Gong Zhenyu, a professor at the National School of Development at Peking University. When the first succeeds, imitators flock in. The next step is a price war. Chinese companies are keen on price wars, from home appliances to mobile phones and daily chemicals, price wars are common in various industries. After the rise of the Internet, with the addition of capital, this competitive form has become more intense: the thousand-group war, the ride-hailing war, the bike-sharing war, the e-cigarette war, the food delivery war... The final result is that products become more homogeneous and profits become thinner. "Positioning Theory" is no longer a panacea Brands are at their wits' end, looking for new ways to break through. Many people put their hope in positioning theory. What is positioning theory? It emphasizes that people's "mind space" is limited; when it comes to a need, they can only remember one or two brands. The only purpose of branding is to occupy a unique position in the minds of potential customers and persistently reinforce this cognition, so that when people talk about this type of product, they only think of this brand. This theory does not seek growth within the enterprise but changes from the brand, emphasizing the establishment of cognition in the customer's mind. The "fear of getting heaty" of JDB we see belongs to this category. It is regarded by many as a panacea, and brand owners seem willing to believe that as long as they repeatedly emphasize a certain positioning to consumers on TV and occupy their minds, they can regain growth. But the market environment is changing. First, the competitive environment has changed. Domestic brands are becoming more mature, and international brands are entering China head-on. In the global competitive environment, substitutes for brands are increasing and pervasive. Second, user needs have changed. Due to the influence of region, income, education level, etc., Chinese consumption has multiple levels. The rise of Pinduoduo shows that in fifth- and sixth-tier cities, high quality and low price remain a weapon. In first- and second-tier cities, luxury goods are still popular. The "2018 China Luxury Digital Consumption Market Insight" shows that one-third of global luxury sales come from Chinese consumers, and first- and second-tier cities are the main base for domestic luxury consumption. Compared with the post-70s and post-80s, the post-90s and post-00s pay more attention to personalized expression and favor niche brands. With consumption stratified, one tactic cannot cover all users. Image source: QuestMobile Third, the media communication environment has changed. The "2019 China Online Audio-Visual Development Research Report" shows that in 2018, Chinese netizens spent an average of 5.69 hours a day on mobile phones, a net increase of 1 hour compared to December 2017. This year it is likely to approach 7 hours. That is to say, excluding the 10 hours for eating and sleeping, most of Chinese consumers' time is spent on mobile phones. Mobile Internet directly leads to two results: users' time and frequency of watching TV are greatly reduced, reducing the effectiveness of TV advertising that traditional brands are good at; most importantly, the relationship between brands and customers is broken—with the rise of many forms of media such as WeChat, Weibo, video, and short video, consumers are flooded with massive information every day. This makes it more difficult for brands to accurately convey information to target users, and consumers face massive information, which means the brand is hard to be chosen by customers. Companies become isolated islands because they cannot connect smoothly with consumers. In the above changes, relying solely on "positioning theory" seems difficult to work. In a sense, positioning theory still belongs to the field of marketing or brand-level knowledge, but the dimensions of consumer experience are increasing, and the brand is no longer all that customers come into contact with. Moreover, to fully respond to market changes and solve the problem of brand aging, it is not just the brand that needs to change; it requires comprehensive changes in team, product, technology, channel, capital, and so on. In a rapidly changing market, can a static report or a marketing theory mainly acting on a local brand solve the problem of building a company's long-term competitiveness? What is the way to break through? Facing new problems, relying on a single tactic is insufficient. Against this backdrop, some domestic companies have successfully transformed, and their strategic approaches are worth learning from. Before 2017, due to the continuous encroachment of giants, Bosideng, which had a solid product quality foundation, saw declining performance. However, since September 2017, Bosideng has embarked on a magnificent transformation. In 2018, it appeared on the main stage of New York Fashion Week, achieving brand rejuvenation; performance rebounded strongly, with revenue exceeding 10 billion yuan in fiscal 2018/2019, reaching 10.3835 billion yuan. Bosideng brand show at New York Fashion Week 2018 Price wars in China's electric vehicle industry have lasted for several years and caused drastic changes in the industry landscape. Data shows that in 2009, there were more than 2,600 electric bicycle manufacturers with production licenses, but after a crazy price war, the number of electric vehicle companies shrank to more than 700 by the end of 2016. Many electric vehicle companies were punished and eliminated due to frequent price wars. However, Yadea Electric Vehicles grew against the trend. In 2017 and 2018, its global sales reached 4.06 million and 5.03 million units, respectively. By sales volume, Yadea's market share in China's electric two-wheeler market reached 11.6% and 14.1% in these two years, ranking first globally. Let's look at Feihe Dairy. Affected by the 2008 milk powder incident, domestic infant formula suffered a trust crisis, and gradually faded from the mainstream market in subsequent years. By 2015, domestic formula accounted for only about 39%, while foreign formula had a market share of 61%. However, by November 7, 2018, Feihe's infant formula overall performance exceeded 10 billion yuan, creating the first 10 billion in China's infant formula industry. In just one or two years, there was a counterattack. What happened in between? Junzhi Consulting is the operator behind the above cases. It has a set of Chinese tactics called "new generation competitive strategy consulting," which is more suitable for the current business environment. Michael Porter, the father of global competitive strategy, led the development of competitive theory, believing that differentiation is strategy and cost leadership is strategy, but in reality, it needs to be dynamically adjusted and responded to, not a static view. Jack Trout's positioning theory says that differentiation exists in the mind, not in the product, nor in the channel. But copying Western theories cannot help Chinese companies solve competitive problems. Therefore, Junzhi, in addition to integrating the above ideas, also combines ancient Chinese military wisdom and Drucker's management thoughts, emphasizing that in addition to the brand as a part, it must also enter the enterprise. That is to say, strategy formulation must include positioning; without positioning, it is absolutely impossible, but it is not omnipotent. Relying solely on a certain "positioning" or marketing thought cannot solve complex business problems. From the practical level, Junzhi emphasizes that the "results" that enterprises want include strategic results (such as market position), management results (such as team productivity), and operational results (such as revenue). Unlike most consulting services that mainly deliver reports, Junzhi believes that the purpose of a consulting company is to help enterprises achieve these three types of results. Thus, it proposes the "three-stage theory of consulting results" , emphasizing that the results of a consulting company are not reflected in how many expert consultants are trained to output knowledge, nor in how many satisfactory consulting reports are delivered, but in truly bringing results to client companies. For example, Yadea played the "high-end" card. In addition to its motorcycle background and focus on brand, Junzhi's research found that people who buy electric vehicles want to treat themselves better. Although some styles cost customers only two or three hundred yuan more, they feel their car is more high-end than their neighbor's, more face-saving to ride, and more durable. But because consumption habits differ by region, some areas have strong local brands and completely different competitors, so each city is a different "battle." To this end, in store operations, Junzhi assisted the Yadea team in comprehensively upgrading terminal store materials and image, introducing the industry's first five-star service standard to enhance consumers' purchase and after-sales service experience. In 2016, it further upgraded to higher-end smart and beautiful terminals, triggering an industry-wide store upgrade craze. In offline promotion, it abandoned the old three-piece activities of "discount, buy-give, trade-in" and introduced high-end brand promotion activities such as model displays, city flash mobs, college student rides, and test ride experiences. Through a series of strategic implementation actions, Yadea gradually established a unique and overall competitive advantage that competitors find hard to replicate. In management, the team must be united. But once a consulting company enters the enterprise, the most complex problem to solve is the human problem. To this end, in the process of implementing strategy, Junzhi not only helps solve the relationship between the enterprise and customers, but also helps solve four internal relationships:
  • The relationship of how people effectively produce results in work;
  • The relationship of contribution linkage between people and others;
  • The relationship of people breaking through their cognitive boundaries to accept new knowledge;
  • And the relationship of how people dynamically innovate to produce results. Thus, ultimately, the corporate strategy is attached and reflected in all aspects of enterprise operations. But people have habitual thinking; change is not that simple. Behind this, there needs to be communication again and again. For example, in the implementation of Yadea's strategy, Junzhi held 7 dealer training conferences within half a year to help them understand the logic and key points of "higher-end electric vehicles" and the sales strategies that should be used behind it. In the implementation for Feihe, within three months, it held hundreds of offline trainings, training tens of thousands of sales guides, and changing the concepts, methods, and approaches of customer communication. In terms of revenue, to reach the scale of 10 billion, because after exceeding 10 billion, there is a real foundation and condition to explore the industry's first place, and it is possible to attract more resources, such as talent, capital, user mind, and policy support. Looking back at these classic enterprise cases and reviewing the current Chinese market situation, one cannot help but sigh that the times are changing, and the competitive environment is also changing. Perhaps this means that the era of Chinese enterprises winning from a certain part is over. Source: HUXIU (ID: huxiu_com) Once adopted, the tip will be paid 400-2000 yuanChina FMCG + Internet Professional New Media****Committed to FMCG manufacturer and distributor transformation and channel digital solutions