Source: Kong Shou (ID: firesteal13)
In early July this year, the globally renowned Kantar BrandZ released its 2021 Most Valuable Global Brands ranking. A total of 18 Chinese brands made the list, making China the country with the second-highest number of brands for consecutive years. However, a closer look at these 18 brands reveals that they are mostly from the internet industry, such as Tencent, Alibaba, Meituan, JD.com, Douyin, Huawei, Xiaomi, and Baidu. Among consumer goods brands, only Moutai appears.
China has already produced world-class internet brands, but when will it produce world-class consumer goods brands?
In fact, compared to the internet industry, the FMCG industry relies more heavily on branding. The core competitiveness of internet brands lies not only in the underlying technology and functionality of their products but also in their ability to retain users through scale effects, network effects, and high switching costs, thereby building a moat.
For the FMCG industry, when consumers make purchasing decisions, brand awareness and popularity are the primary decision-making factors, followed by emotional factors such as brand image and personality that can influence consumer attitudes and feelings.
Therefore, building a brand is a must for the FMCG industry. Look at the world's leading FMCG giants; they all have a portfolio of world-class brands.
For example, Nestlé, the world's number one, owns not only the mega-brand Nestlé (including Nescafé, Nestlé Health Science, Nestlé Gold, Nestlé Mom, etc.) but also famous brands like Perrier, Gerber, Wyeth, Totole, and Hsu Fu Chi.
PepsiCo, ranked second globally, owns Pepsi-Cola, 7 Up, Mirinda, Lipton, Lay's, Tropicana, Gatorade, Quaker, Bugles, and Doritos. Mars, ranked seventh, owns Mars, Dove, Snickers, M&M's, and Wrigley's, among others.
(Image source: PepsiCo official website)
So, how exactly do you build a brand, especially a brand portfolio? When will Chinese FMCG companies have their own brand portfolios? This article aims to discuss this topic.
Specifically, it covers: 1. The origin of brands—how a brand is born; 2. Multi-brand management—how to manage multiple brands under one company; 3. Building brand competitiveness—what truly drives sustained brand growth.
Where do brands come from?
In the 1990s, Al Ries and his daughter Laura Ries co-wrote a book titled "The Origin of Brands," which put forward a core viewpoint: The driving force of business development is differentiation. The best way to create a new brand is to differentiate your product or service from an existing category, creating a new category that you can enter first.
A new brand is like a new species. New species do not evolve from existing ones but rather differentiate from them. Brands come from category differentiation—that is Ries's viewpoint.
A typical example is Procter & Gamble (P&G), which has five major shampoo brands—Head & Shoulders focuses on anti-dandruff, Rejoice on smoothness, Pantene on nutrition and repair, VS Sassoon on styling, and Herbal Essences on herbal ingredients. Each of P&G's shampoo brands differentiates the large shampoo category by product function, segmenting it into sub-categories like anti-dandruff shampoo and smoothing shampoo, and then occupying that category with a single brand.
This is a classic way for new brands to emerge: each new brand occupies a unique product functional selling point, thereby completing the differentiation of the original category.
Therefore, when we talk about marketing today, the primary task is to nail STP: Segmenting, Targeting, and Positioning. Among these, S comes first. Only by finding your market segment can you know who your target audience is and how to define your product. The method of market segmentation is category differentiation.
But the question is, what era are we in? It is an era of big bang. Not only is information exploding, but products are also exploding. Today, our marketing and brand management must be based on the premise of this big bang era.
On the product side, regardless of the category, product homogenization is unprecedentedly severe, shelves are saturated, and products with various segmented functions are emerging endlessly.
Take shampoo again. Besides the segmented selling points mentioned above, there are also black hair, anti-hair loss, fragrance, silicone-free, amino acid, hyaluronic acid, scalp care, and even 3-in-1 or 5-in-1 shampoos. Anti-dandruff can be further segmented into men's and women's versions. So, if you were asked to create a brand-new shampoo brand now, what would you do?
Continue developing new segmented functions? But every shampoo function you can imagine is already on the market. It is increasingly difficult to differentiate through segmented functions, and blindly pursuing differentiated functions will only lead you to develop a shampoo that few people actually need.
To create a new brand today, you need both product function upgrades and innovation, but more importantly, marketing innovation. Ultimately, marketing innovation comes down to returning to the consumer, identifying specific target groups, and meeting their differentiated needs.
Because different types of consumers, even if they have the same functional needs for a product, have different requirements for brand personality, style, temperament, and emotional attitude.
In other words, to create a new brand today, you need to segment both vertically by product category and function, and horizontally by target audience and lifestyle. The key to lifestyle segmentation lies in insight into consumer life scenes.
Brands originate not only from category differentiation but, more importantly, from scene evolution.
Only by capturing different segmented scenes can you keep up with contemporary China's changing consumption concepts, lifestyles, and the rising young consumer group.
Only by capturing different segmented scenes can you lock onto the consumption needs of target groups, open up new markets, and build brands with long-term vitality. Insight into and capture of consumption scenes is, in my view, the core capability of contemporary consumer goods companies.
For example, in the coffee industry, all coffee shops used to imitate Starbucks in creating the "third space" social scene. But today's new coffee brands have deeply penetrated numerous consumption forms such as office scenes, afternoon tea scenes, fitness scenes, and breakfast scenes.
Another example is the instant noodle industry. The overall industry decline in recent years and the rapid growth of high-end instant noodle brands (such as Uni-President's Tang Daren, Nongshim, and Nissin) are ultimately due to the evolution of instant noodle consumption scenes from the past main meal scene to today's late-night snack scene. As a result, the product competitiveness of instant noodles has shifted from convenience and speed to good taste, generous portions, and nutrition.
Moreover, today's consumers, in order to satisfy their desire for better taste and texture, are willing to give up the convenience of direct hot water brewing and instead cook the noodles in a pot. This has become the logic behind the rise of high-end premium instant noodles.
It replaces the home-cooking scene occupied by instant noodles and ordinary dried noodles with upgraded products. (The other important scene occupied by instant noodles—outdoor main meals—is also easily replaced by developed food delivery services, so instant noodles can only evolve toward late-night snacks.)
For example, the "Huamian" brand produced by Zihaiguo focuses on "quick-cooked noodles with large chunks of meat," using the selling point of "large chunks of meat" and various new flavors such as Sichuan-style half-tendon half-meat noodles, crab roe noodles, crayfish noodles, and tomato diced beef brisket noodles to attract consumers. It upgrades the noodles, soup, toppings, and side dishes comprehensively, thus completing the occupation of the home-cooked noodle scene.
This is because many white-collar workers today are tired of food delivery and are returning to the kitchen. For them, cooking for themselves is not just about filling their stomachs but is an attitude of taking life seriously, a beauty of everyday life, and a small happiness in ordinary life.
However, for young people who are not skilled in cooking, learning to cook is time-consuming and laborious, and they find it troublesome. After spending great effort cooking, plating, and presenting, if the dish doesn't taste good, it is disappointing and a blemish.
So, targeting this consumption scene, Zihaiguo launched another brand—Xiaoqi Kitchen. It uses ready-made sauce packets, seasoning bases, and other cooking kits to help young people with zero cooking skills make dishes comparable to restaurant quality. Easily, they can enjoy a great meal and even show off their skills in front of friends and family. This is new scene evolution.
These two major brands both come from the popular domestic FMCG company Zihaiguo. Zihaiguo not only has its own self-heating product series, such as self-heating hot pot, self-heating rice, and self-heating noodles, but also creates a series of new brands through scene-based product innovation and sub-category exploration.
First is the evolution of scenes based on the time variable. From the original three meals a day to five meals a day, adding afternoon tea and late-night snack scenes. Because for today's young people, eating on time and at regular hours is not easy.
Second is the evolution based on the occasion variable. For young people, who says eating must be at home or at the dining table? Offices, dormitories, street commercial areas, outdoor wilderness, and even in front of the computer or in bed can be dining locations. In these different scenes, consumers' requirements for food are necessarily different.
For example, outdoor activities are no longer just a sport but a lifestyle. More and more people are falling in love with outdoor sports, and on weekends and short holidays, they invite friends to go hiking, self-driving, cycling, picnicking, and camping. Although the outdoor sports equipment industry is now well-developed, having a hot meal in the wild remains a major pain point.
Zihaiguo's original self-heating hot pot is convenient to carry, but for hikers and outdoor sports enthusiasts, it may not meet portability needs. So Zihaiguo launched the Zihaidai brand, focusing on portable self-heating rice for outdoor use. Whether at an altitude of 4,000 meters or at minus 15°C, you just stuff the Zihaidai bag into your backpack, and in the wild, a cup of cold water can give you a hot meal anytime.
The emergence and rapid growth of these new consumption scenes are becoming the mainstream lifestyle of the new generation of consumers.
Only by addressing these scenes can brands find their growth points, gain insight into consumer groups, and lead new lifestyles.
For an FMCG company, only by capturing these diverse, changing, and pluralistic scenes can product innovation and upgrades have direction, and can it develop different brands to meet the different needs of different consumers, thereby finding its own explosive point.
How should brands be managed?
Once a company has built different brands based on different consumption scenes, how should it manage its multiple brands? This is the second question in brand building.
To answer this question, we need to start from the beginning. The brand management system originated from P&G's invention. In 1879, P&G launched the soap brand "Ivory Soap," which started its rise and gradually grew into today's FMCG giant. Having tasted success, P&G launched another soap brand, Camay, in 1923, but this new brand did not perform well.
Later, P&G research found that Camay's poor performance was due to its team, advertising, and marketing strategy being too similar to Ivory Soap. So P&G assigned a new team to handle Camay's marketing and hired an independent advertising agency for it, and Camay's sales quickly grew. Subsequently, in 1931, P&G introduced the brand manager system. One brand manager is appointed for each brand, leading a dedicated team responsible for the brand's operations. The brand manager's authority spans market research, product development, packaging design, advertising production, promotion, and other full-process product and brand-related matters. Through the brand manager system, a multi-brand management system is created, matching different management teams and market strategies to different brands. This is the common brand management rule today. The brand manager is actually the predecessor of what the internet industry now calls the product manager.
Undoubtedly, brands play a central role in marketing today. Companies are committed to building brands one after another. However, "brand extension" and "multi-brand operation" have always been highly controversial topics in the marketing world.
Many marketing theories and experts argue that companies should not engage in multi-brand building because it obviously leads to resource dispersion, insufficient spending and effort on each brand, and ultimately poor performance for all brands, or even self-competition. Many companies start with multi-brand strategies but eventually have to return to a single brand; such cases are common.
Even P&G, which invented the brand management system, has been divesting food brands, pet care brands, and some hair and beauty brands since 2005, cutting and selling nearly a hundred brands to complete its slimming plan. Finally, P&G focused on two major industries: laundry and cosmetics (i.e., locking onto the core bathroom scene, with all brand extensions under this scene).
So, although diversification and multi-branding are objective needs for many companies, and companies should indeed launch different brands to respond to different consumption scenes and groups, they should pay attention to two issues when implementing a multi-brand strategy:
1. Brands can be diversified, but the industry should not be too scattered, otherwise synergy effects will be lost.
2. When a company has many product brands, it needs to find its strategic focus, prioritize, and distinguish between primary and secondary.
Take PepsiCo and Coca-Cola as examples.
The "Cola War" is a classic case in marketing history. Although Pepsi's tactics were not without highlights and were praised, in the end, Pepsi did not shake Coca-Cola's dominance in the cola market. When consumers want a cola, the first association is always Coca-Cola.
From a product brand perspective, Coca-Cola is far stronger than Pepsi-Cola. But from a company operation standpoint, PepsiCo is stronger than Coca-Cola because PepsiCo owns not only Pepsi-Cola but also Lipton, Lay's, Gatorade, Quaker, and a host of other brands.
So, there is a view in the marketing world that losing the Cola War was not a bad thing for Pepsi; it might even be a good thing. It spurred Pepsi to create more brands outside the cola track.
For Coca-Cola, although Coca-Cola and Sprite are extremely strong, in the overall beverage market, carbonated drinks are showing a decline. Consumer health awareness is increasing, and emerging markets like sparkling water, tea drinks, energy drinks, and coffee drinks are growing vigorously.
So Coca-Cola proposed a new brand management strategy called "Dragon and Rabbit." The dragon is the core brand that bears the main sales and market, such as Coca-Cola and Sprite. The rabbit is an innovative brand that fills market segmentation spaces and follows consumption trends, such as Schweppes, Chunchashe, Youcha, Culiangwang, and Chunyue Guoshui in the Chinese market.
The dragon is powerful, fierce, and has a very long lifespan, while the rabbit is flexible and changeable, and more importantly, rabbits have amazing reproductive capacity and population numbers.
The "Dragon and Rabbit" market approach has given me much to think about. It helps clarify the primary and secondary logic behind brand management. However, I believe the true "Dragon and Rabbit" strategy is not a combination of a big brand plus many small brands.
The true "dragon" should be the core technology and system that supports multi-brand development, thereby enabling the development of many "rabbit"-type rapidly growing brands and ensuring these small brands can survive and grow.
For a company, the truly reliable "dragon" is not a strong big brand but the various capabilities behind the continuous incubation of new brands—innovation capability, supply chain capability, and brand management capability.
So a truly powerful brand management system, I would like to call it the galaxy strategy. In a complete and stable galaxy, there should be planets, satellites, and a star.
Planets represent the many product brands, operating for different target groups and market segments. Each planet brand has its own orbit, does not conflict with others, and has its own unique features.
Satellites are derivative products of planet brands, used for defense or attack against competitors, filling market gaps and compensating for the main brand's insufficient coverage, thereby enriching market strategy tactics.
The star represents the strong innovation capability and core resources behind the brands, providing light and heat to the planets. It is the axis of the enterprise and the center around which the planets revolve.
For example, Zihaiguo, from the very beginning of its entrepreneurship, laid out its brand portfolio to avoid the detours taken by the large groups mentioned earlier. It has many planet brands, including Zihaiguo, Huamian, Xiaoqi Kitchen, Chou Chou Luo, and Newton's Law.
It also has satellite brands, such as Zihaidai and Zihaizong, derived from Zihaiguo.
But most importantly, behind these brands produced by Zihaiguo, there is a powerful star supporting them: its product supply chain, self-heating technology, and factory equipment. It is worth noting that Zihaiguo's most numerous patents are not design patents but product patents.
With core technology and supply chain support, the company has strong power to empower the growth of many brands and help each brand find its own starry sky.
Zihaiguo has already completed the group standards for self-heating convenience foods and food-grade heating packs with the China Quality Promotion Association and the Chongqing Standardization Association. By promoting industry standards for food-grade heating pack technology, it aims to change the current uneven self-heating food industry.
In addition to heating packs, Zihaiguo also has leading freeze-drying technology and convenient-to-heat food-grade aluminum foil lunch boxes. With these patented technologies, Zihaiguo can create many convenience foods such as self-heating hot pot, self-heating rice, and self-heating porridge, build many new consumer brands, and construct its own competitive barriers.
Furthermore, Zihaiguo and its series of brands also represent the company's insight into and satisfaction of young consumers' psychological and emotional needs. Whether eating with family or alone, at home or outside, the most important thing is not to make do or be casual, but to eat happily and tastefully.
What Zihaiguo brings to consumers is not only satisfaction for the taste buds and stomach but also satisfaction for the spiritual world, which other brands cannot imitate. With an ecosystem of planets, satellites, and a star, a company can operate a powerful brand cluster and achieve world-class status. This is Zihaiguo's brand philosophy and the underlying logic of multi-brand management.
How can brands achieve long-term vitality?
The final question about brand operation is how a brand can go from being an internet sensation to a long-lasting brand with strong endurance and sustained vitality.
General Mills, the world's ninth-largest FMCG giant, once summarized its corporate success secrets into four phrases: high-quality products, innovation, emotional connection with consumers, and social responsibility. This sounds very simple, but in reality, it is difficult to achieve.
Among these four secrets, the first two relate to the product itself, while the latter two relate to brand building. In my view, the value of a brand is essentially to help the product achieve three things:
1. Become an identification symbol that consumers can easily perceive and remember. 2. Become a cognitive label representing certain consumer emotions, images, personalities, and attitudes. 3. Become a popular ICON representing certain cultural values and social status.
Building emotional connections with consumers and undertaking social responsibility help brands become cognitive labels and popular ICONs, helping brands adapt to social groups and culture.
As Douglas Holt, author of the classic book "Cultural Strategy," said in the book: "Cultural expression plays a central role in creating consumer value... Cultural expression is also key to identity, being the most basic material for belonging, identity, and status."
A brand's cultural expression is the foundation of its long-term vitality.
Take two classic brands under General Mills: Häagen-Dazs and Wan Chai Ferry.
Häagen-Dazs is a globally popular ice cream brand and a myth in the ice cream industry. In brand promotion, Häagen-Dazs truly sells a sweet strategy.
We all know Häagen-Dazs's classic slogan: "If you love her, treat her to Häagen-Dazs." Because of this slogan, Häagen-Dazs successfully became popular in China, not only becoming a symbol of love and the dream of countless young women but also a representative of quality life and taste.
Of course, with the rise of the equality movement, today's new-generation women will not wait for men to treat them to Häagen-Dazs; they will buy it themselves and reward themselves.
So Häagen-Dazs's current slogan is "Indulge yourself." Buying a box of Häagen-Dazs is not just about buying a high-quality ice cream product; more importantly, it is about self-love and enjoyment. From "love her" to "indulge yourself," the change in person represents Häagen-Dazs's different understanding of the spirit of the times, while the constant is Häagen-Dazs's capture and shaping of consumer emotions and social culture. From brand naming to brand promotion, Häagen-Dazs is very skilled at injecting emotional and cultural value into its products.
For a company, whether it builds its business by launching its own brands or by acquiring brands, the key is to adapt its brands to the consumers and social culture of the market, actively integrating into local people's lives.
For a Chinese food brand, its cultural origin is undoubtedly the long-standing and profound Chinese culinary culture. Chinese cuisine has various styles of dishes, ever-changing tastes, and diverse cooking methods. This is the foundation and nourishment for every Chinese food brand.
But to fully leverage culinary culture and build food brands, the key is to combine traditional culinary culture with modern food industry production models and modern lifestyles, completing two transformations.
First, standardization of cuisine.
For example, the rise of McDonald's and KFC achieved the standardization of Western fast food. But food standardization is much more complex for Chinese food than Western food. Because Chinese cooking methods are more diverse and cumbersome. Moreover, besides the classic eight major cuisines, Chinese cuisine also includes various local snacks and folk delicacies.
Many local street food shops, although they have first-class products and taste, cannot expand beyond the local market. Consumers can only enjoy them when they visit the area, and they may have to wait in long lines (if the shop becomes a trendy food destination).
For the shop owners, due to limited visibility and influence, they often face small business scale, inability to support the shop, and the next generation's unwillingness to continue, eventually leading to the loss of skills due to lack of inheritance.
It is truly heartbreaking to see many flavorful snacks disappear. How can we preserve these traditional good tastes and skills?
In fact, the best way is not to designate a group of people to preserve them in the traditional production and operation methods, keeping them authentic. That would only make these skills less grounded, more detached from the masses, and disappear faster.
What we really need to do is study these snacks and then standardize them. Through standardized production methods, more people can taste and consume them, and more people can understand their production processes and flavor secrets, thereby helping them be passed down from generation to generation.
This is what Zihaiguo is doing today. Facing a vast array of Chinese foods, it has built a Chinese food matrix covering self-heating foods, quick-cooked noodles, innovative rice noodles, braised foods, frozen products, and more, including various consumption methods such as self-heating, brewing, quick-cooking, quick-stir-frying, steaming, and ready-to-eat.
Second, the cultural connotation of consumption.
Product standardization only completes half the work. The more important half is how we combine traditional Chinese culinary culture with contemporary consumers' lifestyles.
For this, we must first understand how today's consumers "eat" and what kind of food brands they need. Today's brand building must be rooted in traditional culinary culture and also committed to finding young people's lifestyles and expressing their personalities and emotions.
Take the Huamian brand mentioned earlier. What makes it stand out is not only the product but also the packaging design. Each product is a beautiful design work, featuring Chinese landscape paintings and works by emerging Chinese designers.
This new aesthetic product style makes a bowl of noodles not just a bowl of noodles but a small happiness in life, an indispensable sense of ritual, turning the smoky kitchen into a refined picture in life.
Another very interesting brand is Chou Chou Luo. The stinky smell can be said to be a unique landscape in cuisine. Like stinky tofu and stinky mandarin fish, it is not only a unique taste memory but also, for consumers, a lifestyle of pursuing novelty, fresh experiences, and constantly exploring the unknown and the world. So the stinky smell is becoming increasingly popular among young people, as seen in the recent explosion of river snail rice noodles.
So when Zihaiguo created the Chou Chou Luo innovative rice noodle brand, it combined the visual design with pop art style plaster head sculptures, emphasizing a lifestyle of pursuing new and exotic foods, an extreme and brain-opening food experience. This visual style, combined with the product taste, is very addictive, developing "brain-opening, truly delicious foods" for rice noodle lovers.
The reason these new brands are able to win consumer favor is that they complete the modernization of traditional Chinese cuisine, helping these traditional food products integrate into contemporary lifestyles, consumption concepts, and aesthetic experiences. These brands typically do the following steps:
1. Meet consumers' scene needs and inner needs, helping them find a sense of ritual and small happiness in life. 2. Tap into emerging designer power, enhancing the brand's unique style and aesthetic experience through design. 3. Brands not only find young people's expression but also export the spirit and connotation of Chinese culture, letting the power of Chinese brands and culture be seen by the world.
Only such cultural expression can help a viral product become a long-lasting brand continuously pursued by consumers. Based on standardized innovation rooted in traditional cooking culture and contemporary expression of Chinese culture, a food brand can find its vitality.
The birth of a brand should be based on category differentiation and scene evolution; the growth of a brand should be based on the ecosystem construction and management system behind the brand; the longevity of a brand should be based on the brand's injection of consumer emotions and integration into social culture.
This is the logic behind the rise of many new consumer brands today, and it is also the thinking of this article. New scenes, new tracks, new models, and new aesthetics are the revolution currently sweeping China's consumer sector. I hope this revolution can help us build first-class brands, thereby achieving first-class enterprises; build first-class brand portfolios, thereby achieving world-class enterprises.
References:
- Al Ries & Laura Ries, "The Origin of Brands," China Machine Press
- Douglas Holt, "Cultural Strategy: Using Innovative Ideologies to Build Breakthrough Brands," The Commercial Press
- Food Business Net, "Coca-Cola's Ambition: No Unconquerable Market, Only Giants Unwilling to Turn Around"
- "General Mills: How an Old Multinational Company Fought Its Way Out in China's Food Market," excerpted from "Bo Guang Ya Hua" by Zhang Jianjun and Zheng Yuting
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