Introduction Strong Group is a highly respected enterprise, always professional in its moves, and its late-mover advantage in the jelly and seaweed sectors was impressive. However, it stumbled with the Youlemei milk tea project. Xiangpiaopiao, using positioning theory, fought back tenaciously and ultimately consolidated its leadership. Let's sort out the mistakes Strong Group made.
Same Team Operating Two Products Jiang Jianqi, the head of Xiangpiaopiao, believes that besides the initial huge mistake of extending the Strong brand to milk tea, the biggest mistake Strong Group made was using the same team to operate both jelly and milk tea products. Xiangpiaopiao's team only had milk tea, so all their energy was focused on it; if milk tea didn't do well, they would go hungry. In contrast, Strong Group's team had to consider both jelly and milk tea, and when milk tea became difficult, they could easily retreat back to jelly. If Strong Group had adopted a divisional structure, with each product managed separately, they might have had a better chance of winning.
| Company Name | Guangdong Strong Group Co., Ltd. | Zhejiang Xiangpiaopiao Food Co., Ltd. |
|---|---|---|
| Business Scope | Production and sales of jelly pudding, seaweed, and milk tea series | Professional manufacturer of cup milk tea |
Launching Bagged Milk Tea Lowered Category Value Launching bagged milk tea might have been another mistake by Strong Group. Bagged milk tea was first introduced by Xiangyue, and Strong Group followed. Bagged milk tea was more convenient to transport and had a lower unit price (a few cents per bag), which sounded attractive. However, the few-cents bagged milk tea also used the main brand name, severely lowering the category's value (cup milk tea sold for 3-5 yuan in supermarkets). Cup milk tea originally targeted college and high school students and new white-collar workers, but the few-cents bagged milk tea suddenly lowered the target consumer to elementary school students, effectively lowering the psychological price floor for Strong's cup milk tea.
Lack of Distinctive Name Deng Delong, general manager of Trout & Partners, also believes that the brand name Youlemei itself is at a disadvantage compared to Xiangpiaopiao. The characters You, Le, and Mei are individually elegant, but together they lack distinctiveness and fail to resonate with consumers' minds. Xiangpiaopiao's name seems a bit rustic, but like Wahaha, it easily penetrates consumers' minds. Similarly, Strong is an excellent brand name, while Meihaoshiguang (Beautiful Time) is not ideal.
Should Not Have Lowered Prices Secondly, Youlemei should not have lowered prices. Price cuts are like drinking poison to quench thirst; in the short term, distributors increased orders, but in reality, the price comparison on shelves further proved Xiangpiaopiao's leadership. Moreover, price cuts squeezed product profits, leaving the brand without momentum. In contrast, Xiangpiaopiao raised prices again after the 2010 increase; with profits, companies invest more in the future, and the brand can develop healthily.
Lack of Positioning Finally, the biggest mistake Youlemei made was not developing its positioning in time. When Xiangpiaopiao reached 100-200 million yuan in sales, it couldn't afford to take on the industry leader role at that scale, but Youlemei didn't position itself in time. Looking at the expensive Jay Chou commercials, although the emotional appeal of "held in the palm" had some rationality, the messages conveyed were vague, missing the opportunity for positioning. (Jiang Jianqi also dismissed Youlemei's advertising creativity, believing that choosing Jay Chou was correct, but the ads were too artistic and sales were poor.) Although Youlemei's ad spending was more than three times that of Xiangpiaopiao, the advertising effect was greatly diminished. When Xiangpiaopiao had fully established itself, Youlemei should have developed a completely different positioning, like Pepsi vs. Coca-Cola, each holding its own ground and developing in its own positioning area. If so, Youlemei would not have fallen into the subsequent price war. If the two brands could complement each other like yin and yang, the entire cup milk tea category would have grown more healthily.
Ad Copy "What am I to you?" "You are my Youlemei!" "So I'm just milk tea?!" "That way, I can hold you in my hands."
Ad Copy "For milk tea, choose Xiangpiaopiao"
The cup milk tea war has basically subsided, and the industry ranking is set. Various signs indicate that Strong Group has accepted defeat and is reducing investment in Youlemei. This, in turn, gives Jiang Jianqi a bigger worry: he fears that Youlemei will stop investing and gradually fade away. In his view, a category only thrives when everyone works together. For example, JDB and Wanglaoji started an advertising war last year, but an undeniable fact is that both sides' sales increased, so it's not a zero-sum game. He also cited the example of Jingpai, a health wine company, which even lent money to competitors to jointly develop the health wine market, preventing the industry from being marginalized by consumers.
In this regard, Lulu and Yeguo are cautionary tales. These two companies have good products and secured leadership positions, but both have stagnated because the entire category hasn't grown. To this end, Xiangpiaopiao has begun adjusting its advertising strategy, downplaying its leadership role, changing slogans from purely competitive and suppressive to "Good taste, naturally popular" and "Xiangpiaopiao milk tea, delicious!" shifting the advertising appeal to "milk tea tastes good," aiming to get more consumers to accept the message and drive category growth.
Source: Food Economy
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