How Do Traditional FMCG Professionals Do Internet Marketing?

About the speaker Cai Haibin: A practical expert in FMCG marketing, he has worked for well-known companies such as Qiaqia Food and Sanquan Food, and is currently the General Manager of the Retail Division at Zhongjing Grand Kitchen Co., Ltd. He is also the author of the sales book Breaking the Game: 31 Sales Battles. The following content is a summary of Cai Haibin's sharing on the topic "How Do Traditional FMCG Professionals Do Internet Marketing in the New Era" at the New Distribution Open Class, edited by New Distribution for the benefit of readers. From my introduction, you can see that I am a typical traditional marketer. First, let me share the pain points of being a traditional marketer in traditional marketing. These pain points were just talk a few years ago, but in recent years, especially in the past year, I have felt them more and more. I believe that traditional FMCG marketing currently faces seven major pain points: 1. Pain point one: Channel-driven growth is failing. Currently, relying solely on external growth such as developing blank markets is hard to sustain. Deep distribution is no longer viable, but many companies have no other choice but to continue down this path, even if efficiency is declining. It's a road with no future, but having a road is better than having none. A few days ago, I attended a company sales manager meeting. Facing market issues, the managers' solutions were to distribute goods, push inventory, and develop blank markets. This is the magic weapon of traditional marketing, but also a helplessness and even a tragedy. Even with such emphasis on channel development, traditional marketing's data-driven work on channels is far from sufficient. Many companies probably don't even have basic channel data, let alone anything else. 2. Pain point two: Brand-driven growth is failing. First, media fragmentation means that even with an advertising budget, there's nowhere to invest, and building a brand feels like there's no handle. Offline brand promotion is also becoming less effective, as young consumers rarely go to offline channels, and you seldom see young people in KA stores. The age group accustomed to online shopping was in their twenties and early thirties a few years ago, but now it's people in their forties and even fifties who are proficient in online shopping. The trend of popularization is becoming more obvious, and the effectiveness of previous brand-building methods is diminishing. More importantly, brands are no longer as important to consumers. Consumers may place an order just because they see a cool picture or because a friend recommends it, not solely because they trust the brand. The above two pain points are the most severe. The dual-wheel model of brand + channel has been a tried-and-true magic weapon for many FMCG brands, but now it's all failing, causing anxiety in traditional marketing. 3. Pain point three: Extremely high failure rate for new products. New product development in traditional companies is often based on gut feeling, and research is only done by a small internal group, resulting in a large deviation from market reality. Often, research shows a bright future, but once the product hits the market, it's a shock because the product doesn't sell at all. There is data saying the success rate for new product launches is 0.3%, or three in a thousand, but personally, I feel it's even lower. The high failure rate of new products makes traditional marketing even more difficult under the failure of the dual-wheel drive. Many brands have seen declines in recent years, and the deep reason is these issues, making it hard to find growth points. For example, Wahaha. 4. Pain point four: Little communication with consumers. Traditional companies value communication with channels, such as distributors and retailers, often holding distributor meetings and retailer forums, but rarely holding consumer symposiums. There is almost no communication between the company and consumers, and they rely entirely on old experience and feelings. In recent years, consumers have been changing, but companies react very slowly, and this is the reason. I think this is a common phenomenon among manufacturers, and everyone is indifferent to it. Few manufacturers can clearly explain the purchasing behavior and consumption characteristics of target consumers. Even if there is consumer research and positioning, it's very simple, such as positioning consumers as "young women aged 18-30," which is useless. 5. Pain point five: Channel squeeze. Traditional channels themselves are experiencing declining foot traffic and sales, putting more pressure on them. For example, in stores, there is no foot traffic, and it's common to see a few thousand square meters of store space filled with stock clerks and almost no customers. Operating costs only rise, and rent increases year after year. Stores can only focus on promotions, and the intensity of promotions is increasing, with 50% or 60% discounts becoming the norm. These discounts are forced on suppliers, who have no choice but to comply. If they don't deliver, they're fined; if they deliver, they lose money. If they want to leave, there are large receivables, so they have to endure, and those who can't hold on have to exit hastily. This pressure is also transmitted to manufacturers, causing a significant increase in channel costs, and everyone is suffering. 6. Pain point six: Low attractiveness to talent. The current human resource dilemma is twofold: on one hand, labor costs are rising. The daily cost of terminal promoters is now 20-30 yuan higher than three or four years ago, an increase of nearly 30%. On the other hand, it's increasingly difficult to recruit suitable people. College students are unwilling to go to traditional companies, especially consumer goods companies, because they think the development space is too small and the pace is too slow, making them unattractive. Real estate sales is actually a more popular career choice among college students. I don't know if you've participated in campus recruitment, but college students are truly the favored ones now, with companies lining up to choose them. The phenomenon of graduating and being unemployed is long gone. The lack of talent causes a gap in the company's team, and business development loses momentum. 7. Pain point seven: Inability to create good content. Although the product is still an important aspect of marketing, the era of relying solely on the product to win is over. Now, marketing must win on content, but traditional companies lack professional content creators. Company official accounts and Weibo may post articles, but they are just self-promotional content with few clicks. Moreover, internal forwarding creates an illusion among all employees that our communication is great, but in reality, it's only within the company or a small circle, which is self-congratulation. Some experts have suggested that every company should have an editor, and that's true. But now, having just one editor is not enough; you also need a graphic designer. The above are the pain points I believe traditional marketing faces. Many companies have these problems, and they are also the driving force for companies to transform to internet marketing. Everyone has this awareness, but after actually engaging with internet marketing, they find it's not as rosy as imagined. In recent years, I have been continuously trying: opening flagship stores on e-commerce platforms, having dozens of online distributors, and cooperating with B2B platforms like Alibaba Retail Link, JD New Channel, and RT-Mart e-Lufa. At the same time, targeting the consumption characteristics of young people, we have also started developing delivery channels. We work hard, but the results are often unsatisfactory. From my personal experience, there are some difficulties after going online that are hard to solve. I believe these difficulties are common, and I'll share them today for your reference. 1. Difficulty one: Sales conversion is hard. Going online is easy, but turning it into actual sales and profits is not. Many are just watching the excitement. The reasons are, first, increasingly fierce online competition and more choices for consumers; second, continuous innovation in content and products is needed. If your face is always the same, young consumers will quickly switch brands. We have statistics showing that our sales conversion rate on Tmall has dropped from 15% to 7-10%, and this is even with us strengthening traffic-driving methods like live streaming and Taoke. 2. Difficulty two: Adjusting the organizational structure is hard. The traditional organizational structure cannot support new marketing, and breaking and restructuring is not easy. First, there is resistance from all sides, which I won't expand on today. Second, we don't know how to restructure: should we set up a marketing department, a communications department, or a separate department? It's hard to choose. Third, there are no suitable people; it's hard to find them, and even harder to keep them. At the same time, using traditional thinking to set up an internet department will severely restrict the development of internet business. The inability to adjust the organizational structure well directly results in an inability to correctly interpret internet rules. It's like playing a game; if you don't know the rules, you can't play well. 3. Difficulty three: Resolving conflicts with existing business is hard. The company's existing business becomes a burden in internet marketing. Once online marketing conflicts with offline existing business, it's easy to compromise on the existing business, because it's tangible sales and profits. Especially when there is a conflict with the original channels, it's easier to feel pressure. For example, with B2B, once it harms the interests of regional distributors, it's hard to persist. And it's almost impossible for this model to coexist peacefully with distributors. Resolving this conflict is a major challenge. 4. Difficulty four: Customized products are hard. Customized products require breaking many things. Traditional companies often test the waters online and are unwilling to invest too much, thinking that customization will generate high costs and reduce the efficiency of the entire organization. This view is mainly based on sales volume. When internet marketing hasn't brought higher sales, it's not easy to ask the company to change first. So, the core of the difficulty with customized products is the company's determination, especially the boss's determination. 5. Difficulty five: Resolving price conflicts is hard. Online sales make it hard to highlight value. The premise for users to spend online is cheapness and convenience, so many platforms require more frequent price promotions and more varied gameplay. Sales volume overwhelms everything, and profits are rarely mentioned. Frequent price promotions directly impact the offline price system, but if you don't do price promotions, you have no resources, and you won't even have the chance to be seen by consumers. 6. Difficulty six: Driving traffic online is hard. Online traffic is in the hands of the platforms. Unless you bring your own traffic, and bringing your own traffic requires focusing on content, which is the biggest difficulty after traditional companies transform. Many platforms encourage brands to bring traffic from outside. If you bring in one traffic, they give you two, but how to bring traffic is still being explored, and there's no good method. 7. Difficulty seven: Marketing management is hard. Platforms are becoming more concentrated and larger in scale. Once a brand cooperates with a platform, it's held hostage by the platform. You have to cooperate with various platform activities, or they will threaten you with resources. Any market management or marketing management you want to do is basically impossible, and you're in a state of loss of control. The above are some difficulties I felt after a simple attempt to go online. I don't think my feelings are very deep, but I believe many traditional companies will encounter these problems when transforming to internet marketing, and they should be somewhat representative. If these difficulties are not resolved, companies will only dabble online. Below are my views on traditional companies doing internet marketing, as a starting point for discussion. First, the biggest difficulty for traditional companies doing internet is not external but internal, especially the top leader. If the top leader doesn't fully support or let go, it will be very difficult. I think any traditional company doing internet must pay absolute attention to this issue. If the top leader isn't ready or hasn't made up their mind, don't push forward for now. Second, traditional companies going online must have a clear understanding of the horse-race mechanism on platforms. E-commerce platforms develop rapidly, and everyone focuses on GMV, with strong explosiveness. The brands on the platform are subject to survival of the fittest, which is very cruel. If you're at the bottom, you have no resources; if you're in the middle, life is a bit better; if you're at the top, you enjoy various dividends. The Matthew effect is obvious. No one pays attention to you or takes care of you. Even if you have good sales offline, online you must start from zero. Third, no matter what, focusing on users and the C-end is always the right choice. And focusing on C-end fan marketing has great potential. Using the C-end to push the B-end and bringing your own traffic to connect with platforms is the only way to survive in the future. How to do fan marketing? There is a whole set of methods, and I'm still learning. Fourth, internet gameplay changes very quickly, which is a very important feature of internet marketing. Traditional companies should actively adapt and keep trying, but a very realistic situation is that the gameplay you learn now may already be the one abandoned by top merchants. This is cruel, but it's the fact. If you want to make a name in the internet, you must devote yourself wholeheartedly, not just try. Next, I want to talk about what I think are the keywords of internet marketing: mainly four: user, data, innovation, and explosion. First, user. Internet marketing absolutely values user experience, user needs, research, precise profiling, and precise targeting. All actions start from the user. Traditional marketing also has this awareness, but it often stays at the slogan level, and in action, there is a big gap compared to internet companies. Second, data. The internet has clearer data presentation. Every penny and every action has intuitive data, so you can clearly see which link has a problem. Data-driven adjustment of marketing direction allows you to precisely allocate resources. Traditional marketing has a huge shortcoming in data; collecting data often relies on a sea of people, and it's prone to fraud, leading to distorted data. Third, innovation. New gameplay and new models emerge endlessly, with very fast iteration. Traditional marketing gives you the feeling of following a set procedure: finding a good practice, replicating it nationwide takes a month, ensuring execution takes another month, and checking results takes another month. Three months pass, and one thing has just landed, while on the internet, it may have iterated five or six times in that time. Fourth, explosion. Internet marketing has extremely strong explosive power. Once it ignites, sales can be unexpected. It can tap into many people's potential needs, gather a crowd, and break through instantly. I chose these keywords because they are all shortcomings of traditional marketing. Only by striving to embrace the internet can traditional marketing achieve these. Actually, when Mr. Zhao (Zhao Bo, founder of New Distribution) first approached me, I thought I had nothing to share. I've been in the traditional marketing camp, with no innovative cases or impressive performance. What could I say? But Mr. Zhao told me I could talk about internet marketing from a traditional marketing perspective, which immediately sparked my interest. As a veteran of traditional marketing, I've been in contact with and learning about the internet in recent years, and when I have the chance, I try it out, hoping to gain something. Although the results are average, these are my personal experiences. I hope everyone can gain a little something. Finally, I want to end today's sharing with a small story: In Alice in Wonderland, Alice and the Red Queen run together for a long time and find they are still in the same place. Alice says, "In our country, we would have run a long way by now." The Red Queen says dismissively, "In this place, you have to run as fast as you can just to stay in the same place." I think our current environment is like the Red Queen's place. Let's run together, embrace the internet, and strive to stay in place, not be eliminated! -END-