New Distribution Note: On January 12, 2019, at the "2019 Opening Marketing Layout" China FMCG New Marketing New Year Course, co-hosted by Teacher Liu's Forum and New Distribution, Professor Liu Chunxiong, the originator of the new marketing topic, delivered a keynote speech titled "2019, Opening Layout."
2019 opening layout. Before discussing the layout, we must first understand a question: What does 2019 mean for enterprises? What kind of year is it? If we don't clarify this, it's easy to go wrong by charging ahead blindly.
Recently, many people have predicted a macro winter. While not entirely wrong, it could harm us. Why? Because many people analyzing the macro economy see only the forest, not the trees.
1998 was a macro trough, but it was the beginning of a micro new marketing cycle. Some enterprises rose rapidly during the macro trough. A macro trough is precisely the start of a new micro cycle, and 2018 was the same. That's the first judgment.
The second judgment: look at 2019 from 2018. In the first half of 2018, the word "anxiety" appeared frequently. In the second half, through visiting enterprises, we found many had found solutions, showing a spring scene. Some achieved 100% or 200% growth. So the basic judgment is: In the second half of 2018, the tactical systems for new marketing and new retail took shape.
Strictly speaking, this opening marketing course is not primarily about expert lectures, but rather about enterprise representatives who have formed representative tactical systems for new marketing and new retail sharing with you. Over these two days, the protagonists are the enterprises. China's benchmark new marketing and new retail enterprises are all here for you to examine.
So this meeting's format is different from usual: enterprises present, experts comment, and deep communication with enterprises is possible. After each enterprise shares, experts will comment. These enterprises may not be the largest, but their models are the most representative.
These enterprises can be called leaders. They spent years exploring and succeeded. Are you willing to become a follower? So I believe 2019 is the year of promotion and popularization of new tactical systems, and also the first year of the second half of the internet.
From a historical trajectory and marketing micro perspective, 1998, 2003, 2012, and 2016 were turning points. I believe this year is too. In this turning year, a batch of excellent enterprises will decline, and a batch of new enterprises will rise.
1998: Market focus shifted downward. Enterprises that didn't follow entered Wu Xiaobo's "Great Failure" stage.
2003: Deep distribution. Many enterprises adopted deep distribution.
2012: E-commerce rose. Many traditional enterprises fell into difficulty. Those that didn't keep up with e-commerce suffered.
2016: Traffic dried up. We thought traditional enterprises were struggling, but e-commerce was even harder.
2017-2018: A micro window period. The typical feature was that traditional methods no longer worked, but new methods hadn't been found yet.
In December 2016, Jack Ma proposed new retail. In the first half of 2017, I proposed new marketing—one thinking from the retailer's perspective, the other from the brand's perspective. After exploration in 2017 and 2018, I believe 2019 will see it take shape. That's the general trajectory of Chinese marketing. If you don't keep up with it, you may be abandoned by history.
2019 is the first year of the second half of the internet (new retail, new marketing). Although new marketing and new retail were proposed earlier, it's this year that actionable tactical systems have formed.
What is the second half of the internet?
In the second half of the internet, there will be no distinction between offline enterprises, social e-commerce enterprises, and e-commerce enterprises. Originally, enterprises occupied one dimension. In the future, everything will be integrated: the army takes to the air, and the air force lands.
Many enterprises and capital will find that physical entities are gold mines. Many capital parties are seeking investment opportunities where traditional enterprises can combine with the internet. What was the first half? New city development, social e-commerce, e-commerce, B2C—these didn't exist before. What is the second half? Old city renovation. Pure e-commerce is also traditional and needs renovation. Traditional offline enterprises also need renovation. So the second half of the internet can be seen as old city renovation.
What is a "first year"?
The concepts of new retail and new marketing were proposed long ago, but hearing these concepts doesn't mean you can use them. Why? Because they are still abstract concepts without concrete tactical systems. My judgment: In 2018, the tactical systems for new marketing and new retail basically formed, reaching a stage where they can be promoted and popularized.
Let's look from four angles:
01 Theoretical preparation: Teacher Shi Wei proposed "three-dimensional space" and "trinity"** **
02 Tools and equipment: Mini-program popularization—connecting three-dimensional space
03 Infrastructure construction: B-chain (channel digitalization), C-chain (connecting C-end)
04 New models: Various models of new retail and new marketing basically mature—new tactical systems
First, theoretical preparation
Teacher Shi Wei's "three-dimensional space" concept system can connect traditional, social e-commerce, and communities. In the past, marketing had only one dimension: offline channels. E-commerce created the second dimension, and communities created the third. Each dimension formed its own business system, but it was only one-dimensional.
Shi Wei's three-dimensional space tells us that entering communities from offline, and from communities to cyberspace, these three can be fully connected. For example, offline training courses can enter communities through text-image live streaming, and then enter cyberspace through video live streaming. There are over 200 people on-site, but live streaming in communities can reach tens of thousands, and in cyberspace, hundreds of thousands or even millions.
In the past, marketing was offline channels—one-dimensional drive. The new marketing system is three-dimensional drive. Why is Pinduoduo more powerful than Taobao? Because Taobao has only one dimension, while Pinduoduo uses two: cyberspace and community group buying. Future new marketing and new retail systems, as observed, basically use three-dimensional space.
How to understand connecting offline, community, and network? 1. Offline has strong relationships; deep distribution is still useful. 2. Communities have strong interaction; communication is convenient. 3. Mini-programs have strong push capabilities. So in the future, one-dimensional drive will be helpless against three-dimensional drive. Whether offline or online, single-dimensional will be crushed by multi-dimensional.
Three-dimensional space drive will become the positional warfare of the internet. In the past, the internet had no positions; now there is positional warfare. Unified's requirement for salespeople: Become air-ground forces—both air and ground, with no distinction between online and offline. Everyone does both offline and online.
Three Squirrels' No. 1 employee, "Mouse Little Crazy," general manager of Squirrel Small Stores, requires for offline stores: "Integration of person and store, dual IP strategy." "Integration of person and store" means the owner is the franchisee and store manager. Only when the owner has offline relationships does the small store have traffic sources. At opening, stores where owners have offline relationships generate 60% higher sales than those without. Integration of person and store means online and offline can connect. A store manager is an IP, and Three Squirrels is also an IP. In the past, we managed traffic, but we didn't know who was behind it. It didn't find you, and you didn't find it.
Now many people use the word "retention": traffic that can be retained, familiar traffic, or "killing the familiar." In the past, the internet was about "killing the unfamiliar"—doing one thing today, another tomorrow. Now it's about serving one customer for a lifetime, called "killing the familiar," mining customer lifetime value. Teacher Fang Gang proposed community marketing—thoroughly penetrating a community. The internet should thoroughly penetrate a local area, creating a dense internet.
Trinity, also proposed by Shi Wei. Marketing's core must solve two major problems: 1. Awareness; 2. Transaction. In the past, awareness was the marketing department's function, and transaction was the sales department's. One did communication, the other did channels; one was brand-driven, the other channel-driven. Now? Communities do awareness, mini-programs do transactions—trinity. Awareness, transaction, and relationship building are trinity. This is the new marketing theory.
You must be clear about this, otherwise you truly cannot understand the value system of new retail and new marketing.
Second, mini-programs: universal tools
Although offline and communities could interact in the past, they couldn't connect with cyberspace. Now, WeChat-based mini-programs, especially in the first half of 2018 when WeChat opened the pull-down function for mini-programs. Originally, mini-programs were a third-level menu in WeChat, found under "Discover." Now mini-programs are a first-level menu. At this point, the convenience of mini-programs is crucial for moving from the second space (community) to the third space (network). Mini-programs successfully bring communities into cyberspace—this is the final link in internet tools.
Third, internet infrastructure
With theoretical systems and tools, the next step is internet infrastructure. As Teacher Fang Gang said, "Use the internet to arm enterprises to the teeth." What infrastructure does the internet need?
B-chain is channel digitalization. In the past, it was called B2B, third-party B2B. Now some enterprises, especially large brands, are building their own B2B, from manufacturer to distributor to retail store, all digitalized. Information and transactions are completed on the B-chain, so it's F2B2R (F is brand, B is distributor, R is retailer).
Building the B-chain enables deep distribution, which previously relied on human-wave tactics, to no longer depend on manpower but on internet technology.
What does relying on internet technology mean? When B-chain transactions reach a certain stage, big data emerges. Future management won't rely on salespeople visiting daily but on precise strikes based on big data. As long as the internet runs to a certain stage, big data will be generated, so big data will become standard for brands.
How advanced is internet technology now? In the past, salespeople had to count product facings and competitors' facings in stores. Now, internet AI makes it simple: take a photo with a smart camera in the store, input it into the system, and the system automatically analyzes product facings, competitor facings, and different SKU facings. Then it analyzes a regional market. Does the salesperson still need to manage? The system automatically produces results.
No longer will we say salespeople are lazy, but rather that our product's facings have problems or competitors' facings are like this. So using the internet to arm enterprises will definitely reduce the personnel needed for human-wave tactics.
China has 6.8 million terminals. Some enterprises control 1 million terminals with 10,000 people. But when B-chain construction is done, they can double to control 2 million terminals. No enterprise in China has achieved 2 million terminals so far, but this one did because it uses B-chain. The result of B-chain is improved channel efficiency, which is also the foundation for building new marketing and new retail systems.
C-chain: In the past, whether doing marketing or retail, we didn't know where consumers were. Retailers had consumers register as members but still didn't know where they were; only at purchase did they know. Now it's different: any new retail must have online scanning. Either scan at checkout, or download an app or mini-program. This way, as long as a consumer transacts with you, a relationship is established and a link is created. In the past, deep distribution was "sweeping streets." Now internet marketing is "sweeping people." As long as you establish a transaction with a consumer, a relationship occurs.
The above theoretical preparation, tool preparation, and internet infrastructure are all prerequisites. The final link is the tactical systems for new retail and new marketing.
Fourth, new models
The formation of a tactical system marks a new era's maturity and popularization. A conceptual system plus tactical systems will create an era.
Let me briefly share the tactical systems for new marketing and new retail. New retail currently has roughly four categories:
First: New species retail, such as Hema Fresh and Yonghui. These are innovative and have nothing to do with tradition.
Second: Various innovative retail. These also have little to do with tradition. They may be cases within the industry: new retail coffee (Luckin Coffee), new retail tea drinks (Nayuki, Heytea), and unmanned retail. Some have proven failures, others await proof. They are innovative and unrelated to existing stock. The rest are related to existing stock.
Third: KA new retail, mainly traditional KA renovation, such as Better Life new retail. New marketing's heaviest parts are two: KA (hypermarkets).
Fourth: Community e-commerce and new retail small stores, which carry 40% of China's sales. Small stores now also have community e-commerce. Of course, this includes innovative new retail forms like Three Squirrels (Squirrel Small Stores). It's not traditional e-commerce, but it is e-commerce new retail.
Summarizing the third and fourth types, they share four commonalities.
First, connecting C-end
Connect with consumers through apps, mini-programs, and communities. In the past, we didn't know who consumers were; we only knew when they came to consume. Now, through apps, mini-programs, and communities, we clearly know who they are. I "lurk" in Kaola Select's (community group buying) No. 1 store. It pulls over 400 consumers with offline relationships into a community, interacts with them, sends mini-program reminders before 11 PM to place orders, and delivers by 10:30 AM the next day, reminding consumers to pick up. Community e-commerce connects three-dimensional space: from offline strong relationships to mini-program ordering.
Rely on offline channels to connect three-dimensional space. Without offline channels, it can't connect; otherwise, it becomes WeChat business, which becomes annoying.
Awareness (communication), transaction (ordering), and relationship—trinity. Communities do communication and education—that's awareness. Transactions and ordering can be done "seamlessly" via mini-programs. Offline communities all have relationships.
Users online, content, ecosystem. Why do community e-commerce all start with C-end? Because it's the highest frequency, with the highest interaction frequency.
This is the first point: all new retail has this feature, while traditional retail doesn't—only membership systems.
Second, diversified orders: Online orders, on-site scanning, self-checkout—each can connect with consumers. Technical means are not a problem at all.
Third, scene recreation and deep experience: Recreating terminal scenes and deep experiences are hard for tradition but present in new marketing and new retail. In the past, terminals were just places to sell goods, with little attention to scenes, at most deep promotions. Without experiential scenes, high-end products don't sell well. Combining scenes and experience means people not only buy things but also want to browse and rest.
Fourth, O2O: A few years ago, O2O was said to be a total failure, but it was actually bad timing. New retail will provide "to-home" and "to-store" services. Fresh produce must be time-limited, otherwise lunch can't be eaten.
Fifth, category structure adjustment: In the past, community e-commerce had two unsolvable problems: First, location and rent—good locations have high rent. High sales, but all profits go to the landlord. Now, as long as you establish online and provide to-home services, the terminal's relationship with location weakens. So some people sweep traffic, build stores online, and close offline stores. Relationships matter more than location. Second, store size is small, selling the highest-frequency products with high price transparency, making it hard to profit—high sales but no profit. Community e-commerce has an advantage: its SKU count far exceeds what the store can hold. As long as the warehouse has it, as long as the mini-program has it, there's no need to display in-store. Plus, order today, deliver tomorrow, solving a problem traditional retail never could.
If you achieve the above five points, traditional retail can't compete, and even traditional e-commerce can't, because e-commerce orders today and ships from Beijing. New retail orders via mini-program, prepares at midnight, and delivers to your home the next morning. New retail eats traditional retail and will also eat part of e-commerce.
These are the basic features of the new retail tactical system. It relies on internet technology, and you can't fight it. Charging with swords and spears against machine guns is no match.
New marketing and new retail have great similarities. Traditional marketing has two driving models: brand-driven and channel-driven. What are the two in the internet era? First, IP-driven. IP is social currency. Traditional ads aren't watched; now IP is spread by others. Second, the past channel-driven becomes three-dimensional drive. Through offline deep distribution into communities, through communities into the network, three-dimensional space merges to form three-dimensional drive.
Three-dimensional drive has two methods:
1. "Terminal-dependent" three-dimensional drive. Typical cases: Unified and Xiaoshile. Unified's traditional supply chain is strong, deep distribution is well done—a tens-of-billions enterprise with a team of over 10,000. Its overall transformation is basically complete, relying on terminals to complete three-dimensional drive (Mr. Huang Wei, General Manager of Unified's Lifestyle Division, will share this afternoon). Xiaoshile, when it started in 2017, mini-programs didn't exist, so it used two-dimensional space, connecting offline channels and online communities. In the second half of 2018, it connected three spaces: communities, offline channels, and mini-programs. Pre-Spring Festival sales were very good.
2. "Experience-oriented" three-dimensional drive. The best current example that can be modeled is Lidu (Mr. Tang Xiangyang, General Manager of Lidu Liquor, will share on the afternoon of the 13th). By adopting an experience-oriented new marketing system, sales have doubled year after year. A bottle of unboxed liquor now costs 730 yuan—this is experience-oriented deep distribution.
Many enterprises haven't treated experience as a marketing system, but those that tried found that after consumer experience, the direct result was that the most expensive products were all bought. Many enterprises making high-end products lack the method. In fact, there's only one way to get consumers to accept high-end: deep experience. Tell consumers one result: "The most expensive thing is the best."
This isn't a single-enterprise phenomenon; it's a cluster. Some enterprises discovered it but didn't promote it as a tactical system comprehensively.
Three-dimensional drive tactical system 1: Terminal-dependent
Rely on terminals to enter three-dimensional space. Enterprises can fully rely on deep distribution's strong relationships to form high-density, high-intensity communication in a short time. Xiaoshile once achieved, within ten days, 400,000 people participating in communication in a county of 600,000, ultimately selling 10 million yuan from May 2018 (when it became an agent) to Spring Festival 2018. Neither CCTV ads nor e-commerce could form such high-density, strong-awareness communication in a short time, but connecting three-dimensional space can.
Two steps: First, channel community-ization, community channel-ization. Second, from community to cyberspace, ultimately achieving "regional communication cross-coverage" (communication detonation) in the short term, achieving high-density, high-intensity communication. That's called detonation.
Community channel-ization and channel community-ization sound simple, but most can't do it. Yesterday I communicated with an enterprise. They kept asking. I said, "You play WeChat every day; how can you not know how to do this?" Playing WeChat and using WeChat as a business model are different.
The terminal is the smallest marketing unit because it can achieve awareness, transaction, and relationship. The terminal as the smallest unit is also the smallest unit for entering "three-dimensional space."
Point-line-surface-body: Break through at points, connect points into lines, lines into surfaces, surfaces into bodies. In the past, even a small enterprise without brand influence was fine because deep marketing's advantage is: one store done is a point, one street done is a line, several streets done is a surface. The internet battlefield is also point-line-surface-body. New retail must "eat dry and wipe clean" surrounding consumers. Once you enter a county, that county is yours. Even a small enterprise, as long as the product is acceptable.
Why is the internet actually a dividend for small enterprises? Because you have no barriers (no stock baggage), no fear of being small—small can do well, no thresholds. So three-dimensional space greatly lowers marketing thresholds.
Organizational system: become air-ground forces. People doing channel distribution often say, "Sales are bad because the brand is weak; market performance is bad because the brand is weak." Air-ground forces mean every salesperson does branding, every salesperson does channels, every salesperson does three-dimensional space. There's no distinction between marketing and sales departments; everyone is the marketing department because you have communication capabilities and tools. So the organizational system must change. Why did Unified rename its sales department to marketing department? Because employees are air-ground forces, doing internet positional warfare.
Suitable for high-density market enterprises and products. If in the past deep distribution was only suitable for high-density products, then entering cyberspace, like Lidu, doing other provinces is definitely low-density—only doing experience, entering communities and cyberspace, still works well. So low-density products are also easy.
Three-dimensional drive tactical system 2: Experience-oriented
Experience-oriented logic: Deep experience brings strong awareness, which brings high communication. For example, I participated in a Lidu immersive experience: I blended a bottle of liquor myself, signed it, then took photos and shared—behind that is communication. Recently I went to Lidu and chatted with salespeople. I heard this year's experience activities exceeded targets. Planned 50,000, but 100,000 experienced. At the same time, these 100,000 were all communicating. Annual ad spend is less than 1 million yuan. Every experiencer is a communicator.
The simplest method is to graft onto terminal-dependent three-dimensional drive.
Suitable for mid-to-high-end products, low-density products, and new products.
This is a brief overview. Over the next two days, when we discuss cases, each will have expert comments telling you why they did well.
Opening layout: What to lay out?
2018 is the second half of the internet and the first year because the basic internet new marketing tactical system has formed. Since the tactical system has formed, 2019 is not only a turning year but also a turning year for Chinese marketing. That is, marketing turns regardless of whether enterprises turn, because society turns; if enterprises don't turn, they'll be eliminated.
Because 2019 is the opening year, there are two levels of layout: First, advance traditional models. Second, lay out new tactical systems. Capable enterprises experiment and explore; those without capability benchmark.
Opening layout: 1. Step onto the rhythm of the second half
Correctly understand 2019's value in business history. Sometimes looking back, the future is blurry. Imagine five years from now looking at this year: will I have regrets? If you don't want regrets, what now? Do it now.
Make three choices: Lead (model breakthrough), follow (benchmark, model replication), or lag (continuous observation). If you can't lead, follow—find a benchmark and replicate the model.
Benchmark tactical systems: choose benchmarks and models. Deep communication, not just listening to lectures. Listening is just the beginning. No matter how good the talk, go see the site.
Opening layout: 2. New tactical systems
Benchmark—who is your dish?
Internally pilot and validate, turning others' tactical systems into your model and routine.
Promote and popularize.
Opening layout: 3. Infrastructure construction
New marketing and new retail have become heavy-asset business systems. This heavy asset isn't about money but requires the following construction. B-chain: channel digitalization. C-chain: connecting C-end. For C-chain, think about how to interact with tens of millions of users, or hundreds of millions, and whether you have the technology. After connecting C-end, what content to provide and how? For example, my feeling about Better Life: products sold daily, sold out by afternoon. Better Life can tell consumers what the best-selling product is across the store, and push targeted ads. With enough transaction frequency, you can predict consumption trends and the next consumption time, pushing targeted ads. Taobao does this now: precise targeting. Full-chain: full-chain sales. Brands might wonder why they should think about new retail. Because new retail's landscape has emerged. If brands don't know how to cooperate, a lot of opportunities are wasted. Cooperation generates dividends. So these infrastructure constructions must be done, otherwise playing internet marketing is just playing blindly.
Opening layout: 4. New organization, new functions
Organization is the solidification of functions. Enterprises need organization, but traditional organization is the biggest obstacle to transformation. At the 2018 Sugar and Wine Fair, I summarized three sentences: Bosses need to change circles, internally change organizations, and heavily invest in young people. Internally change organizations: the two core departments were usually marketing and sales. Unified changed marketing to "market content department" and sales to "marketing department." Connecting C-end requires content production, so new functions emerge.
Marketing department: air-ground forces—independent marketing units. Market content department: new products, new scenes, new experiences, IP, big data, content production. Most people haven't heard of these. What to do? Hire new people.
In the future, the marketing department will shrink because fighting with nuclear weapons doesn't need many people—streamline the front line. The back office must be strengthened, with more people. Originally, by proportion, one person in marketing to 100-200 in sales. In the future, it may differ: few on the front line, many in the back office, because front-line operations need back-office support systems.
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