FMCG products, as is well known, are characterized by high consumption frequency, short usage cycles, and a vast consumer base—essentially, everyone is a consumer. This means the FMCG industry is a massive cake with a huge market. But with a big cake, there are many to share it, and carving out a piece is no easy task. Due to low unit prices and rapid consumption, FMCG products are impulse purchases for consumers, who mostly buy based on preference, with low brand loyalty. Moreover, FMCG products have low technological content and low entry barriers, with little difference in technology and functionality between products. Therefore, packaging, advertising, price, and store proximity become decisive factors for most consumers. In the traditional FMCG business model, to gain a favorable position in the red ocean competition, companies typically adopt the following strategies:

  1. Continuously increase outlets and distribution coverage to make products more accessible to consumers.

  2. Optimize distribution models, channel control, and management.

  3. Increase advertising and marketing expenses to familiarize consumers with the brand and products.

  4. Improve production efficiency and reduce costs. Clearly, under traditional competition, FMCG competition is more about corporate resources and resource allocation capabilities. Large enterprises have more capital, professional teams, and richer experience in resource allocation, leading to a situation where the big get bigger, making it difficult for small companies to get a share. As a latecomer, entering the FMCG market through traditional competition becomes extremely challenging. So, as a latecomer, how can one enter the FMCG market and secure a piece of the cake? Le Chun Yogurt, the internet-famous yogurt brand, has provided a perfect answer to this question. When Le Chun entered the yogurt market, it was dominated by oligopolies, with several major brands holding the main market share—a veritable red ocean. Yet, since its founding at the end of 2014, Le Chun has spent three years, and despite pricing its yogurt at two to three times the price of most market yogurts, it still sells over a million boxes monthly, with a loyal user base of over a million. How did Le Chun manage to carve a path through this red ocean battle? In my view, the key lies in two words: innovation. More specifically: business model innovation. Traditional FMCG competition focuses on channels and resources. Le Chun took a different path, using the internet to interact directly with users, transforming the traditional yogurt industry's "resource-driven" business model into a "user-driven" one. The essence of resource-driven is product and channel-centric: typically, products are developed based on research and accumulated experience, launched through strong channels, and then feedback is awaited to optimize the product. The essence of user-driven is user-centric: first accumulate a core group of loyal users, develop products, build initial content, and then leverage these early users' organic word-of-mouth to create influence. How exactly does Le Chun implement user-driven?

  1. Change in organizational structure Traditional FMCG companies typically have five modules:

(1) Product development

(2) Brand building

(3) Promotion and communication

(4) Supply chain

(5) Product iteration and continuous optimization Le Chun, with its user-driven philosophy, created five corresponding modules: (1) Product operations

(2) Content operations

(3) User growth

(4) User operations

(5) User experience Traditional FMCG organizational structures are designed to reduce costs and improve efficiency, with users passively receiving products. Le Chun's user-driven structure places users at the core, attracting core users with superior product quality, and in the early stages, operating the core user group well, which then generates organic word-of-mouth to attract more users. This structure better ensures that products meet user satisfaction and acceptance, and user loyalty and retention rates are far higher than traditional FMCG.

  1. User-driven product development Whether traditional FMCG or internet FMCG like Le Chun, the core is still the product. Traditional FMCG typically develops products based on market research data, launches them for testing, and then iterates. Le Chun took a different path by involving users in product development. Before officially launching, Le Chun produced 3,000 trial boxes of yogurt, making 100 boxes daily, inviting fans to taste and provide feedback, then producing the next day's 100 boxes based on that feedback. Finally, they selected a few flavors that fans loved most. This ensures that products launched to market will be liked by the majority of users. Not only yogurt, but Le Chun's upcoming "snacks that don't make you fat" also adopted this strategy: first recruit a group of fans for tasting, and only after they pass the taste test, launch to the market. This approach has two benefits:

First, it ensures the product meets user needs.

Second, the fans who participated in tasting, having chosen the product themselves, are more willing to promote it organically. In the FMCG industry, organic user promotion is far more effective than spending huge sums on celebrity endorsements and TV ads.

  1. User-driven promotion and publicity After product development, the next step is promotion to build awareness. Traditional FMCG typically invests heavily in advertising. Le Chun relies on free, organic fan word-of-mouth. Le Chun's first major campaign was an article by CEO Denny, "A Weirdly Priced Yogurt Company Opened in Sanlitun," which, without any paid promotion, generated over 1 million reads within 24 hours, attracting a large user base. Later, Denny recalled, "The article's massive reach was entirely due to the initial 3,000 fans who amplified it." The core of user-driven is to first cultivate a group of loyal fans, impress them with superior product experience, and then leverage these initial fans to ignite word-of-mouth. Compared to traditional models, this approach not only achieves astonishing results but also saves significant promotional costs.
  2. Building trust and loyalty with users Le Chun's six-character motto is: openness, transparency, and participation. Le Chun fully discloses its yogurt recipes, and its Sanlitun physical store is even fully open to users, allowing them to see the entire production process. This way, users are no longer passive recipients; it creates a new user experience, and users are more willing to buy.
  3. User-driven supply chain Traditional FMCG uses distribution models, where companies do not directly contact consumers. This creates two problems:

  1. Multi-tier distribution squeezes margins, leading to higher prices and lower profit.

  2. After multi-tier distribution, manufacturers struggle to obtain first-hand consumer data, hindering feedback and lengthening product iteration cycles. Le Chun uses a direct sales model, both online and offline, directly engaging with users. This not only ensures users get better products at more affordable prices but also allows Le Chun to receive first-hand feedback and complete product iterations in a shorter time. Le Chun applies the user-driven philosophy, always placing users at the core, optimizing organizational structure, product development, promotion, and channel models. In the fiercely competitive yogurt market, it has secured a significant share. For companies still struggling in the FMCG industry, perhaps they can learn from Le Chun's model, abandoning traditional vicious homogeneous competition. By focusing on users, starting with differentiated products that users accept, and continuously applying user-driven thinking to optimize promotion and channel strategies, they can escape their predicament. Source: Marketing Flight (ID: YXHB18) -END-