The old thinking about brands is being overturned Brands are not just business results, static mental assets, cognitive assets, or even the concept of brand equity; they are becoming an important source and engine of corporate performance growth. Based on years of observation in global and Chinese brand strategy consulting practice, I will share with you. My views may not be universally applicable, but they represent some observations and summaries from practice, hoping to help you expand cognitive boundaries. Overall, global brands face three major challenges: First, generational differences For the first time in human history, five generations—fully five generations—will use the same brand, which poses a huge challenge to brand management, brand positioning, and brand extension. It requires maintaining high relevance to the brand's original core audience while ensuring that when new generations come in, they don't feel it's a brand for their grandfathers or great-grandfathers, that beer isn't just grandpa's beer or dad's beer, but also my beer. Many brands face this problem, especially durable goods brands and FMCG brands. Facing generational differences, how can brands achieve differentiation while maintaining relevance, that is, both firmly retaining core customers and continuously acquiring new ones? This is a challenge. Second, digital invasion When consumers connect with enterprises, and consumer behavior and attitudes can be digitized, recorded, and analyzed, and when needs and desires can be deeply understood, it will greatly impact business models, expand possibilities for enterprise-customer connections, and thus bring more space for creating customer value. Depending on the industry and the individual's position within the enterprise, perceptions of digitalization will vary. Some industries are more "upstream value," such as chemical products or some B2B products, where we first feel digitalization in supply chain digitalization, digital factories, digital twins, etc. If you are in FMCG or customer management industries, you will feel more digitalization occurring in "downstream value," but regardless of the connection, the impact is enormous. Let me give an example. In the past, building and shaping a brand often required shelf space. But if we still understand the brand battlefield with shelf thinking today, we will find that there are at least six shelves in China: 1. Platform e-commerce, such as Tmall and JD.com; 2. Interest e-commerce rising from short videos; 3. Private domain of mini-programs and WeChat; 4. Offline retail terminals; 5. Food delivery industry, such as Meituan and Ele.me; 6. Community group buying. The diverse impacts brought by digital invasion deserve special attention. Third, wealth polarization In today's world, the "Matthew effect" in wealth distribution is becoming increasingly evident, leading to a high diffusion of premium consumption and low-end consumption. This affects our understanding of customer purchasing behavior, purchase motivation, and customer lifestyle patterns, which is of great significance for building brands. So what is the ultimate impact of these three challenges? It changes the consumer base and changes customers. Basically, we can divide consumers into two major groups: one is the ESG group, and the other is the new consumer group. The ESG group is concerned about social interests, especially environmental protection, social sustainable development, greenhouse effect, circular economy, and conservation-oriented development. This group is growing rapidly in Europe, America, and China. What do ESG groups desire and demand from brands? They hope these brands do not just focus on making money and pursuing short-term economic growth, but truly act as social enterprises, creating social value, not just economic value. So they will like, resonate with, and be loyal to brands that care about and create social value. The new consumer group mainly refers to people born between 1998 and 2005, with a population of about 150 million. These people are new consumers of categories; their purchasing standards, brand choices, tastes, and lifestyles are being defined, and they are waiting for brands to help, guide, and co-create new living standards. So they are very valuable, and in terms of customer lifetime value, their time is long and their value is great. In brand awareness and brand attachment, the new consumer group has very strong self-standards, which differ significantly from other generations. In summary, ESG groups and new consumer groups have some very clear expectations of brands in the digital age, mainly in four aspects: First, consumers expect brands to have attitudes and values Making a good product that is functional and meets needs is just a threshold and no longer allows a brand to win. When all products can meet consumer needs, how do consumers choose brands, decide which brand to be loyal to, or resonate with? At this point, attitude matters: Does the brand align with my values? Does it resonate emotionally with me? In fact, consumers don't have much affection for brands, but why do some brands seem to be loved by consumers? The reason is that they resonate with consumers. Consumers don't love the brand; it's that the values described by the brand align with their inner thoughts. Through the brand's reflection, consumers ultimately fall in love with their own inner dreams, emotions, and persistence. So we need to build attitudes, form values that express ourselves, resonate with consumers, and let consumers better love themselves through the brand. Second, consumers expect brands to be interesting Life is stressful today; we don't want to be heavy every day. There are many uncontrollable external factors. We hope to live comfortably and happily, and hope brands can bring small blessings and add new fun to life. Today, there are many interest-based brands, such as figurines and Pop Mart, which can bring new small touches, interests, and happiness to our lives. Brands should bring interest and inspiration to consumers and help them cultivate hobbies, so that brands can gain love. Therefore, whether a brand is interesting, joyful, and can give new meaning to life determines whether it can enter the hearts of young people. Third, consumers expect brands to become a medium for building "weak ties" Before WeChat, the number of human relationships was only about two to three hundred, but with WeChat, our weak ties have greatly increased. Weak ties cannot bring security or social status, but they bring possibilities, new knowledge, and happiness. So brand communities are a very important carrier of weak ties. Good brands, strong brands, help us build weak ties. I personally believe that humans are essentially animals defined by relationships; there is no independent will. The communities we join will greatly affect consumers' perception of the world and their happiness index. Good brands should revolve around values, unite interpersonal relationships, and help consumers expand themselves. Fourth, consumers expect brands to be trustworthy expert leaders Especially in complex, high-ticket products, the product awareness and purchase process is very complex, and the consequences of buying wrong are serious. We call this high involvement consumption, requiring slow thinking. In such cases, brands need to build trust like experts. Brands are becoming the engine of growth Today, for enterprises to achieve growth, brands are a very important source. Because brands that can meet consumer expectations can enhance customer stickiness and increase consumer loyalty, thereby promoting brand growth. For enterprises to achieve performance growth, one source is structural growth, and another is strategic growth. Brands belong to strategic growth, which can help enterprises grow substantially. True brand value is reflected in achieving organic growth and external growth. Among them, organic growth refers to increased sales revenue and increased profits. External growth refers to mergers and acquisitions. Whether the transaction conditions of M&A can be reached largely depends on whether the brand is respected by the acquired party. Therefore, brand is a very important lever in M&A. Brands are a major source of corporate performance growth Since brands are an important engine of growth, what is the basic logic of brand growth? It is nothing more than more customers, more frequent purchases, higher prices, a higher share of the customer's wallet, and more friends recommended to buy. In connecting with customers, brands are the most important; brands are the fundamental way for enterprises to establish relationships with customers. There are three core logics of brand growth: The logic of brand growthFirst, for new brands, the key to growth lies in high customer acquisition Emerging brands such as Jiangxiaobai, Naixue Tea, and Genki Forest have not spent a lot of time advertising or doing offline promotion. They can rise quickly because they have learned to tell stories, shaping narratives through storytelling, bringing content, and then forming customer acquisition through online word-of-mouth. In the past, building a brand required advertising and distribution first, and only after selling a lot did brand awareness and recognition slowly form. In today's digital society, this logic has changed. Brands must first create a high-energy awareness and story, then form word-of-mouth effects. In the past, brands were the result of long-term management; today, brands are a management tool to help enterprises grow rapidly.Second, for high-end brands, the key to growth lies in high repurchase This is mainly because customer acquisition costs are too high, so managing customers and enhancing customer lifetime value become key.Third, for mass brands, the key to growth lies in high penetration High penetration means customers can buy products anywhere. In fact, for mass brands, customers rarely have strong loyalty; convenience value is more critical. Many mass brands, such as cola, soda, and snacks, are not that important categories. If they don't advertise, consumers will forget them. Among the 7.4 million terminals in China, if you enter 6.8 million terminals, you are a mass brand. We believe that brands are not only business results but also a management tool.Trends in brand growth in the digital intelligence eraFirst, "brand activism"—we call for value-based products. Mr. Kotler emphasized in his new book "Brand Activism": Brands cannot just make money silently; brands cannot just show how good their products are. They must care for customers in difficult times and form value resonance. Brands should have such leadership, like Unilever, Starbucks, Vanke, Erke, Nike, etc.Second, brands must transform from communication brands to narrative brands. In the past, enterprises used brainwashing methods for brand communication. Today, enterprises create content and customer value to help customers better understand products and achieve brand communication. This is a narrative brand. This is a huge shift. In the past, many marketing terms, such as seizing customer mind, visual hammer, emotional anchor, were words for treating enemies, as if customers were prey, and enterprise marketing was the hunter, hunting customers everywhere. This reflects extreme arrogance towards customers. Today's brands no longer use advertising brainwashing based on information asymmetry. Today's brands respect customers, learn from customers, co-create with customers, and resonate with customers. So we must change the past "looking up" brand from making others worship to becoming intimate and equal friends. This is reflected in a series of value brands, IP brands, from product brands and corporate brands to scenario-based brands, such as Lululemon, Three-Winged Bird, Casarte, Pop Mart, and Duanmu Liangjin, which do well in this regard.Third, form structured brands. Brands can seek breakout and stock growth through multi-brand portfolio strategies, professional focus layout, etc. GE, Johnson & Johnson, Siemens, and Toshiba are representatives of corporate brand portfolio growth, while Genki Forest, Lixiangguo, Naixue Tea, and Transsion are large-scale growth from single brand to multi-brand portfolio.Fourth, build ingredient brands. Technology and innovation are the grand narratives of today's world. Technology patents must be branded to become key drivers of consumer brand awareness and purchase. Intel, Leica, Dolby, Mini Cooper, CALB lithium batteries, and GORE-TEX are representative ingredient brands.****No brand, no growth Finally, let me summarize. In today's digital era, brands are not just a static asset; they have become the growth engine of enterprises. The upgrade from mental asset to growth engine is a key feature of brand marketing in the digital era. As Mr. Kong Shou, a mentor at Kotler Growth Lab and a famous brand expert, pointed out: The fundamental of business operation is to create customers and build brands. Without brands, there is no growth. I strongly agree with Professor He Jiaxun's statement: "Brands transcend the life of entrepreneurs. What entrepreneurs leave to their next generation and society is not patents, funds, or land, but a beloved brand." In the final analysis, a brand is a value promise to customers. I hope everyone can continuously deliver value promises to our customers, to those who love us, and to those we love.From April 6 to 8, 2023, the 8th China FMCG Innovation Conference will be held at the Tiwoli Hotel, Chengdu Intangible Cultural Heritage Expo Park (601 Guanghua Avenue, Section 2, Qingyang District) with the theme "New World, New FMCG." On April 6, Cao Hu, Global Partner of Kotler Consulting Group and President of Greater China and Singapore, will share at the conference on topics related to "New World, New FMCG." We sincerely invite colleagues to attend the conference and discuss together!