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What is product thinking? It's whether we can turn a product into a solution for users in a specific consumption scenario. A light bulb is not a light bulb; it's a solution for illumination. Wine itself is not wine; it's a solution for socializing in drinking occasions. —Tao Shiquan, CEO of Jiangxiaobai
In the consumer goods sector, we are in a particularly interesting era of change. When generational culture shifts, you can see two obvious windows of opportunity—the revival of traditional brands and the birth of entirely new brands.
When I first started Jiangxiaobai, many thought our company would collapse immediately. Going back seven years, young people had low acceptance of baijiu, mainly due to two impressions—it didn't taste good (too spicy and strong) and it wasn't cool enough. If you went to a bar, you wouldn't see traditional Chinese baijiu brands; young people thought they were too old-fashioned.
But that was my original intention for Jiangxiaobai—to create a baijiu brand with a sense of fashion.
A Growth Curve Like an Airplane Taking Off
Traditional baijiu brands focus on creating a sense of classic and prestige, but we wanted to make a fashionable baijiu brand for young people, for those who thought baijiu was not tasty and not cool.
After persisting for five or six years, we have now achieved two number ones:
- Among the 25-35 age group, we have the highest market share in the baijiu category.
- Among all baijiu brands, we have the highest proportion of female users.
So, are there new opportunities in traditional industries? I think there are many; some industries are even worth redoing from scratch.
For example, the liquor industry seems to have been fortified by old brands like Moutai, but looking at it from the other side, you can find small breakthroughs with asymmetric thinking.
Currently, there are two obvious entry points: craft beer and wine markets. These products are growing rapidly in popularity and speed, and many investment institutions have already entered. However, I believe this is a business model that looks attractive but is hard to succeed with as a single product. Because craft beer and wine have strong agricultural product attributes and are hard to centralize, in these two categories, the channel and brand value of liquor stores may be greater than the brand value of the product itself.
In all consumer goods, if you want to create a large category and a large single product, you must essentially build a brand. There's a saying that makes sense: "Without a brand, no matter how high-end the liquor, it's just a bottle of flavored water."
This guides us to understand the most fundamental thing in this industry—brand is the core competitiveness of consumer goods companies.
How do we discuss the taste of liquor? How do we build a brand? Here are my summaries:
- Products like liquor and tea bring more emotional value. Emotional value means, first, you must have a differentiated taste, then let consumers perceive it, and then form a memory. Someone once asked me why Jiangxiaobai tastes different from Moutai. Actually, I wanted it to be different. These three points are prerequisites for building a food and beverage brand. After forming a memory, you must ensure the taste is consistent; the flavor cannot change. This is a supply chain issue. Liquor is an emotional beverage, not a rigid demand. Many products like to boast about how good they are, but the truth is consumers can't perceive it. So we see that successful liquor brands often give people an emotional brand perception. Emotional value is even not less than functional value.
- The growth of liquor brands, I believe, follows the curve of an airplane taking off. At first, the plane runs on the ground with great effort and difficulty, then there's a slight increase, still very flat. At a certain point, it suddenly accelerates rapidly. Many consumer brands are like this. For Jiangxiaobai, I worked very hard to go from zero to one billion, and it almost failed many times. But after passing the one billion point, it became easier. So, when we invest in consumer goods projects, we may not need to focus on early sales figures, but rather on whether the things done in the 0-1 process are correct. Is it building momentum? Is the airplane's engine powerful enough? Can the runway support the plane's takeoff?
Pay Attention to the Ability of the Younger Generation to Drive Brands in Reverse
Why did many people initially think Jiangxiaobai would fail? Because the mainstream view at the time was that to build a baijiu brand, you had to create a sense of tradition; the older the brand, the more competitive.
But I observed that Mercedes-Benz sales have been growing rapidly in recent years. Why? Because in the past two or three years, it has been working hard to create a youthful image. Its products, technology, and brand tradition are not issues, but many new-generation consumers tend to think this brand represents their parents' generation, so there's a natural resistance.
Once these brands do a good job with youthfulness, the opportunity is huge. GUCCI and Nike have done particularly well in this regard.
I have a viewpoint: The emergence of new-generation consumers brings opportunities for reverse brand building.
In the past, high-end consumer brands had the ability to drive prices; if a product was used by high-status people, it would be sought after by lower-tier consumers. The obvious change in recent years is that it's not about how high-end a brand is, but if young people are using a brand, it creates reverse guidance, bringing preference from high-end consumers.
In the consumer goods field, we are in a particularly interesting era of change. Each generation's living environment and aesthetic values are changing. So, how should we find opportunities that generational culture brings to brands? I believe we must find the different emotional appeals of each generation's culture.
For example, Jiangxiaobai opposes traditional liquor culture. Traditionally, drinking is seen as socializing with a purpose, a way to show status. But these are absent in the younger generation's culture, so we positioned ourselves against traditional liquor culture.
Youthfulness is a challenge that all brands should face today. Giving brands fashion elements and maintaining activity among consumer groups is very worthwhile.
If You Have Insight into Users, the Product Naturally Comes Out Right
How did we build a fashionable brand image?
I noticed a phenomenon: many companies' user research teams, product teams, and production and channel teams are disconnected in their operations. But I've always had a viewpoint: Product is content, and content is product.
That is, once a product is created, how it will be communicated in the future is already determined. The communication and marketing departments don't need to come up with wild ideas.
Generally speaking, from user insight to product, to brand, and finally to sales, these four levels have a causal relationship.
User Insight: What Data Can't Tell You
This is important; it can't be obtained through data analysis or research companies. First, the information you get from users may not be true; second, even if users give you true information, your conclusions are only valid from the past to the present moment.
What mission should companies undertake? It's how we should act from today to the future. So I believe, no matter how detailed the data research and user surveys are, you still have to go back to the beginning: how do product managers or even CEOs gain insight into users?
When I go out every day, I especially like to watch how people talk and eat. Especially for my own product, I must put myself in the user's shoes and experience it, spending time and effort on it.
If you can find a new scenario from user insight, or innovate from the scenario, then the product naturally derives itself.
Product: What is a product?
It's a solution for users in a specific consumption scenario
From a user insight, how specifically do you derive a product?
Let's first look at drinking scenarios: China has a round-table culture, which is actually about acting according to one's status, right? That was the main consumption scenario for Chinese baijiu.
In contrast to the round table, a square table with two people facing each other, or a few people sitting together—brothers, classmates, friends—this is a casual consumption scenario.
From a category perspective, we classified the industry into several scenarios: government banquets, business banquets, company gatherings, family gatherings, and casual small gatherings.
Among these five scenarios, Jiangxiaobai doesn't fit government or business banquets, and family gatherings are not quite right either, so we focused on casual scenarios. Others make products by giving up 9 out of 10, but we give up 4 out of 5.
Refining the casual scenario further, we came to an observation: small gatherings, small drinks, small moments, small emotions.
This is our non-data analysis of the target consumption scenario. After finding these four "smalls," the subsequent product, content communication, and channel all came out.
So what is product thinking? It's whether we can turn a product into a solution for users in a specific consumption scenario. For example, a light bulb is not a light bulb; it's a solution for illumination.
From this perspective, we created the Expression Bottle, a product that sells over 300 million yuan annually. It's a small bottle of liquor with packaging costing only 8 cents, achieving the lowest packaging cost ratio in the industry, but with excellent results.
Guided by these four "smalls," all our creativity cannot deviate from the scenario and product. Around the small gathering scenario, what are the relationships of participants? They are classmates, colleagues, couples, brothers. We sorted out these relationships. What do these people say during small gatherings? We printed it on the bottle, and thus the hit Expression Bottle was born:
At graduation, we said we'd meet once a year, but we never met again. They say all men are brothers within the four seas, but we never contact each other within four kilometers.
Jiangxiaobai Expression Bottle
This is the first generation of Jiangxiaobai. Based on the relationships in the subdivided small scenarios within different large scenarios, we produced the copy content.
The second insight was: why do people drink? Drinking is for expression, to make me talk more. So later, we put a QR code on the bottle, allowing everyone to record a sentence and send it to us. We received a large amount of UGC content, which was better than what our copywriters thought of, leading to a lot of innovation.
Moreover, consumers whose sentences were selected became our spokespeople. Because we used their intellectual property, we gave them ten cases of liquor. Out of pride, they would give it away everywhere, becoming our viral users.
Then, for the third generation of products, we developed a private customization service. Now we use a supply chain system where orders can be received within 3-4 days with customized quotes on the bottle.
To reiterate, because of consumer insight, the product naturally grew into this shape.
Another example: our second product just launched, called "Sanwu Zhiyou" (Three or Five Close Friends). This product was created based on insight into another group of users. We all have three or five very good friends; this is a liquor for that scenario. From naming to communication to packaging design, this product was completed on the first day of product design.
We also have a product directly from user insight—"Shiren Yin" (Ten People Drink), for company team building. What is the scenario for company team building? Ten people sit at a table, everyone wants to drink heartily to break the ice, but they don't want to drink too much and get drunk easily.
So what is this product like? A large bottle of four jin (about 2 kg), but with extremely low alcohol content, only 25 degrees, satisfying users' desire for hearty drinking while not getting drunk easily.
Jiangxiaobai "Shiren Yin"
Brand: Why We Didn't Burn Too Much Money
Brand innovation mainly has two points:
- Make your own brand an IP.
- Try to collaborate with other IPs.
Sometimes, don't overestimate users' loyalty to your product itself. Especially for non-essential goods, it's easy to blow your own trumpet.
From this logic, you need to be careful when building connections with users. So we say, aren't you interested in anime? We invested 30 million to make a domestic anime called "I Am Jiangxiaobai," which is technically advanced and refined. After watching it, you find out it was actually made by Jiangxiaobai. This is how we treat Jiangxiaobai as a character IP.
This anime has now aired its second season, with the first season's views exceeding 100 million. In terms of investment cost-effectiveness, this anime is very worthwhile. If I spent the same money on advertising, I definitely wouldn't get this effect. Although the anime doesn't mention anything about the product, the IP itself is gradually being built.
We also made collaborative liquors with other brands like Tongdao Dashu and Zhang Xiaohe. We also do co-branded products with some singers.
Additionally, we create many event IPs.
Usually, people are accustomed to sponsoring others' events, but we found that sponsorship rarely leaves a long-term deep impression. In fact, a very important principle in brand communication is that you need to repeatedly build impressions. So if you can't form a bond with the event itself, it's meaningless except for a one-time awareness boost.
What we do is turn the promotional activity itself into a brand, which gives us opportunities for continuous improvement and allows the scale to keep growing.
Before iQiyi popularized Chinese rap music, we had already planned a rap concert under the Jiangxiaobai brand, doing four shows in the first year.
The second year, many singers became famous from "The Rap of China," so we expanded the concert series. The Changsha stop had 50,000 people, and the Nanjing stop had 60,000, all loved by young audiences.
These are all products of combining with the culture of the post-90s and post-00s. Similarly, we also held street dance competitions and graffiti competitions, which have good influence in the industry.
Looking at 2018 data, compared to companies of similar scale, our advertising expenses are not high, but our communication efficiency is relatively high. The IPs mentioned above can continue for the next ten or twenty years, bringing output effects.
Channel: It's the Product Waiting for Users, Not Users Searching for the Product
If you do the first three things well, doing the channel is easy; you just need to ensure coverage.
Our channel logic is to put the product there waiting for you; the opportunity is a thousand or a hundred times greater than users coming to find you. In summary, "visible and buyable."
Actually, for many traditional consumer goods, e-commerce may not be a good channel because the active demand and preference for the product are not that high. So we must let the product wait for users, not let users search for the product. Through years of ground promotion, we have covered 2 million retail outlets nationwide.
In the traditional market, we have completed 60% of city coverage, with room for growth. At the same time, Jiangxiaobai is already exported to 28 countries and regions.
Finally, let me introduce my time allocation as CEO regarding the above four points: 40% of time on consumer research; 30% on product development, as I am the head of our product department; 20% on brand management; and 10% on channel management. In 2016, my focus was on upgrading the product, essentially redefining a good product.
New Distribution will hold the 2019 (5th) FMCG + Internet Conference during the Chengdu Spring Sugar and Wine Fair from March 15-18. This conference will focus on the topic "Breakthrough" and engage in in-depth discussions with numerous brand owners, supply chain service providers, distributors, retailers, and others.
Compared to previous conferences, this summit will be fully upgraded. In addition to original topics like channel innovation, city distribution logistics, and distributor transformation, it will add parallel forums on new marketing cases, IP + FMCG empowerment, community group buying, and innovative retail. Through three days of ten high-density, high-quality expert sharing sessions, we believe every brand owner and distributor can learn the latest business models, expert opinions, and practical methods, finding new tools and methods for their own breakthrough in 2019, and returning to a track of rapid growth.
Review of Previous Conferences
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