This article is a transcript of the sharing session by Zhao Bo, founder of New Distribution, who was invited to participate in the Kotler Growth Lab's "Hu Ge Dialogue - Answering 2022" series of themed live streams. The following is a shorthand compilation. (Hu Ge Dialogue - Answering 2022 Live Room) The theme of this session is "Channel Structure and Reconstruction - Big Penetration and Street Fighting: Channel Evolution 2022." The guests invited are Dr. Cao Hu from Kotler Consulting Group and Mr. Zhao Bo, founder of New Distribution. Today's topic of discussion is "Channel Evolution." How do you two think the ever-changing topic of "channels" will see new changes and evolution in 2022? How do you understand this evolution? How will it affect companies' growth capabilities? Let's first invite Dr. Cao to share. I am very glad to have this opportunity to discuss the topic of "channels" with Mr. Zhao at the beginning of the new year. It coincides with the busy sales season for various brands, dealers, distributors, and end customers, making it particularly relevant and meaningful. Channels are an important part of the classic "4P theory" in marketing. Place (channel) is also the most complex of the 4Ps because the other three Ps—product, price, and promotion—are, to some extent, controllable by the company. Only Place (channel) requires the integration of contractual social resources to run through the long process from product manufacturing to delivery to customers, involving various channel roles such as general agents, terminals, authorized agents, etc. Therefore, I believe that manufacturers and channel partners are both competitive and deeply cooperative; it is a co-opetition relationship, which is relatively complex. For example, Wahaha, mobile phones in the 3C field, Midea and TCL in home appliances—their success all has an important reason: innovation in channel models, channel execution capability, and fair distribution of channel profits. So by 2022, we see some important trends in the continuous evolution of channels: First, the number of channels and the structure of channel formats are unprecedentedly rich. From traditional offline supermarkets, standard supermarkets, to KA and CS stores... the high differentiation and integration of offline channel formats are increasing. At the same time, from past online platform e-commerce to the well-known content e-commerce, interest e-commerce, social e-commerce, and now community group buying, there is a common feature: whether online or offline, channels are showing a process of flourishing, multi-format structure, and reconstruction. Second, the relationship between channel partners and brand owners is changing. In the past, especially in the FMCG industry, the relationship was that brand owners were the main creators of customer value. When consumers buy a product worth 100 yuan, most of the value is created by the product, but now channel partners play many roles in the entire customer value creation process. Today's products increasingly emphasize experience, scenario, and brand building, not just product value, functional value, or use value. So in this long process, channel partners come into contact with many new customer touchpoints, and whether the feelings and experiences at these touchpoints are consistent and superior greatly affects whether the product is loved by consumers. Now brands and channel partners are co-creating consumer value. Channel partners are no longer just a role of moving boxes, doing distribution, and delivery; they have become more of marketers, cooperating more with brands, and starting to take on the role of connecting and managing customers. This is the second very important trend I see: the relationship between channels and brands is changing, placing new demands on channel capabilities. The third trend is that channels are breaking the past concept of space and becoming a fusion and interweaving of time and space. Nowadays, consumer shopping, delivery, and experience services happen anytime, anywhere. Mobile internet, the all-real internet, and the integration of online and offline scenarios make our consumer lives a "mix" of life scenarios, shopping, services, and entertainment. In the past, buying something was an economic behavior, a behavior of going to a specific destination. Today, buying things has become an entertainment behavior. Space has been broken, so our channels must evolve from single-channel to multi-channel, to omni-channel, to integrated channels. The fragmentation and overlap of time and space call for channel integration and digitalization. These are some trends seen from a macro and abstract level. Mr. Cao just mentioned many key points. Let me first give a simple definition: what is a channel? In textbooks, it generally refers to all the circulation links from the factory to the consumer, including dealers, distributors, retailers, and many other links, as well as complex behaviors such as information, logistics, transactions, and delivery. So from an industry perspective, according to the "4P theory" framework, channels are the only one not under autonomous control, and cooperation is always in the form of contracts for "co-opetition." Companies that succeed in China have unique methods and execution in channels. From the perspective of consumer transactions and delivery, the past channels had a notable feature: "one hand for money, one hand for goods," meaning transaction and delivery were integrated. This is very obvious in ordinary retail stores. When I go to a convenience store to buy a bottle of Coke, the consumer pays for the goods, and the goods are given to the consumer. Now the situation is: cognition and transaction are integrated. For example, when I watch a live stream on Douyin and Li Jiaqi recommends a product that seems good, I might place an order, but the product is not given to me from a physical store; it is delivered to me through logistics, causing transaction and delivery to separate. This model actually exists on many platforms, such as B2C models and direct-to-consumer enterprise direct sales. Any place where transactions occur can be understood as a channel. From a trend perspective, the popularization and maturity of internet technology, and the integration of cognition and transaction, are making channels irreversibly fragmented. Any scenario with transactions can be understood as a channel. From the development trends of the past two years, including Douyin, interest e-commerce, live-stream e-commerce, community group buying, content e-commerce... a large number of emerging one-stop e-commerce platforms, on internet platforms and social networks, have seen a large number of various emerging transaction models based on people, platforms, technology, and algorithms, all further eroding the traditional retail channels of "one hand for money, one hand for goods." This is the overall market change we see today. From a growth perspective, new models make it easier to reach consumers. But we will find that the more emerging the platform, the higher the technical complexity, and although there are more and more channels to reach consumers, the marginal cost of a single channel is also increasing. From the perspective of channel business models, we see that some emerging channels allow companies to reach consumers quickly in the short term, and sales "spurt" rapidly, but it becomes harder to obtain profits through brand premium. From another angle, although brand owners had little control over channels in the past, facing large live-stream platforms like Li Jiaqi's and e-commerce platforms with many KOLs, channel control capability is actually gradually weakening. This is the change we see at the channel end at this stage: the power of channels is forcing companies to transform and evolve from a technical level. Yes, Mr. Zhao's entry point is very interesting and valuable. From the perspective of the entire channel terminal, this is the link where consumers can experience and feel the most, and it is also a touchpoint for key purchase behavior. The role of channels is becoming segmented. In the past, many products were available in large circulation channels—large standard supermarkets and hypermarkets. But today, you will find that many brands only appear in specific terminals. For example, certain drinking water, sparkling water, and certain categories of cosmetics choose to appear in brand collection stores or brand experience stores. So channels, like brands, carry a very important reach function. Different channels reach different market segments. Now the consistency of target audience selection and reach between brands and channels has become very important. Simply put, I think our channels are now divided into two types: One is channels that pursue distribution efficiency and let consumers "get a bargain." That is, when I buy your product, the reason is that I think it is cheaper and more convenient to buy from you. I gain a lot of economic value, and the value created by the enterprise is transferred to me. "Bargain-type" channels emphasize low-involvement products. Low-involvement products do not affect my perception of society and do not have serious economic consequences; low-involvement products are those I am willing to choose to get a bargain. Like today's live-stream e-commerce, some hypermarkets, and community group buying, to some extent, they have this nature. They allow familiar low-involvement categories to match my needs more efficiently. But there is another type of channel that mainly plays a connecting and carrying role. I call it "experience-type channels" , channels that can sell at a premium. They bring us scenario-based, lifestyle-shaping, interest-cultivating experiences, helping us match and inspire new value and space in life. Especially brands with strong values and unique lifestyles particularly need to match such channels. Let me give a typical example. For instance, when a new furniture store opens in Shanghai, it is basically arranged according to consumers' living scenarios, living rooms, breakfast rooms. So when you go there, in this channel, you not only pick a table and take it away, but you also "learn" the store's life proposal and buy a home space layout proposal. So in the home furnishing field, channel changes can also reflect the upgrade companies make to increase average transaction value. More and more overall home decoration and smart overall home decoration are launching scenario brands. The change in upgraded scenarios is very important for channel coordination and channel reconstruction. Learning to tell stories and create life proposals to significantly increase average transaction value means channels must learn to understand customers, manage customers, maintain customers, and do long-term business from simply selling goods. Another example is the beauty industry. In the past, our beauty industry was first sold in hypermarkets and multi-category, multi-variety buyer stores, basically in a "shopping guide model." But now young people choose channels differently. They go to Tonalite, KK, etc. Why are they willing to buy there? Because these places create a theme park feeling, allowing exploration of emotional, aesthetic, and scenario interactions. These are actually channel evolution. Channel upgrades and brand upgrades are synchronized. Ultimately, they must be able to reach and move consumers in the store environment, educate consumers, help consumers find a better self, and better shopping combinations. So Mr. Zhao's mention of "terminals" is very important and inspiring. The popularization and maturity of internet technology, and the integration of cognition and transaction, are making channels irreversibly fragmented. The change in upgraded scenarios is very important for channel coordination and channel reconstruction. Learning to tell stories and create life proposals to significantly increase average transaction value means channels must learn to understand customers, manage customers, maintain customers, and do long-term business from simply selling goods. Just now, it was mentioned that current channels are upgraded for customer experience improvement. Regarding channel digitalization, I have a question. From the past multi-channel to omni-channel, to the current integrated channels, including what Mr. Zhao mentioned about live streaming and top streamers... these channels are constantly evolving and advancing. In essence, it is the improvement of customer experience based on digital capabilities. How do you two view the integration of digitalization and channels? Let's invite Mr. Zhao to share first. Undoubtedly, digitalization is an inevitable trend for any enterprise. From our observations of companies in recent years, digital strategy has become the core strategy of all brands. The essence of this strategy is based on changes in consumers' "people, goods, and places." Mr. Cao just talked a lot about changes in consumer behavior brought by changes in consumers. Essentially, it is the oversupply brought by the "infinite shelf" driven by technology, which in turn brings a series of behavioral changes. We have always talked about consumption upgrading. The essence of consumption upgrading is not that consumers have more money, but that consumers have more choice ability and rights. In this process, users' shopping logic will undergo irreversible changes. From the past P&G HBG large distribution system, we saw that the logic in users' shopping behavior was called restocking and hoarding. But from the perspective of exploration, conformity, and immediacy, his needs are safety consumption, functional consumption, quantitative consumption, and social consumption. But today's consumption has become emotional consumption, addictive consumption, social consumption, and health consumption. Essentially, it is a leap in the entire consumption level based on the infinite supply brought by the "infinite shelf." For brands, they have to use more "experiential marketing" to mobilize more senses of users to make users remember the brand; to mobilize more senses, they must necessarily use a large amount of data, digital, multimedia, and experiential marketing to make consumers remember. For brand owners, from the marketing dimension, this is an inevitable marketing trend. They must digitalize because only with digitalization can a large amount of user data provide feedback, and then match and coordinate with consumer behavior, consumer demands, and consumer thoughts to meet consumer experience and generate strong interaction and communication with consumers. From a strategic perspective, the logic of consumers' "people, goods, and places" has fundamentally changed. Therefore, brands must rebuild a complete set of digital marketing and distribution systems based on changes in consumers' "people, goods, and places." This system can be summarized in four words: "online, routing, precision, and efficiency": "Online" means that products, information, transactions, data, and experience must all be online. In the "online" process, a "routing" must be presented. The so-called "routing" means that we may not be in the warehouse closest to the consumer, but consumers can be reached in the most efficient, fastest turnover way, allowing consumers to get the best experience and meet the distribution capability of consumers. The third is "precision" . From our perspective, we can see thousands of channels, but from the perspective of the user's total cost, if users have planned consumption and hoarding behavior, we must consider their total cost. When consumers are "thirsty, hungry, tired, sleepy, or sick," the user's time pain becomes particularly high, and needs are everywhere. In this process, high-density distribution becomes particularly important. At this time, it must be ensured that online is the most favorable. So different categories, based on different consumer behaviors, must carry out different product combinations and distribution channel combinations to meet various family consumption scenarios of consumers. Finally, "efficiency" means how to form an effective and efficient distribution system among the complex channels and SKUs. This requires channels supported by digital systems. Based on consumer habits, covering consumer behavior, from the perspective of scenarios, family, social, office, travel, haircut... different scenarios give different satisfaction. This process can be called full-domain, full-scenario, full-time, full-market satisfaction. This is the true meaning of digitalization, and this is the core of why all enterprises need to digitalize. I very much agree with Mr. Zhao's point. Actually, Mr. Zhao just mentioned a very good definition. We have many basic needs, the needs of our body. As long as you are human, you cannot stop these needs. So products that meet our basic needs must be high-density, large-penetration, and large-distribution. But some needs are desires from the heart. For example, I want to do beauty treatments, I want to wear beautiful yoga clothes, I want to eat a very exquisite Japanese meal... These are "desire needs." "Desire needs" require creating "destination"-type consumption, creating deep emotional resonance and design resonance. On the channel side, our views are highly resonant. I have a friend, Doris Daojie, who wrote an article titled "China is hard-pressed to produce another P&G, but there will be countless lululemons." I very much agree with this view because "P&G-type" brands are brands that meet the basic needs of the masses, but lululemon meets the deep emotional needs of vertical groups. I want to add one point: since we mentioned the relationship between digitalization and channels, the fundamental relationship between the two is: whether the channel side is willing or not, they are forced to do multi-channel, and finally do integrated channels. The difference between multi-channel and integrated channels is: in the past, multi-channel meant several sets of goods in different channels with different experiences; but today, there is a unified perspective, unified goods, unified behavior, and unified labels to cover customers across all channels. I call this integrated channels. The benefit of integrated channels is that they do not lose customers, maximize the return rate of a single customer, maximize customer loyalty across channels, and ensure high consistency in customer awareness of the brand and product. But this is difficult to do. It does not happen naturally. It requires a series of preparations in management, organization, technology, and infrastructure. For example, today everyone is building CDP data platforms on the data foundation, in order to form an overall understanding of users from various user touchpoints and user data sources, and in turn, reach them. With CDP, we also need to build various user platforms, tag users coming from various channels and product lines across the company, form audience segmentation, and turn it into product segmentation. Why do we need a content platform after having a user platform? The reason is simple: I want to achieve "thousand people, thousand faces." Let the content platform match different channels and media, and match goods based on customer behavior analysis and tag analysis to form the optimal solution. This is the underlying logic of digitalization. Digitalization originates from the changes in complex consumer shopping behavior. Today, consumers can engage in planned shopping, emotional shopping, scenario shopping, social shopping anytime, anywhere... This shopping change makes channels ubiquitous, so it must be matched while also being highly precise in selection. Channel digitalization is actually a transformation of a company's marketing strategy and business model. It is not simply purchasing some software, doing some customer camera digitalization, or doing some offline in-store shelf digitalization. Without a complete set of data-driven models based on data operations and integrated with the 4Ps, integration is very difficult. For example, live streaming counts as a channel, but doing live streaming faces a huge problem: if a series of transformations cannot be formed, how to balance the interests of offline dealers. Many of our clients started offline. Now the most headache in doing online is how to divide the two sets of goods, and after doing live-stream e-commerce, how to balance the interests of offline regional dealers. Of course, various channel digitalizations are visible and tangible for many companies and have the greatest impact on performance, so companies will first take it as a new entry point, but behind it is not just the use of a set of tools, but the entire digital marketing transformation of the enterprise. We must have correct expectations and preparation for investment in this situation. Brands must rebuild a complete set of digital marketing and distribution systems based on changes in consumers' "people, goods, and places." This system can be summarized in four words: "online, routing, precision, and efficiency." A transformation of a company's marketing strategy and business model is not simply purchasing some software, doing some customer camera digitalization, or doing some offline in-store shelf digitalization. Without a complete set of data-driven models based on data operations and integrated with the 4Ps, integration is very difficult. Returning to today's theme of "2022 Channels," the two keywords are "big penetration" and "street fighting." Among them, big penetration means many consumer goods companies are starting to go to lower-tier markets and increase penetration. On the other hand, many online brands are also entering offline, starting to compete with classic offline big brands for shelf space. How do you two view this phenomenon of big penetration and sinking trends? Let's invite Mr. Zhao to share first. "Sinking" is a topic that international brands have discussed a lot in the past two years. Almost all consumer goods we see, especially fast-moving consumer goods like Nestlé, Wrigley, and Mars, which used to have a relatively high-profile brand tone in China, have been going down in recent years for growth. But what I want to say is that "sinking" is one of the two important ways for big brands to grow; it is not everything. The other is category upgrading. In the past two years, a very obvious category is beer. Whether from quantitative consumption or product quality consumption, the trend of category consumption upgrading is very obvious. Second is "sinking." In the past, when domestic brands "couldn't beat" foreign brands, they would strengthen control and management of channels through the first-line market, thereby gaining their own survival niche and space, obtaining growth opportunities, and gradually establishing a foothold in the Chinese market. Just like Jinmailang launched the "four-in-one model," Wahaha launched the "joint sales system model"... A large number of consumer brands avoided big brands through this form, and under the gradual brand influence and communication influence, they gained competitive advantages through their own channel management. "Sinking" is still a long-cherished wish of big brands. On the one hand, infrastructure was not perfect in the past; on the other hand, in the large sinking market, the consumption capacity of the first-line market had not yet reached the level, and consumers found it difficult to consume relatively expensive goods. In the past two years, we have seen typical examples: milk brands Yili, Mengniu, and Jindian have seen rapid outbreaks and rises in village and town markets. For example, Jindian is the first single product to break the 30 billion level this year—why can a milk product sell 30 billion? Without the support of China's strong first-line market, it would be impossible to achieve such high sales. That is to say, the consumption capacity of the first-line market has already risen. Moreover, China's village-to-village road connectivity, including the improvement of China's distribution system and digital e-commerce system, entering villages is no longer a difficult thing. So for any brand, sinking is also a very important topic. For any consumer brand, online traffic has peaked, and online traffic is measurable, calculable, and evaluable. New consumer brands find it difficult to obtain brand premium through their own brand on a relatively aggregated e-commerce platform. They urgently need to find new growth points. If new consumer brands only do online, they can only build awareness; they cannot achieve reputation and loyalty. We see Xiaohongshu grass planting and KOL recommendations. Apart from price advantages, it is difficult to form reputation and loyalty for a specific brand. Only by going offline, into consumers' scenarios and lifestyles, can a real brand be built. This is also an important reason why all new consumer brands need to sink. Let me give two simple examples to make it more concrete. For instance, most people first drank Wanglaoji in hot pot restaurants. This is because Wanglaoji initially promoted its products in hot pot restaurants; its slogan is "Afraid of getting heaty? Drink Wanglaoji." Because only in the hot pot restaurant scenario is there the "afraid of getting heaty" scenario. For Wanglaoji, only through the high correlation and unity of scenario, crowd, and product can consumers' awareness of the product be strengthened, brand experience and perception be formed, and consumers can form consumption touchpoints in the same scenario next time, further extending to brand loyalty. If new consumption is only impulsive buying online, even the express box mailed home may not be opened for half a year, making it difficult to form brand influence. This situation is everywhere, and it is also why new consumer brands must go offline. On the one hand, it is expensive; second, if they do not go offline, it is basically water without a source, and it may pass like a gust of wind. This is my view on how today's brands treat offline big penetration and going offline. Indeed, this is also what is happening now. Many internet-famous brands and Taobao brands, whether doing lotion, yogurt, sparkling water, beauty, or even clothing, are going offline. One important reason is the limitation of online traffic; the second core reason is that only offline can you truly see, touch, use, and experience. The categories I mentioned are in large traffic, large consumption, and large tracks. To truly become a brand, you must become a national brand. Of course, we still have many niche market brands, and the story may be slightly different, but the ability to operate online and offline channels is essential. Whether you go offline first or online first, eventually, to some extent, you will meet at some point. Recently, I saw a case: Baby Care, a maternal and infant brand, basically started online, but as it continued to develop, it immediately faced the problem of how to continue "breaking the circle," from more than 200 million per month to higher. Offline is an undisputed choice. It began to enter more maternal and infant stores, enter multi-brand, multi-SKU, and the maternal and infant stores under the brand began to grow continuously. Conversely, looking at the "Kidswant" brand, Kidswant is the opposite: from an offline multi-brand retail complex, it needs to become a comprehensive free brand that launches more of its own online and offline products. Therefore, whether it is street fighting or big penetration, there is a matching problem and feasibility problem. Big penetration is suitable for large categories of necessities that meet people's basic needs in life. To increase distribution density and penetration, the key point to consider is: every "zero" after the sales figure can continue to sink, but you must calculate clearly whether the order quantity and order density in the sales terminals behind each "zero" are sufficient to support the series of distribution costs and personnel costs brought by serving this order. In the past, for big brands, this account could not be calculated. This is also why Coca-Cola's distribution is very good, but its basic unit is "county." But today, they have also begun to enter communities, especially during epidemic prevention and control, with the integration of B-end and C-end. Coca-Cola's infrastructure has improved, consumers have money, order density has increased, service costs have decreased, so sinking can be achieved. Similarly, China currently has 6.8 million terminals, of which less than 600,000 are truly chain stores. These chain terminals are the first choice for online brands entering offline because negotiating with one headquarters can cover thousands of stores, and they are all in first- and second-tier cities. So internet-famous products often appear in these chain stores. But the real 6.2 million terminals are mostly independent stores, and even more than 4 million are mom-and-pop stores. The cost of covering such stores is high, and they cannot sell at high prices. This is the fundamental reason limiting distribution and big penetration. But now the situation has changed. LBS-based location programs and software have expanded the space of geographical location. Originally, a pharmacy could only do business within 1 kilometer; now with LBS, it can cover a population of 3 kilometers. So the development and improvement of channel technology have changed order density and coverage, making deeply penetrated terminals profitable. This is a very important change. Therefore, I think whether it is street fighting or big penetration, whoever can find a more efficient reach channel and co-create interests with the channel will win. Just now, we were all based on the assumption of consumer goods. Cohesion is actually more complex. In fact, in B2B production materials products, channels are also facing the problem of refinement and sinking: how can I help channels better meet B-end users. The actual requirements of B-end users are not just to simply share a product, but also need many value-added services, technical services, and even buyer credit services. These value-added services have become a very important condition for testing the upgrading ability of channel partners. Recently, we did two very large consulting projects. One is a very large domestic fintech company. The other is a global chemical and seed company. In fact, both face the challenge in their distribution channels: how to enhance channel value-added capabilities to firmly lock in customers. Because in the large chemical distribution process, channel profits were very low in the past, and value was mainly in the product. But now, due to customers' large-scale, flexible production of multiple models, the service capability brought by channels has become extremely important. I also see another point: our consumption upgrade is not only sinking, but also rising. For example, Snow Beer launched a high-end beer at over 900 yuan per bottle. Correspondingly, channels are not only sinking and refining, but also seeking its "big merchant strategy" —a strategy of Snow Beer this year. The "big merchant strategy" reflects having quite strong capabilities, both in brand marketing and improving intensification. The "big merchant strategy" also reflects the reality that brand upgrading and brand sinking occur simultaneously. So my suggestion to friends watching our live stream is: whether it is street fighting or big penetration depends on what is the main driving force for the growth of your category. For example, for beer, the fastest-growing category this year, the main driving force for its growth comes from the overall upward shift of the "price band" and the continuous derivation of new categories. This is the main driving force of the entire beer industry, not that consumers drink more and more. Conversely, how do our channels reach the target audience? Does the channel have the ability to sell cheap products more, more efficiently, and let consumers stock up? How can expensive products be sold at their prices? This is actually a big challenge for channels and terminals. Only through the high correlation and unity of scenario, crowd, and product can consumers' awareness of the product be strengthened, brand experience and perception be formed, and consumers can form consumption touchpoints in the same scenario next time, further extending to brand loyalty. The actual requirements of B-end users are not just to simply share a product, but also need many value-added services, technical services, and even buyer credit services. These value-added services have become a very important condition for testing the upgrading ability of channel partners. Now there are some emerging channels, such as social e-commerce, community group buying, and live-stream e-commerce, which grew very rapidly during epidemic prevention and control. But after the epidemic, consumers will return to offline channels. Including some policy tightening, the future of live-stream e-commerce seems to be shrouded in gray. How do you two view the development of these new channels this year? What opportunities and trends are there? Let's invite Mr. Zhao to share first. Strictly speaking, consumers have not returned offline. Because from a broad behavioral perspective, users have started omnichannel shopping, and this is irreversible. In recent years, we have continuously conducted consumer surveys, asking whether consumers shop omnichannel online. The latest data for 2021 is that about 83% of consumers shop through an average of more than 8 channels. That is to say, from the current perspective, from the perspective of consumer shopping behavior, users are no longer limited to online or offline, but they will search, buy, comment, forward, and recommend based on memory, and will jump continuously in three-dimensional space—offline, physical channels, and online network media—according to their own habits and behaviors. At present, omnichannel shopping is the mainstream trend. But at the same time, we do see that in the past two years, social e-commerce, especially community group buying, has cooled down, and the state has suppressed live-stream e-commerce at the tax level. I think this comes from two aspects: On the one hand, community group buying is due to capital frenzy. It is not a real "spurt" growth that conforms to business logic, and the epidemic has accelerated and fueled this "spurt." Any business must eventually return to business essence and business value. Community group buying is suitable for social, small-scale retail platforms with LBS. In Tencent's social network, it is decentralized, not a star-shaped platform, nor a tree-shaped network. As a supply chain group model, it is destined to be a decentralized model, so giants entering it violates business logic. Second, from a business logic perspective, the "oligopolization" of live-stream platforms is not allowed by the state. Because for head KOLs like "Li Jiaqi," the central media think tank once did an analysis: one "Li Jiaqi" may represent tens of thousands of offline, millions of offline retail jobs. This is a very terrifying data point. That is, if one "Li Jiaqi" rises, millions of retail jobs may disappear, which is not conducive to the country's guarantee of employment and stable economic growth and development. It is not allowed to have such strong head streamers. So from the perspective of national policy, as long as it is reasonable, legal, compliant, conforms to national policy trends, and respects business logic, the general trend of consumers' omnichannel shopping is irreversible and unchangeable. Moreover, with the rise of interest e-commerce in the past two years, interest feeding, tribal, social, and KOL retail scenarios, retail channels will only become more differentiated, and users will only become more fragmented. There will not be a relatively large return or return to offline. Finally, summarize in one word—"return," return to business essence, return to business value. Yes, in the eyes of customers, there are no channels. Channels are the perspective of manufacturers and brand owners. Just as doctors say, the various parts of our body are not the parts we think they are. In the eyes of customers, they themselves do not have channel problems. For customers, shopping is experience, convenience, anytime, anywhere... when I want it, supply on demand. If we follow this logic, I think customers form mixed purchasing behavior. From the platform perspective, if we change the angle, from the customer's entire purchase path, we at Kotler have a customer "5A model": "Aware→Appeal→Ask→Action→Advocate" It represents the 5 stages of consumer cognition. According to the 5A model, we find that customer consumption is no longer a completely simple linear process. In this process, each link has multiple choices, and at the same time, he will repeatedly jump in this process. It is a diversified convenience and a relatively cross-cutting process. For example, buying home furnishings can be compared online, picked up offline, or even delivered home. So for enterprises, we have channel thinking and channel-style perspectives, but ultimately when designing channel strategies and channel experiences, we must stand from the customer's perspective and experience as a customer. For example, I often use various banking apps, and I find that various banking apps are very different. Some banking apps are very troublesome for me to use. I very much agree with Mr. Zhao's point. It is difficult for our customers to return offline after the epidemic. A large amount of consumption may not happen offline. Although offline accounts for nearly 80% of the country's GDP, the growth rate of online is higher than offline. Our people, life, and entertainment are all moving online. Online has become a very important leading and decisive battlefield, while offline is a battlefield emphasizing the formation of moats. Whether it is the Douyin model, Baidu model, or WeChat model, the core is centralization. Only through centralization can scale be achieved. Regarding some emerging business formats, such as community e-commerce, the essential gene is multi-centralization, making it impossible to form a unified large platform. As a multi-centralized organization, there is no obvious difference between internal transaction costs and external transaction costs, which means it will always play a filling role. In the long run, its development is limited. But regarding social and live streaming, I want to add a point: the future of live-stream e-commerce, especially celebrity live streaming and KOL live streaming, should be a standard configuration for serving customers. This standard configuration brings a sense of reality and interaction. For example, I broadcast live at the factory site, I broadcast live in the farmland, bringing customers a long-lost sense of trust and reality in the brand, playing a role in enriching the scenarios and channels for brand-customer contact. In the past, KOL live streaming existed as a channel. Under the background of national compliance and strengthening of tax and anti-monopoly policies, a possible opportunity for the future of this live streaming is: from a simple channel gradually entering a channel brand. Not only Li Jiaqi, but in the future there may be "Li Jiaqi brand" cosmetics; not only Luo Yonghao selling these things, but in addition to bringing goods, "Luo Yonghao's selection" will gradually become a real channel. Once there is a private brand, this sustainable core capability will change. At this time, supply chain control, product selection, packaging, design, and continuous customer management become very important. This may be a possible future for typical KOL live streaming. As long as it is reasonable, legal, compliant, conforms to national policy trends, and respects business logic, the general trend of consumers' omnichannel shopping is irreversible and unchangeable. Customer consumption is no longer a completely simple linear process. In this process, each link has multiple choices, and at the same time, he will repeatedly jump in this process. It is a diversified convenience and a relatively cross-cutting process. You two have shared many insights and predictions about channels in 2022. Can you summarize and give some suggestions for enterprises in channel layout and innovation? Speaking of suggestions, I will give three major directions: The first is for the vast majority of mature mainstream consumer brands: offline is still the basic market. We must deeply cultivate offline and use technology to optimize and drive it. From the channel dimension, this is an inevitable trend to increase the internal operational efficiency of the enterprise. The second is that efficiency improvement cannot be separated from channel digitalization. We must accelerate the cultivation and construction of dealers' digital capabilities. Let dealers gradually become an important organ in the brand owner's own organization, embedded in the enterprise, and then connect internally and externally, up and down, front and back. This must be completed through digitalization. In the digital era, this is a very important foundation for building a company's omnichannel marketing capability. Speaking of capability, we must inevitably talk about the third thing, which is omnichannel operation, global operation, or digital operation. We see that in the past, all enterprises' digitalization, to some extent, still stayed at the information level, such as the digital and informational connection of certain departments. But in fact, the essence of digitalization is still centered on changes in consumers' "people, goods, and places," making consumers digital, goods digital, and factories digital. Around these dimensions, we must rebuild the enterprise's distribution and digital capabilities at the channel and marketing ends. These are my three suggestions to the audience present. Following Mr. Zhao's three suggestions, I will also give three corresponding suggestions. The first suggestion is for startups. If friends watching our live stream today have a startup, my channel suggestion is: find a single channel, make it deep and thorough, eat up the channel dividend, and understand the channel rules thoroughly. For startups, the scarcest thing is resources. The opportunity to seize is how to find a channel with dividends, familiarity, and resources. I suggest focusing unremittingly on this one channel, making it deep and thorough, and then expanding. Second, if a mature enterprise is in a high-growth market, has its own continuous cash flow, relatively large scale, and has already laid out several channels, has old customers, and also has a normal process of acquiring new customers. My suggestion is: vigorously seize channels that can reach new customers. In a growth market, your core task is to greatly expand market share. So acquiring new customers is the primary core indicator. Through new channels, mining new groups, reaching new groups, and making acquisition the main growth driver. Many of our channels are like this today. Many products are in rapidly growing fields, such as some online entertainment products, high-tech products, and new 3C products. They are all in this stage. Third, if it is a mature enterprise but in a stock market, such as most of the liquor industry, it is in a stock market. From a broad perspective, if in such an industry, your core task is to deeply mine the existing customer base, cross-sell to existing customers, manage "old customers bringing new customers," and operate the lifetime value of existing customers. For example, the broad concept of the liquor industry, automobile industry, banking, maternal and infant, clothing... are actually characterized by "medium-low speed growth, customer management as the core." Their task is to consolidate old channels, expand channels, deepen channel capabilities, expand channel scale, improve channel efficiency, and enhance the channel's ability to connect and manage customers. This is very important. Because in a stock market, the driving force is to seize repeat purchases from old customers, seize upward and downward cross-selling from old customers, and seize "old customers bringing new customers." This is the easiest and lowest-cost way to grow now. At the same time, you must keep an eye on opportunities for category differentiation and category innovation to discover the market. Looking at the entire period from the early 20th century to 2022, the global beer market has almost gone through such a journey. Category differentiation as the main driving force is not achieved overnight. It requires attention, waiting, active mergers and acquisitions, and attention to new trends, but at the same time, do a good job of the customer base. So these are my three suggestions: one for startups; two for mature enterprises in incremental and stock markets under different environments. The essence of digitalization is still centered on changes in consumers' "people, goods, and places," making consumers digital, goods digital, and factories digital. Around these dimensions, we must rebuild the enterprise's distribution and digital capabilities at the channel and marketing ends. In a stock market, the driving force is to seize repeat purchases from old customers, seize upward and downward cross-selling from old customers, and seize "old customers bringing new customers." This is the easiest and lowest-cost way to grow now. Here, a viewer wants to learn more about the "growth rate of online channels" we just discussed. Online customer acquisition costs are rising. How should we find new traffic depressions? Can the two teachers answer this? Let's invite Mr. Zhao to share first. This depends on your category, product, and strategy. If it is a mature brand, asking this question is no problem. For mature brands, traffic growth is essentially sales growth. There is no need to additionally build your brand barriers and brand momentum. But for a new consumer brand or innovative brand, if the purpose is not to build a brand, all traffic strategies are essentially using low prices to acquire customers. If you couldn't make money in 2021, you will even less make money in 2022. So traffic dividends will be hard to find in the future, unless we enter the metaverse. Because at present, video is already the best form. So in this situation, it is difficult for us to gain growth through traffic and traffic dividends. This is a speculative behavior. My personal suggestion is to think about how to build your own retention system, convert traffic models into retention models, continuously build your private domain and brand barriers. This is the true right path for a company in marketing. I very much agree. For large enterprises, there is no need to look everywhere for so-called traffic dividends. If you look everywhere for opportunities, you become a speculator. So small enterprises can look for opportunities, while large enterprises need to follow trends. The core task of large enterprises is to increase the penetration rate of the entire category among consumers. Just like Yunnan Baiyao is already the leader in the "Sanqi" field. What it is doing now is to increase the awareness, reputation, and penetration rate of the entire "Sanqi" category among consumers. But for startups, do not hold a speculative mentality everywhere and look for dividends everywhere. If you do not hold the attitude of building a brand, it is basically like drawing water with a bamboo basket. Startups should learn to give up the dividend mentality, enter the basic value mentality, and make building a brand a basic value. Where is the brand of a startup reflected? It is to make consumers feel love, a sense of premium, and attention to the story. Startups must have very unique product innovation, and this product innovation is not aimless, purely relying on technology or gimmicks. Product innovation must be based on a specific need of a group, a specific scenario, or the need innovation of a certain type of segmented group. Behind innovation is the breakthrough of technology, materials, patents, processes, and even design scenarios, which is valuable to customers. For a person with a brand dream, the first step to building a brand is to use the product to pay tribute to and express your brand dream, so that consumption can resonate. So as a startup, first consider whether you have the diamond drill—whether the product itself can form attention, form consumer trial, and after trial, consumer recommendation and repurchase. When we talk about marketing, many people mistakenly understand marketing as communication. Being able to shoot videos, tell jokes... this is not marketing at all. Marketing is absolutely not just communication. Marketing is 4P: product, pricing, channel, communication. Just like some people often tell me, "We are very good at making products, but we are not good at marketing" or "Our products are very good, but others are unwilling to sell them." Actually, these are all wrong. Maybe your product is not good enough and does not conform to consumer value. So the essence of the problem is: give up the shortcut of traffic dividend thinking, return to basics, polish your product well; do not work behind closed doors, but open your heart to understand customers. The only value of a company's existence is to create value for customers through products and find the dividend of customer value. The only measure of entrepreneurial success is that customers succeed, and then the enterprise succeeds. Because your customers succeed, profit is a natural result. Think about how to build your own retention system, convert traffic models into retention models, continuously build your private domain and brand barriers. This is the true right path for a company in marketing. Give up the shortcut of traffic dividend thinking, return to basics, polish your product well; do not work behind closed doors, but open your heart to understand customers. The only value of a company's existence is to create value for customers through products and find the dividend of customer value. The only measure of entrepreneurial success is that customers succeed, and then the enterprise succeeds. Because your customers succeed, profit is a natural result. _ -END- _