The 2020 (3rd) China FMCG Conference, hosted by New Distribution, was grandly held from August 24 to 26 at Shanghai Fuyue Hotel! The event attracted 3,000 distributors, manufacturers, internet companies, and many other practitioners from all over the country, with a full house and unprecedented scale. The following is the speech by Mr. Liu Chunxiong at the "China FMCG New Marketing Forum", organized and released by New Distribution for the benefit of readers. Due to the impact of the pandemic this year, we once predicted that enterprises might suffer greatly, but the recently disclosed first-half financial reports show that many companies exceeded our expectations, with increases rather than decreases, and some even grew better than in previous years. I think the pandemic has pushed some trends in China forward. The trends haven't changed, but they have come earlier: 1. China's head effect. The head effect in various industries has accelerated; better companies get better, while worse ones die. 2. The combination of internet and tradition. I think this has been brought forward by two or three years. We found that most of the companies with good growth are related to traditional enterprises using the internet. So, how exactly do these traditional enterprises with good growth combine with the internet? I proposed four words: Experience, KOC, Cloud Store, and Channel Live Streaming. -01- Growth Hot Word: Experience In the past, only selling cheaply could sell more; now, only selling expensively can sell more. We found that after the pandemic, high-end products were the first to recover; the pandemic did not interrupt the trend of product upgrading. However, how to sell high-end products, how to build awareness, and how to combine with the internet? Companies that do well all, without exception, use offline experience as their winning weapon. In the internet era, it's not about abandoning offline to do internet, but making offline heavier so that internet can be lighter. Note, only by making offline heavier—this heavier means doing experience. **After the experience, consumers will form a judgment that the most expensive is actually the best. Consumer experience is a very inefficient way; in the past, we said experience generates word-of-mouth, but since the Industrial Revolution, word-of-mouth has not been very obvious because it is far less efficient than mass communication. However, experience has the highest cognitive intensity. There are currently 4 cognitive models: first, experience; second, word-of-mouth based on experience; third, advertising on mass media; fourth, creating content and IP on internet self-media. In industrial society, advertising was efficient; in the industrial internet, IP is efficient, but both advertising and IP have a drawback: cognition is too shallow. The deepest cognition is when I have experienced enough, but the internet has changed this. Xibei's parent-child experience is a typical trinity: experience includes cognition, transaction, and relationship, and it is strong cognition, strong transaction, and strong relationship. Coupled with internet dissemination, because this experience is very ritualistic—for example, training little chefs, parents will take photos, and photos will definitely be posted on Moments. Personal experience is amplified through self-media, producing the strongest cognition and also efficient dissemination under the strongest cognition. So it is strong experience, strong cognition, and strong dissemination. In the past, many people thought experience was the tasting of terminal products, but you will find that many products cannot be distinguished by tasting, so at this time, experience extends to craftsmanship, technology, supply chain, and derivative products, so that experiencers know how the product is made, where the key points of the product's craftsmanship and technology are, and what pigments are used—all clear. At this time, the cognitive intensity of high-end products is very strong. Many companies do experience at their headquarters. For example, Lidu Liquor has achieved three-level experience, both at headquarters and at terminals, making its experience scenarios ubiquitous, activating what we thought were agricultural-era methods, inefficient methods, with high intensity in the internet era. So traditional enterprises face two tasks: first, to combine with the internet; second, to upgrade products. Product upgrading and internet combination—using the method of experience precisely combines these two. Therefore, for internet dissemination to go IP-based and truly move upward, experience will become a basic skill. -02- Growth Hot Word: KOC When enterprises go online, they need to do both B-end deep distribution and link consumers for distribution. There are two manifestations: first, old products find terminals to link, from B-end to C-end, requiring BC integration. New products directly go to C-end and then work backward to B-end, so that's called CB integration. For new products doing CB integration, who generates the link? KOC—Key Opinion Consumer. What is the difference between KOC and KOL? Position KOL as media, KOC as channel; use KOL for dissemination, KOC for transactions; simply put, KOL builds the brand, while KOC sells goods. The premise of KOL is influence; the premise of KOC is strong relationships. BC integration cannot connect all C-ends; who does the experience? KOC. KOL has influence and can influence, say, 10,000 fans, but he doesn't know these 10,000 fans; it's a weak relationship. KOC, on the other hand, has strong relationships. ** KOC has four labels: first, he has strong relationships; second, he loves sharing and talking; third, he is himself a consumer; fourth, he has done experience. We found that when KOC and experience combine, the inefficient cognitive model of experience becomes very efficient. So, if a company has 100 KOCs in a county, it can basically start the county; once a certain density is reached, it can be activated. At this time, the brand hasn't been built up; it doesn't matter, because people are buying. KOC buys well, and in turn, they will find B. So this is the CB integration mentioned earlier: first get KOC done, then you'll find retail stores start stocking, and you can force the B-end. In the three-dimensional space linking process, the node of deep distribution is the terminal, and the node of three-dimensional linking is KOC. At this time, you can achieve dual-line deep distribution in three-dimensional space, BC integration, from original deep cultivation to B-end, through KOC to connect to C-end, naturally opening up the three-dimensional space. The best linking point for three-dimensional space linking is KOC, and using KOC for experience gives the strongest cognition. KOC is a new species different from KOL; one is channel, the other is media. Only KOC can achieve integration in cognition and transaction, and it is a combination of three strengths: strong relationship, strong cognition, and strong dissemination. This intensity strengthens the trinity of cognition, transaction, and relationship that Teacher Shi Wei talked about. -03- Growth Hot Word: Cloud Store Cloud store means offline stores open an online store. Cloud store is different from micro-mall; micro-mall is retail logic, while cloud store is given by the brand, and there is marketing bringing traffic. The brand gives the retail store a cloud store. The area of offline stores is limited and can only sell high-frequency products. The characteristic of high-frequency products is low gross margin. So what to do? Sell high-margin products on the cloud store, with front warehouses for delivery. For example, Ubrew does same-city delivery; whether ordering via WeChat or cloud store, it's delivered within the same city. There are three sources of traffic: first, good location with high rent; second, search traffic—when consumers buy things, it's simple: they search; third, cloud store traffic. Cloud store traffic is different from e-commerce platforms like Taobao and JD; cloud store traffic is personal connections, so cloud store will become a standard configuration. We call stores that have cloud stores and can connect three-dimensional space "new store merchants." We used to call them stores; now they are new store merchants, having both offline stores and cloud stores. The traffic brought by cloud stores has no rent cost; offline traffic has rent cost. The gross profit of cloud stores is actually net profit, so sales may only increase by 20%, but profit may increase by 100%. -04- Growth Hot Word: Channel Live Streaming Everyone knows that influencer live streaming is hot, but when influencer live streaming is on the decline, another type of live streaming has become popular—this is called channel live streaming. On February 18, Lidu launched channel live streaming. On March 3, DeRUCCI mattress channel live streaming (100 million+). In early May, Xiaoshile channel "flash broadcast" (100 days, 100 counties). On June 18, Dong Mingzhu channel live streaming (10.2 billion). On August 4, Wu Xiaobo and TATA Wooden Doors "channel training" live streaming. Combining the live streaming scenario with channel mobilization capabilities shows how powerful traditional enterprises can be. Because if you don't use influencers, it's hard to mobilize 1.5 million KOCs. If you don't use channels, Wu Xiaobo's live streaming had 8 million online viewers, over 100,000 entered the mall, and over 20,000 placed orders. The vast majority were not brought by Wu Xiaobo's influencer effect but by TATA Wooden Doors' sales channels. So I call it channel live streaming. Channel live streaming is a way to test channel mobilization capabilities and directly monetize through live streaming. The biggest advantage of this monetization method is that popularity is visible and usable. Suddenly, hundreds of thousands or millions of channel customers come up, and that's powerful. So channel live streaming, from B-end to C-end, BC integration, tests the channel's mobilization capability. It needs to be linked and amplified through KOC. How many customers each salesperson brings is clearly visible in the backend. I once saw a salesperson on a live streaming platform bring over 2,000 people alone; that linking capability is very impressive. When influencers live stream, it's the influencer pulling traffic alone, but in channel live streaming, you can clearly see how much traffic each person pulls. The system ranks them: who is first, who is second, how much traffic each has—all clear. So I think this tool is a bit wasted on influencers; when used by channels, especially by companies that do deep distribution well, it's like adding wings to a tiger and icing on the cake. The above are the four key points I summarized for companies that have done well in sales growth this year. Thank you all! If the tip is adopted, a reward of 400-2000 yuan will be paid.