The dilemma of traditional marketing is treating the terminal as the end point. The purpose of traditional marketing is merely to carve up more terminal share through deep distribution. Look beyond the terminal, operate beyond the terminal, and the ultimate solution is BC integrated operation. The terminal is the B-end, and users are the C-end. -01- Let's start with a case study; it's more vivid. Everyone knows Three Squirrels is a Tmall brand, but starting in 2018, Three Squirrels began opening offline alliance stores. The alliance stores are small, 30-40 square meters. However, on the opening day, revenue basically exceeded 100,000 yuan. In September 2019, 144 stores generated 21.5 million yuan in revenue, with an average monthly revenue of 150,000 yuan per store. It's common for a store to achieve million-yuan revenue during the Spring Festival. In terms of sales per square meter, this is very high, far exceeding traditional terminals. Why is sales per square meter so high? The alliance stores are called "alliance stores" because they implement a "dual IP strategy" : Three Squirrels is of course an IP, and the store owner is also an IP. The company designs the IP for the store owner. Therefore, Three Squirrels requires that the investor personally serve as the store manager, and does not allow one investor to open multiple stores. The revenue of Three Squirrels alliance stores comes from two main sources: one is revenue from the store's location; the other is revenue from the store owner's IP. Revenue from the store's location comes from inside the store; revenue from the store owner's IP comes from outside the store, relying on the IP's influence on the social circle, plus the endorsement of the Three Squirrels IP. When business is outside the store, sales can be limitless. IP is about expanding influence beyond the store. When terminal sales are shrinking, looking beyond the terminal may be the way out. -02- What is a terminal? I find that views on terminals have diversified. Traditional marketers see the terminal as the end point of marketing. Deep distribution is about carving up more terminal share. Three Squirrels sees the terminal as just a starting point. Through the terminal IP, they enter the C-end and radiate to more users. Community group buying sees the terminal as a connection point. From the upstream perspective, it's a new supply chain; from the community perspective, it's strong community relationships. As for where the terminal is or how large it is, that's not important. Traditional marketers view the terminal from within the terminal; new marketing and new retail look beyond the terminal. Standing within the terminal, there are many problems; looking beyond the terminal, there are unlimited growth opportunities. Let's discuss the different perspectives on the terminal. -03- From the traditional marketing perspective, the terminal is the end point of deep distribution. Deep distribution is becoming increasingly difficult, mainly because sales at traditional terminals are declining. In traditional retail, store revenue mainly comes from two sources: one is the store's location and area. Location determines the main traffic, and area determines the radiation radius; the second is the owner's operational capability, which determines the average transaction value and repeat customer rate. Deep distribution has three main tasks: first, terminal customer relations; second, terminal product placement (shelf stocking, shelf management, replenishment, and terminal merchandising); third, promotions targeting users. These three tasks share a common characteristic: given a certain level of terminal sales, they aim to carve up a larger terminal share. The price paid for carving up terminal share includes customer relations and various fees, such as display fees and shelf fees. Before 2014, terminals had natural growth. That is, sales still grew without improving terminal operations. Therefore, terminal owners were relatively lenient with manufacturers and suppliers. After 2014, industry sales peaked, and e-commerce and social e-commerce diverted sales, causing terminal sales to decline. The decline in terminal sales inevitably shifts difficulties to suppliers. Therefore, the dilemma of traditional marketing is determined by the macro environment. Without solving the terminal's growth problem, traditional marketing has no solution or way out at the terminal. Even if you carve up share at a greater cost, the return on investment is increasingly low. -04- In the eyes of Three Squirrels alliance stores, the terminal is no longer a traditional retail store, but an experience center. The marketing of alliance stores has three key elements: scenario, experience, and dual IP. Of course, the product is not determined by the alliance store. The core of the terminal is the scenario, not the selling space. A selling space displays products; a scenario evokes emotions and awakens user desires. So, despite the small area of the alliance stores, the scenario design is carefully crafted. Creating user experience around the scenario is the second value of the new terminal. Experience is not tasting; tasting aims at product satisfaction, while scenario plus experience aims at user affection. With scenario and experience, there will naturally be in-store sales and repeat customers. However, these sales are still far from enough; larger sales are outside the terminal. How to obtain sales outside the terminal? This is the value of dual IP. Dual IP: Three Squirrels is an IP, and the store owner is an IP. Three Squirrels' IP provides endorsement; the store owner's IP expands the store's radiation radius and acquires large C-end users and B-end users. -05- Community group buying is a large-scale entry of online platforms into terminals, a typical case of online eroding offline sales, which will create greater difficulties for traditional marketing. In the eyes of community group buying, the terminal is no longer a store, but more like a pickup point. There are two types of group leaders: stay-at-home mothers and store owners. Stay-at-home mothers do not have stores. The benefit that community group buying brings to stores is expanding the product categories. Traditional stores have limited space, so they only sell high-frequency, leading brands, with a few exceptions like snacks and condiments. The higher the frequency and the more leading the brand, the lower the profit. Because community group buying operates on an order-based system, theoretically it can sell almost all categories. Besides early fresh produce, now it can include almost everything. Previously, the supply chain was local; now remote orders are possible. The value of community group buying to stores is like opening a small store but doing KA business. In the eyes of community group buying, the store is a connection point for the community. Stores and community users have strong offline relationships and can also achieve strong online interaction through social groups, typically connecting the three dimensions of on-site, community, and network. The flagship category of community group buying is fresh produce, which is a high-frequency category. High-frequency categories help increase store revenue. -06- The dilemma of traditional marketing is treating the terminal as the end point. The purpose of traditional marketing is merely to carve up more terminal share through deep distribution. The disappearance of natural terminal growth and the diversion by e-commerce have made this business logic unsustainable. Whoever creates growth for the terminal will be given more existing share by the terminal. Where is the path for terminals to create growth? It is to look beyond the terminal and enter the C-end. In fact, it's treating the terminal as a starting point. The users who enter the store are limited; those who do not enter are unlimited. Only by looking beyond the terminal can you capture unlimited users. In traditional marketing, only those who enter the store are customers; looking beyond the terminal, there are more customers outside the store. In the past, there was no technical means to achieve this; now with the help of the internet, it is no longer a problem. Look beyond the terminal, operate beyond the terminal, and the ultimate solution is BC integrated operation. The terminal is the B-end, and users are the C-end. -07- Operating beyond the terminal with BC integrated operation has a business logic different from traditional retail. Traditional retail: sales = traffic × entry rate × conversion rate × average transaction value; Traffic and entry rate are determined by store location and area; conversion rate and average transaction value are determined by operational capability. In new retail, connection capability is paramount. The store owner as an IP determines stronger connection capability. Connection capability is unrelated to location or storefront. Having connection capability does not mean the store is useless; otherwise, it would be pure online sales, which are now facing traffic depletion. The value of the store was previously sales; now, besides sales, it must also serve outside-store sales. Scenario creation and user experience are the store's advantages and also the means to serve outside-store sales. -08- Three Squirrels entered offline from online, and community group buying is platforms entering offline. Both are eroding offline sales. What should traditional marketing do? Channel issues are shrinking, and online is grabbing terminal sales. Channel sales can no longer be confined to or limited by the terminal. The era of deep distribution has ended. What is the next stop after deep distribution? I believe we must operate beyond the terminal with BC integrated operation. Source: Teacher Liu's New Marketing Tips will be paid 400-2000 yuan once the tip is adopted.