China's market is undergoing a product revolution of 'mainstream shift'! This revolution is called the 'new normal' at the macro level, 'leader replacement' at the micro level, and 'mainstream shift' at the meso level. In October 2014, the two biggest news events were the collapse of Taiwan's Ting Hsin Group due to the use of 'gutter oil' and the fall of Pang Donglai's myth of harmonious boss-employee relations. The common feature of both events is that the golden status (market position + reputation) cultivated over many years was instantly destroyed. These seemingly localized events are actually early warnings of the mainstream shift: Regarding the Ting Hsin incident, could the oil used in mainland Master Kong noodles be problem-free? How long can the mainland keep a lid on this, just like the melamine scandal in the dairy industry? Excluding moral condemnation, isn't the business principle of companies that would rather spend tens of millions on food deodorizers than use qualified oil simply the low cost behind 'double low' (low quality, low price)? This phenomenon is not limited to Ting Hsin! What about the Pang Donglai incident? Isn't it the contradiction between another cost factor in business operations—labor costs—and corporate profitability? The essence of these two events sends a clear signal: The growth model of achieving scale through low cost, low quality, and low price (the 'three lows') has reached its end. Or more precisely, for 'three lows' companies, the abyss lies ahead, and former industry leaders who remain stubbornly attached to this model will lose everything overnight. The catastrophe of Ting Hsin is clear proof. The myth of 'too big to fail' is over. In times of drastic change, no one has a get-out-of-jail-free card. Chinese enterprises must calmly face the future, abandon the arrogant mindset accumulated from past successes, and recognize the reality that is unfolding: the mainstream shift. Mainstream shifts always start with products In the past, the competitive threshold for leading enterprises was a brand threshold built on channel and media barriers. In the context of the mainstream shift, brand is no longer a moat for enterprises. Latecomers with 'super charismatic products' can easily marginalize former industry leaders—note that all mainstream shifts begin not with changes in scale comparison, but with changes in market attention (i.e., hotspots). New mainstream products marginalize industry leaders almost without a fight, plunging them into a terrifying 'forgetting black hole.' Once Tesla came out, the word 'trendy' was no longer associated with Mercedes-Benz or BMW. That's what makes Tesla terrifying: former leaders are deprived of even the chance to counterattack. In consumer electronics, entertainment, and every industry related to clothing, food, housing, transportation, birth, aging, illness, and death, this product disruption of the mainstream shift is happening, faster or slower. The only certainty is that every industry is undergoing a mainstream shift; companies that don't feel it may be showing ominous signs of aging. Thus, we propose the second conclusion of the mainstream shift: The new mainstream is the new fashion. In other words, anything that cannot become a new fashion, cannot dominate public opinion headlines, media hotspots, or public discourse, is not the new mainstream. Luojisiwei, a hipster niche community experiment, is becoming a source of new fashion: In 2014, several of Luojisiwei's 'Luoji experiments'—selling books, mooncakes, and Liu Tao (a fruit brand)—demonstrated the immense power of communities. Luojisiwei sold 8,000 sets of obscure social science books in a few hours, collecting 4 million yuan; Luoji mooncakes, from planning to sales in less than 3 months, sold over 60,000 sets, setting a record for new brand mooncake sales; the ongoing Liu Tao campaign has gathered a host of hot figures like Liu Chuanzhi (Lenovo), Wang Zhongjun (Huayi), and Diao Ye. Regardless of whether Liu Tao has improved as a product compared to last year, it's certain that Liu Tao's heat will surpass that of Chu Orange in 2013. What's truly scary is not Luo Pang's (Luo Zhenyu) team, but that Luojisiwei has indeed become a source of new fashion. According to Luo Pang, this is an aggregation and fission modeled on 'Out of Control' (K.K.), where no one can predict the future; the only predictable future is that changes will be bigger and faster, and no one knows the endpoint or boundary: 'Sliding on a watermelon rind, wherever it goes' has become Luojisiwei's mantra. Five underlying drivers of the mainstream shift Whether it's Tesla or Luojisiwei, the mainstream shifts they trigger are revolutionary and even dizzying. But is there no pattern to the mainstream shift? Of course not. The mainstream shift not only has patterns but also clear logic. In the past, marketing focused on the operational level of enterprises, with 4P to 12P forming a self-contained system. In the context of the mainstream shift, marketing is returning to its true source: society and the times, i.e., the new living environment in macro time and space. Teacher Liu Chunxiong said to 'read the times'; I add, 'analyze society': The mainstream shift is not only a topic of the times but also a sociological topic. Today, the development of data technology gives us a more scientific foundation for predicting the future. The trends or signs of the mainstream shift can be observed, studied, and predicted because the foundation of the mainstream shift is five underlying drivers: population structure, geographical distribution, income level (including social welfare), education level, and technological innovation. Three trends in China's population structure: gender imbalance, rural population decline, and a surge in overseas emigration. The baby boom is weakening, so spending on milk powder will be much less than spending on travel and dating. Changes in population structure will alter the flow of disposable income. Even for existing products, companies must consider which demand 'touchpoints' they align with. The biggest variable in China's geographical distribution is the 300 million new urban residents brought by new urbanization; the term 'migrant workers' will gradually fade. People flow means money flow; 300 million new urban residents are enough to support an industrial consumption revolution. The disappearance of China's demographic dividend is unstoppable. Income levels are rising significantly, and demands for welfare are increasing. Even amid massive unemployment, per capita disposable income is growing. At least 30% of households are entering middle-class society, and 50% are entering a moderately prosperous society. Bourgeois consumption may last for over a decade. What is bourgeois consumption? It's the 'new 3B' creating new categories—zhuangbi (selling sentiment, dreams, style), doubi (fun, interesting, silly and cute), and erbi (nonsensical, brainless fans). The internet has torn down the walls of knowledge, making the global village a reality. Illiterates are aging and dying; those alive and able to consume are all intellectuals. The rich second generation, overseas returnees, and otaku tribes have created a new breed of humans with developed minds but degraded abilities. These people can enjoy an affluent life without hard work; their world has only two words: play and fun. This group won't even give a glance to products that their parents used for a lifetime—isn't that future terrifying? The technological innovations most closely linked to consumption are mobile internet and the Internet of Things. Mobile internet connects people, while IoT connects everything. Selling goods on WeChat Moments and wearable devices are the biggest changes brought by the explosion of technological innovation. Big data, sensors, remote sensing—new and novel products are born every day, and no one knows which product will destroy an industry. It's like three sentences that destroyed three money-making treasures or industry leaders: 'Do you have WeChat?'—the most profitable SMS business in mobile communications was destroyed. 'Do you have a public account?'—media and websites were destroyed. 'Can I buy your product on your phone?'—retail terminals and Taobao (PC) were destroyed (fortunately, there's mobile Taobao). The generative dynamics of the mainstream shift We've said that for an industry, the leading brand (i.e., the one with the largest market share) represents the mainstream direction, and the leading brand's core product (i.e., the one with the largest internal sales share) is the concrete manifestation of the mainstream. Therefore, when discussing the mainstream shift, we first talk about future brand leaders, and second, the mainstream niche-fillers that form around them. From the perspective of the production dynamics of the mainstream shift, companies need to pay attention to six shift opportunity points. Purchasing power shift opportunity The shift in purchasing power is increasingly evident in food upgrades: From essential goods like rice, flour, and oil to optional consumer goods like tobacco, alcohol, and tea, price sensitivity is decreasing while quality pickiness is increasing. This process of one rising and one falling is the death knell for 'three lows' products and luxury brands. A large number of high-quality, reasonably priced products will be quickly accepted until a new mainstream price band (the price range with significant consumption volume) and new mainstream products form. What replaces Master Kong instant noodles may not be 're-noodles' but cold-chain fast food: not frozen food, but microwaveable ready-to-eat meals with a short shelf life but more original flavor, better taste, and higher nutrition. In Shanghai, cold-chain fast food around 10 yuan has become the mainstream lunch for white-collar workers, even dinner. Instant noodles have no other reason to be chosen besides convenience. In Shanghai's office buildings, eating instant noodles has become synonymous with laziness and low taste. Demand hotspot shift opportunity In recent years, there's been constant discussion of transformation and upgrading. Actually, transformation is transformation, and upgrading is upgrading. Upgrading is improvement within the original industry and product; transformation is not patching up but finding new demand hotspots and quickly getting a foothold. In other words, transformation is first stopping the original business and starting anew; if the new business touches future demand hotspots, then transformation is successful. So, in what direction are China's demand hotspots shifting? We believe there are three major directions: First, from physical to experiential—service products and experiential products will be highly popular, such as various themed inns and homestays, and products to improve indoor air quality—air purifiers, like water purifiers 20 years ago, have become essential home appliances due to PM2.5. Second, from material to spiritual products—small theaters, cultural performances, MICE tourism, and even education and training are becoming Hollywood-style blockbusters. Third, green and natural—many factories are turning workshops into flower rooms and opening eco-restaurants, which can be more profitable and comfortable than producing goods. Agritainment, land leasing (farm-to-table), and eco-restaurants are forming new peri-urban industries. Transformation along these three directions is reliable. Opportunity from industrial changes brought by technological innovation It sounds scary, but the biggest change from technological innovation is that people can be lazier and more comfortable, yet society becomes more transparent, meaning personal privacy is increasingly eroded. Technological innovation in cars, TVs, phones, medical, health, etc., means a person's life information is increasingly recorded in some data warehouse. Tesla owners drive a trendy car, but all their driving information—routes, charging, web browsing, music listened to—is recorded on Tesla's servers. LeTV TV records every power-on/off and program selection; phones go without saying; wearable devices like health bands and smartwatches record our daily information—exercise, sleep time, health status. The latest smart vibrator, connected to a phone app, can adjust six vibration modes to help women achieve orgasm, which means transmitting one's masturbation information to the product provider. However, these smart devices are rewriting people's lives and shaping new industries: a new generation of smart cars, a new ecosystem for smart TVs, new medical models, and new lifestyles for health and entertainment. Opportunity from new consumption forms created by new channels China's current basic business environment is the 'three worlds' (physical, PC internet, mobile internet), each independent yet interconnected, with O2O becoming the basic business model for all enterprises. The three worlds are not only sales channels but also new consumption forms and even new lifestyles. A large number of new products and brands are rising: No need to dine out; order on Fanfou or Taodiandian, and delicious food arrives at your door. No need to carry a wallet; use WeChat Pay or Alipay to pay for taxis or buy things at convenience stores and fast-food restaurants. No need to shop in malls for clothes; enter your measurements on a website, choose fabric, style, and embroidery, and a custom-made shirt is completed. In 2014, every beauty on WeChat was selling face masks, and every loser entrepreneur on Weibo was selling agricultural products. WeChat and Weibo, these channels that bypass traditional media to reach target customers, have made micro-business a new profession after e-commerce. As we've said, the 'three micros' (Weibo, WeChat, micro-business) new world will give birth to a batch of 'nomadic brands': no sales staff, no stores, because everyone spreads and sells, directly creating sales scale through a snowball effect. Some worry this is illegal pyramid selling, but that's a failure to recognize the essence of illegal pyramid selling. The essence of illegal pyramid selling is controlling people through deception and illegal detention; the product sold is just a front. Person-to-person selling is based on free, trust-based information dissemination and purchasing. It's precisely in 'semi-acquaintance' communities that fraudsters have no market. Those who don't embrace new channels in time will lose more than half of their market opportunities. To reiterate the impact of the 'three worlds' on future sales, it lies in three core elements: payment, express delivery, and media. Marketing and commerce, especially the way enterprises achieve sales, build brands, and manage marketing, are undergoing major changes. That's the key. Category shift opportunity Besides the continuous innovation of new categories, the shift of existing categories may be more worthy of attention for enterprises. The world we live in today is a world processed by industrial mass production, not an 'eternal' reality. Take food as an example: Today's packaged food's variable cost factors are, in order: petroleum, food additives, and flavorings, not raw materials. Melamine and gutter oil incidents are just the tip of the iceberg of the packaged food industry. Humanity has long been using synthetic chemical food as supplementary food. In raw material production like agriculture, pesticides, fertilizers, insecticides, antibiotics, growth promoters, and contraceptives are widely abused. These abnormal industrial foods will all face opportunities for category shift and change. What drives category shift, i.e., toppling the former elephants, may be easier than many think: If the cooking oil we commonly eat is scientifically proven to contain high carcinogens, would you reduce consumption or switch products? If rice as a staple is proven to cause physical weakness and is even related to beriberi, would you consider reducing rice consumption? In fact, these are real scenarios for future category shifts. That is to say, the replacement of past 'three lows' categories with healthier new categories doesn't require a market war; the mainstream shift grows in another dimension and level, eventually causing old categories to automatically exit the stage. Mindset shift opportunity The mainstream shift naturally cannot ignore the impact of changes in consumer group mindsets. We disagree with the positioning school's erroneous approach of attributing everything to mindset; instead, we need to understand from a social reality perspective how changes in different groups' mindsets affect purchasing decisions. Take the post-90s and post-00s, who are becoming the main consumer force. This generation faces relatively less survival pressure, so their consumption choices are more influenced by aesthetics, play (games), interests, and peers, with relatively lower price sensitivity. They pay more attention to spiritual consumption products than material ones. Due to a lack of ostentatious motivation and even aversion to flaunting wealth, they have weak or even negative demand for luxury goods. Categories (and brands) driven primarily by success and ostentation will face huge survival challenges in this generation. For example, cars—this generation might be indifferent to Tesla; their transportation might be solar-powered bicycles or electric balance scooters. Huge social changes, population structure, and education levels will cause massive divergence in group mindsets. The flip side of 'the world is flat' is that people are grouped by kind, and communities re-segment humanity into circles, some mutually exclusive to the point of being irreconcilable, such as Western medicine vs. traditional Chinese medicine, pro-Han vs. anti-Han, left vs. right. From a social perspective, both flowers and weeds have the right to exist. A life world that 'does no harm' and respects differences might be our future. Our conclusion: The death knell has sounded for the growth model of achieving scale through low cost, low quality, and low price (the 'three lows'). Once a new mass-appeal product with high cost, high quality, and medium price appears, it will shine brilliantly and be unstoppable, becoming the vanguard of the mainstream shift. In the mainstream shift, opportunities outweigh crises, but those who can't keep up will be eliminated! 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