Click to read the original article for details. This article was first published on Professor Chen Chunhua's official WeChat public account "Chun Nuan Hua Kai" (Spring Blossoms), and is reprinted with authorization. Introduction: The gap in enterprise performance in the market is largely a gap in marketing. For today's Chinese enterprises, whether going global or protecting their achievements at home, a deeper understanding of marketing is required. There are often debates about whether marketing is a science or an art. I believe that because marketing is based on relevant disciplines, it should be science; because marketing is based on customer value, it should also be art. Therefore, marketing is both science and art, which is also a characteristic of management science. In the past, Chinese enterprises have indeed undergone earth-shaking changes, making progress in many fields, and even playing a leading role in some industries. But when glory becomes the past, we need to settle our thoughts and lay a more solid foundation for the next glory. From Mass Market to Segmented Market Although marketers are familiar with the concept of market segmentation, and many have already begun practicing it, there is still a lack of collective segmentation behavior. In fact, most marketers do not favor the prospects of segmented markets, but are accustomed to a marketing model: design a good product that meets the needs of the masses, sell it through mass channels, promote it through mass media, price it at a level acceptable to the masses, and try to maximize sales volume. Before the mass consumer market space is truly saturated, developing segmented markets is a thankless task. We criticize this view and insist on market segmentation because: First, the mass consumer market is approaching saturation, forcing enterprises to seek segmented markets to create growth space; the mass market is becoming increasingly low-margin or even unprofitable, forcing enterprises to turn to high-margin segmented markets. Second, income distribution disparities and the resulting demand differences are now large enough. The middle class and high-income groups have emerged as a social class, and the Gini coefficient has exceeded that of many developed countries. These are prerequisites for the scale-up of segmented markets. Third, segmented media and segmented channels have emerged, and niche media continue to appear, creating conditions for the promotion of segmented products. Some enterprises, in the process of developing segmented markets, have found that marketing teams accustomed to the mass market, due to their concepts, habits, and experience, often apply mass market models to segmented markets, leading to the failure of segmented product marketing. Knowing these drawbacks, we must learn the capabilities and habits required for segmented markets, rather than insisting on only doing mass markets. We must accept the reality that segmented markets are a trend and be prepared for it. Channel Reinvention Based on Supply Chain Management The high cost of marketing channels and terminals has become a prominent issue, and promoting the development of modern logistics and supply chains will be an important solution. But this is not the most important thing. The most important is that the model shown by the Wal-Mart effect has become the fundamental model of market game rules. I call the Wal-Mart model the "Wal-Mart effect." Simply put, it covers four aspects:
First, the high efficiency of the logistics and information system leads to lower prices;
Second, demand-driven retail forms a new relationship with suppliers;
Third, information systems drive distribution;
Fourth, it prompts manufacturers to work harder, forming an efficient consumer response. In the past, enterprises mainly relied on seizing positions in the supply chain to gain relative competitive advantages, but the various links in the supply chain were isolated, information was not smooth, interests were unbalanced, and the supply chain did not form an overall advantage. Today's enterprise competition is key to speed, and the speed of an enterprise depends on the overall operating speed of the supply chain. This requires enterprises to shift from seizing positions in the supply chain to integrating the supply chain. The so-called supply chain integration first requires establishing an enterprise supply chain system based on information technology; second, it requires adjusting the interest relationships among supply chain stakeholders through mechanism innovation, establishing a target responsibility system to achieve effective coordination; third, it requires using capital leverage to integrate the upstream and downstream of the supply chain or form strategic alliances and cooperation. If we return to the characteristics of supply chain management, you will more agree with my point of view. Supply chain characteristics are manifested in the following aspects: Acknowledging interdependence and leadership;
Strategy based on feedback;
Comprehensive solutions;
Specialization of core competencies;
Shared culture. The result of supply chain management is that procurement methods shift from competitive bidding to close cooperative relationships. Therefore, we need to seriously understand supply chain management and use it as the foundation for channel reinvention. Uncertainty is a Norm in Marketing In recent years, almost all industries have faced pressure from significant fluctuations in raw materials and unpredictable global markets, which can be seen as manifestations of uncertainty in the external environment. What is thought-provoking is that such uncertainty seems to be increasingly frequent, becoming a norm for enterprise survival. The facts reveal the basic logic hidden behind the market—just as free competition determines that the era of meager profits for enterprises is inevitable, an open market environment also requires enterprises to accept the challenge of uncertainty at any time. If uncertainty in marketing is a norm, then our marketing must be prepared in at least several aspects: First, strengthen internal capabilities, using our own system capabilities to ensure total cost leadership of products. Second, innovate marketing around customer value. The opportunities provided by uncertainty can only exist in customer needs. Therefore, in the face of a rapidly changing market, marketing innovation should start from customer needs and strive to add value for customers. Third, reinvent marketing processes based on supply chain management. Fourth, become a value chain manager. The relationship among manufacturers, distributors, and consumers should no longer be a zero-sum game, but a positive-sum game, that is, a win-win or multi-win concept. This will balance the interests of all parties in the value chain, generate true synergy, and enhance an enterprise's ability to resist market uncertainty. Achieve Success for Others First, Then for Yourself Tetra Pak, one of the Fortune 500 companies, mainly sells packaging materials, beverage processing equipment, and filling equipment. As the world's largest soft packaging supplier, it controls about 75% of the global soft packaging market share. Since officially entering China in 1985, it has become China's largest soft packaging supplier. So, as an upstream supplier in the industry chain, how did Tetra Pak rapidly develop its business in an industrial environment, especially when downstream enterprises had poor business concepts? Tetra Pak's business philosophy in China is: grow together with customers. Tetra Pak firmly believes that only when all manufacturers in the entire industry chain develop together can the industry prosper. As an upstream supplier in the industry chain, only when downstream develops can it achieve greater development itself. As a supplier, Tetra Pak did not limit its responsibilities to improving product quality, enhancing product competitiveness, continuously launching products that meet enterprise needs, lowering prices, and improving after-sales service. Facing the poor "software" environment downstream in the industry chain, Tetra Pak decided to help customers grow and develop. As a practical action to implement this philosophy, Tetra Pak formed strategic partnerships with downstream manufacturers in marketing. This partnership is called the "Key Account Management System" (KAM) model. Tetra Pak, "customer-centric," changed its internal organizational structure, set up key account managers, and formed a customer-oriented operational process in its business functions. In this way, while exporting products, Tetra Pak also exported corporate culture, management models, operational concepts, marketing ideas, and market operation methods, and trained talents for partners. In this process, Tetra Pak also actively used advantageous resources to integrate customers comprehensively. Through effective key account management and implementation, it enabled customers to achieve business profit growth, thereby achieving customer satisfaction goals. In this way, Tetra Pak gained customer recognition and achieved greater development itself. Scale Allocates Costs, Structure Generates Profits In the marketing field, people have always focused on scale. Increasing sales volume and expanding market share have always been the pursuit of marketing personnel. But in today's market, people find that "scale is not economical." Facing this fact, how to reasonably leverage scale and how to solve the risks brought by sales personnel pursuing scale are the focus of sales management. A reasonable choice is to establish a new business model, that is, a model of "scale allocates costs, structure generates profits." This means enterprises should: First, appropriately reduce the proportion of leading products and increase the proportion of "small-batch product groups," because leading products are "targets" for competitors and difficult to generate profits, while "small-batch product groups" are products with rich profits; Second, establish an appropriate product structure, creating a business model where "low-end products generate cash flow and allocate costs, mid-end products generate profits, and high-end products shape the brand image." Only enterprises that target the mid-to-high-end market or "cover" the high, mid, and low-end markets can survive in the era of "diseconomies of scale." Opportunity Creates Opportunity Opportunities can sometimes be created, not just fought over. When you are full, you want to eat better; when you eat well, you want to eat scientifically. Human desires are stimulated step by step. Early cosmetics were only used to moisturize skin in winter. Look at today's cosmetics: by function, there are sunscreen, moisturizing, freckle-removing, whitening, nourishing... by type, there are toners, lotions, creams, eye creams, hand creams, foot creams... You might think the space is already crowded, with no unmet consumer needs, but cushion foundation and BB cream have created entirely new market spaces. Continuously digging deep into consumers' inner needs and segmenting these needs creates one market opportunity after another. Even in an era of increasing material abundance, such opportunities are never lacking. From Refinement to Leanness in Marketing We must recognize that the competition Chinese enterprises face today is global competition. The Chinese market has become the focus of competition for global multinationals. Chinese enterprises have already directly participated in international competition even before stepping out of the country. This requires that the marketing thinking of today's local Chinese enterprises have an international perspective, keep up with global marketing management levels and cost standards, and implement localized actions. China's current market has undergone structural changes. This structural change has put internal transformation pressure on the marketing thinking and models of Chinese enterprises, and has raised the requirements for upgrading the management capabilities and levels of Chinese enterprise marketing. This requirement is that marketing needs to shift from refinement to leanness, and from management to operation. The difference between "益" (benefit) and "细" (detail) is just one character, but it represents the key to marketing success and a qualitative difference in marketing models. "益" is the purpose, "细" is the means. The purpose of "operation" is efficiency, and the purpose of "management" is efficiency. The core problem facing Chinese enterprise marketing is the lack of a strategic profit niche. Marketing management manages for the sake of "management," sells for the sake of "sales volume," and focuses on "details" for the sake of "details," forgetting that the core purpose of an enterprise is to create value for customers, to be profitable, and to seek development. The biggest waste in Chinese enterprise marketing is the waste caused by the lack of strategy and marketing plans, the waste caused by extensive resource investment, and the waste caused by excessive terminal management and services that do not create value (reflected in low output per unit area, low unit customer value, and low per capita efficiency). Benefits without market share scale are limited, and market share scale without enterprise benefits is false. The quality of market share is the key to unifying scale and benefits. The Model for Discovering Models: From the Frontline, to the Frontline Once a successful model is found, enterprise development enters the fast lane. Haier discovered the "service marketing" model, and only then was it able to find marketing competitiveness without core competitiveness and product differentiation. Trout tells us: successful strategy is not the result of "racking brains" in the office, but the result of successful tactics. He therefore concluded: "The most useless activity in marketing is sitting around a round table to improve strategy." "Since tactics dominate strategy, the key step in the entire marketing process is to go deep into the market frontline. Unfortunately, many companies do not have a vice president responsible for this." Models originate from frontline personnel, but are discovered by those who go deep into the frontline. Trout also pointed out: "Do not confuse going deep into the frontline with being sent to the frontline." Those "sent to the frontline" are there to work, while those "going deep into the frontline" are there to discover patterns. The boss's job should be: go to the frontline to discover experience, return to headquarters to summarize it into a model, and then promote it on the frontline. This can be summarized as the "model for discovering models," that is, "from the frontline, to the frontline." Some salespeople are very successful, but they do not know why they succeed, nor do they know the value of success. For them, some successes are the result of careful design, while many may be the result of "accidental hits," or even "innovations" from not following company instructions. Only from the boss's perspective can one understand the value of local success, analyze the reasoning behind success, and know which successes are inevitable and which are accidental. Price is a Strategic Choice, Not a Tactical Choice A successful pricing strategy should not attract the attention of competitors or cause them fear. When using price as a response, the key is to make consumers perceive your concession. If you can create differentiated products, supplemented by price measures, and combined with cost advantages from scale effects, then such a strategic and systematic price strategy is the way of marketing. Unfortunately, many domestic price wars are more of a "show," a provocative game, or a hoarse cry after anger. At this stage, the homogenization of products and services in the consumer goods market is increasingly serious, and the facts of low consumer brand loyalty and severe brand switching determine that price wars will inevitably be favored by merchants. In fact, true experts are not unaware of using price measures to increase market share, but after evaluating the environment and available methods, they find that in most cases, simply adopting price reduction promotions is not the best choice. Because when product homogenization is severe, if any major brand in the market adopts price cuts to gain more market share, other brands will inevitably take similar or even more aggressive price cuts to protect their share, ultimately destroying industry profits. For a price war to succeed, the first problem to solve is: Which customers are you attracting? Is the consumer group large? Which companies does this pose the greatest threat to? Give a Set of Standards for Salespeople to Succeed In excellent enterprises, it is not only marketing experts who can succeed; it must be ensured that ordinary people can also succeed. This ordinary person is the salesperson. Ordinary enterprises have a bad atmosphere, seemingly noble when talking about incentives and trust, but vulgar when talking about supervision and management. In fact, effective supervision and management are indispensable means to force ordinary people to succeed. Therefore, excellent enterprises adhere to the principle of "limited trust" when formulating rules and regulations, rather than indulgent management like "use people without doubt, doubt people without using." Give a set of standards for salespeople to succeed. "Crossing the river by feeling the stones" is a phrase often misread. In ordinary enterprises, everyone is crossing the river by feeling the stones, and as a result, most fall into the river, so ordinary enterprises have more lessons than experiences; in excellent enterprises, ordinary people are never allowed to cross the river by feeling the stones. This is the work of a few excellent people, and once they have crossed, they turn the experience into standards, and others follow the standards to cross. Therefore, excellent enterprises have many standards. Excellent enterprises always have many "standard operating manuals." When encountering problems, they first look at what the manual says; if it is not in the manual, they seek support from superiors. For example, Coca-Cola's "1.5 times safety stock" and "visit customers in clockwise order" are not things that ordinary salespeople can figure out; they must be the crystallization of the collective wisdom of the enterprise. In ordinary enterprises, experiences and lessons belong to individuals; in excellent enterprises, experiences and lessons belong to the corporate wealth. In fact, everyone has their own unforgettable experiences and lessons. Summarizing these experiences and lessons can form standards. It is not difficult to do this; the difficulty is to think this way. Source: Chun Nuan Hua Kai (ID: CCH_chunnuanhuak)