Scenario has become the first principle of marketing Recently, the topic of scenario is hot in the marketing circle, with everyone saying that in a shrinking market, scenario is the only growth opportunity. Brand owners are thinking about how to stimulate more consumer spending within scenarios. First, I personally agree with this view. The topic I want to discuss today is: Why, after 40 years of marketing in China, has everyone suddenly started talking about scenarios in the past two years? Was scenario not important before? Yes, I want to tell you that in the past, scenario was really not important for brand owners. Why do I say that? Those in FMCG know that P&G has the HBG theory, which says that because consumers have scarce information, scarce purchase channels, and scarce quality products, they prefer big brands, big media, and big channels. The logic of HBG is based on an assumption: that consumers are generally in a state of scarcity. What does that mean? I want to say that in the past, consumers had limited access to information, shopping channels, and the variety of products available, with few choices, so overall it could be called scarcity. So you see, companies like P&G only needed to build competitive barriers on the occupation of scarce resources to do business well. As for whether the product is good or where to buy it, it really didn't matter. They just needed to advertise on TV, create displays in stores, and offer special prices on e-commerce to capture most consumers. Another example is beer: big brands only needed to buy out the catering channels to lock in the annual consumption of consumers entering those catering outlets. Do you think consumers mind? They don't. Because their income is increasing, they are full of hope for the future, and they don't think it's a problem to pay a bit more within limited choices. But today, the market environment has completely changed. First, the economy is no longer growing, and people are now burdened with assets and liabilities. I recommend everyone watch Fu Peng's recent speech, which is very popular and points out all the current consumption problems in China's economy. Here I will only mention one point: people do still have some money, but the middle class has lost expectations for the future, and they are starting to budget their lives. At this time, they begin to try to find more cost-effective things to replace some of their past unreasonable consumption. So we see the rise of many discount stores in the past two years. In fact, people starting to budget their lives is, I think, a sign of consumption maturity. Moreover, China's current supply is actually excessive. I describe this excess as affluence. Let me give an example: today, if I want to treat a client to a beer and want a better one, I can order a Heineken Iron Keg on Waima before leaving the office, and by the time I arrive at the restaurant, the beer has arrived. It's good, fast, and cheap. I wouldn't buy ordinary beer in the store that is expensive and not tasty. The key is that my friend also feels I value him by buying this way. So, this affluence is not just about products, but also about the information consumers get and the ways they shop. Let's go back to the beginning: why is scenario so important? It's because I have enough choices in the channels I get information, shop, and the products I can buy. This means my consumption decisions are not constrained by scarcity. I can buy immediately if I want. There's no need to accumulate purchase needs. When consumption freedom is high, all consumer decisions are based on: in that scenario, who am I with, what problem am I solving, what are my pain points, and which product can provide me with the best solution. Whoever can trigger my purchase desire and is the best solution in my consumption scenario, I will buy their product. Mature Society Need to Re-examine Consumer Needs & Behaviors The biggest change in China now is that during the Third Consumption Era, China's economy is no longer growing rapidly, and consumption has entered a stock market. Consumers are becoming more mature, and the dimensions they consider when shopping are significantly different from before. In an affluent market environment, consumers have more choices, and the quadrant of consumer decision needs and behaviors will shift significantly, from the Second Consumption Era to the Third Consumption Era. In addition, for those interested in this classification, you can sign up for the speech at the New Distribution Conference in March next year. I will explain in detail the changes in consumer consumption logic in the table at the conference. But the division of needs and behaviors in the table above is too complex. I have simplified the two significant consumption preferences of mature consumption in the Third Consumption Era: value-for-money and emotional value, combined with income levels, into a simplified model for your analysis. See the figure below: Basically, these four quadrants abstractly summarize the logic of consumption characteristics under China's current sluggish economy. In this demand space, you will find that people with high income and attention to cost-effectiveness are the middle class who are at risk of class decline. When shopping, they will consume rationally, pursue high quality and practicality, and value long-term value. Their typical behaviors in shopping decisions:

  • Prefer products with leading technology and reliable quality
  • Also value product cost-effectiveness and sustainability
  • Pay attention to functional innovation and service guarantees So you see, this is the largest backbone of consumption in China, and also the most difficult group to deal with. How to win them over is a topic every brand and retailer must study. Of course, it's not just this quadrant; the other three quadrants also have extremely large groups. Take the fourth quadrant: in the past two years, the very popular trading cards, blind boxes, claw machines, plush toys, lottery tickets, and "guzi" stores are all targeted at this group of people with low income but who care a lot about emotional value. Among the three significant types of emotional consumption: addictive, social, and self-pleasing, self-pleasing is the most important, social is second, and addictive is actually the least important. From the perspective of consumption freedom, in summary:

The first quadrant has the highest freedom, but the demand for FMCG accounts for the lowest proportion in Engel's coefficient, so their main consumption is not in FMCG. The second quadrant has relatively high consumption freedom, but due to uncertain expectations for the future, they are calculating and focus on value-for-money. The third quadrant has high consumption desire but very low freedom, generally focusing on cost-effective products. The fourth quadrant is generally people entering the workplace, with relatively low consumption freedom, and they value the emotional value of products more. Due to space limitations, I won't expand on this here; the figure above has a detailed interpretation. The biggest reference value of this quadrant, I think, is that in the Third Consumption Era, consumer habits are significantly different from before. The differentiation of groups means that brand owners cannot use one product, one communication method, or one channel strategy to cover all groups. You must choose different market strategies for different quadrants, and the product, pricing, channels, and promotion methods are completely different. In the economic downturn cycle, everyone should give up illusions; this year is definitely the best year in the next 5 to 10 years. How to provide better products and services to these consumers who are poor, picky, and demand emotional value? You must roll up your sleeves and compete on product, service, and quality. So we often say how good Japanese products and services are, but you don't realize: today's goodness is rolled out continuously in a non-growing economy and shrinking market. If business were easy, who would roll up so many details? Characteristics and Responses in a Mature Society Here I want to discuss a viewpoint with you: China's market maturity is significantly different from Europe, America, Japan, and South Korea. They matured relatively early, and media, as the biggest variable in consumer goods, was still in a relatively homogeneous environment. Although the United States had thousands of TV stations in the 1980s, there were only a few mainstream programs and core channels, which did not have a particularly big impact on dispersing consumer attention. So, their mature market characteristics are based on cultural homogeneity. But algorithmic media makes a thousand people have a thousand faces, intensifying diverse cultural attributes, and needs and consumption preferences are significantly different from other countries. The core reason is the differentiation of values caused by media, leading to significantly different definitions of "good." So, today we cannot look at people's needs from a single dimension. We must combine Maslow's hierarchy of needs with Max Weber's logic of behavior, conduct in-depth analysis and insight within scenarios, and then provide corresponding countermeasures. But in an affluent and mature market, no matter how differentiated, in summary, consumer behavior has roughly the following 8 characteristics: 1. Insufficient consumer confidence, high savings rate, sluggish consumption 2. Aging population, especially the generation of material scarcity exiting the mainstream consumer group 3. Diversification of consumption habits among the new generation 4. Diversification of consumer choices 5. Increase in female drinkers 6. Diversification of purchase channels 7. Significant increase in the proportion of convenience store sales

8. Significant increase in high-quality, healthy, and emotional products In response to the above characteristics, how should we respond? I provide 5 suggestions: 1. Core strategy: segment people, needs, and behaviors, actively innovate, and provide more accurate products for consumers in scenarios. 2. Brand upgrade, rebuild cultural and value attributes, and stimulate the public's desire for lifestyle innovation consumption of your products. 3. Compared to Japan, 90% of China's consumer goods still need quality and experience upgrades; providing consumers with better products that balance emotion and value-for-money is the primary task for enterprises today. 4. Actively transform organizations and supply chains to quickly meet consumer needs.

5. Seek diversified layouts and pay attention to the consumption needs of young people. (