The keyword of this article is 'new mass products' (新大众). So, what are mass products? According to Baidu Baike, 'mass' (大众) refers to 'many people.' In this article, it refers to mass products, typically the best-selling products in a category during a certain period. Usually, it is not a single product but a group of products in the same price range.
Consumer demands are diverse, but mass products represent the greatest common denominator among consumers. Mass products not only have prices suitable for the masses but also quality suitable for the masses, hence their highest sales volume.
Sales in an industry form a normal distribution around mass products. The price range of mass products is called the mainstream price band, where sales are highest. As prices move toward both ends, sales gradually decrease.
Many people think that lower prices lead to higher sales. This is wrong. The price range where mass products are located is often the middle-to-upper price band. But it is definitely not the high-end price band, nor the luxury price band.
What are new mass products?
With consumption upgrading, traditional mass products have fallen behind, becoming old mass products. Therefore, new mass products must be launched to meet the consumption needs of the masses. So, new mass products are products that replace old mass products, or in other words, an upgrade of mass products.
Take beverages as an example. Initially, Genki Forest (元气森林) launched products at a new high price of 5 yuan. Subsequently, Eastern Leaf (东方树叶) achieved great success and became a new mass product. Innovation in the entire beverage industry revolved around the 5-yuan price band, and the original 3-yuan mass products below this price band also successfully raised prices.
It is precisely because of the success of Eastern Leaf as a new mass product, coupled with the price increases by leading beverage brands in the past two years, that the beverage industry has become one of the few FMCG sectors experiencing both volume and price growth. See the figure below.
Ask yourself: which FMCG industry has such impressive performance as beverages? Although the beverage industry also faces involution, it is precisely because new mass products have opened the industry ceiling that the industry focuses its main energy on creating and following up new mass products.
Marketing expert Mr. Fang Gang (方刚) jokingly said that the beverage industry's profit margin is almost comparable to Moutai's. Compared to revenue growth, profit growth is faster. This is the effect of structural adjustment, and this is the value of new mass products.
The Replacement of Mass Products Determines the Industry Growth Trajectory
The development of China's FMCG industry can be illustrated by the replacement of new and old mass products.
You Suan Ru (优酸乳), a mass product 10 years ago, may be gradually forgotten by many, but its sales were considerable at that time. Later, Ambrosial (安慕希) and Pure Zhen (纯甄) rose as new mass products, with Ambrosial creating a mega single product of over 20 billion yuan. Now, when Ambrosial and Pure Zhen need heavy promotions, they are gradually classified as old mass products.
So, where are the new mass products in dairy? Without new mass products, where is the driving force for industry growth?
1-yuan bottled water was once the mainstream product in the past, later replaced by new mass products like 2-yuan Nongfu Spring and C'estbon, which has been over 10 years.
Now, although there are 3-yuan and 4-yuan bottled water products, they have not reached scale and are insufficient to assume the role of new mass products for bottled water. Now Nongfu has even launched a 9.9-yuan blue bottle. If bottled water cannot break through the 3-4 yuan new mass price band, it will only face involution.
In the instant noodle industry, the mass price band was 3.5 yuan 10 years ago. In 2016, it upgraded to the 5-yuan price band, such as Tang Daren (汤达人). Now, although there are high-end products, they lack scale and have not formed a new mass product group. Therefore, the instant noodle industry is experiencing sluggish growth.
The development of an industry is the replacement of new and old mass products. Old mass products gradually become marginalized, and new mass products rise, creating a cycle that gives the industry a growth trajectory.
To some extent, it is precisely the lack of new mass products in various industries that many industries lack upward momentum.
New Mass Products: The Antidote to Shrinking Volume
The FMCG industry has been shrinking since 2013, not just for a year or two, but especially severe in the past two years.
When the market shrinks, the instinct is to engage in involution to cope, which is normal. Everyone knows involution has no way out, but without involution, there is no path at all.
We have proposed another path besides involution, which is continuously launching products with upward price adjustments. We have used concepts such as structural adjustment, high-endization, new world, new mainstream price band, and mainstream gear shift to describe that products should attack upward and open the industry ceiling.
These concepts have either been misunderstood or ignored, failing to exert their due influence.
The concept of shrinking volume was first mentioned casually in a group chat. Compared to concepts like sales decline, stock competition, and sales peak, it is more vivid and intuitive, and quickly became popular.
The concept of new mass products was also inadvertently mentioned in community chats and quickly gained recognition.
The word 'mass' needs no explanation; as a method of product structural adjustment, the concept of new mass products is self-explanatory.
The most widely accepted explanation for the current environment is K-shaped divergence, with both consumption downgrading and upgrading. The response to downgrading is involution, and the response to upgrading is structural adjustment. This is a very academic expression.
However, the term 'structural adjustment' is not concrete, and 'high-endization' or 'luxurification' is misleading. Structural adjustment is not decoration, not niche, not serving a few consumers, but serving the masses.
Only what is for the masses can achieve scale. Only scaled-up upgrades can change the weight of the structure. Otherwise, involution will inevitably push the structure downward; only new mass products can push the structure upward as a whole.
Therefore, I regard new mass products as opening the industry ceiling. Once the ceiling is opened, the industry finds an upward direction, and everyone focuses on upward development, such as the beverage industry, which no longer has only the path of downward involution. It can be said that new mass products are a force that changes the industry.
So, in the atmosphere of consumption downgrading, are there really new mass products?
2013 was the first year of shrinking volume. My proposed response was 'mainstream gear shift' , which received responses from some companies. In 2016, quite a few companies succeeded with new mainstream products, such as Ambrosial and Pure Zhen in dairy, and Tang Daren in instant noodles. At that time, I described 'mainstream gear shift' as 'changing the main dish,' not just changing a few side dishes, but changing the signature 'main dish' or 'big dish.' In the period after 2016, although still in the era of shrinking volume, the FMCG industry indeed had a few good years.
In hindsight, they were the new mass products of that time. But now they are all old mass products and can no longer drive the industry upward.
In the first half of this year, two leading companies in a certain industry successively released annual reports with declining performance. When discussing with an industry friend, he said the main reason was that the original mega single products had aged, while new upgraded products had not succeeded, lacking new mega single products to drive development. The meaning is clear: old mass products lack momentum, and new mass products have not yet emerged.
Domestically, besides the beverage industry represented by Eastern Leaf, beer is considered relatively successful in terms of new mass products in recent years. The old mass price band for beer was 6-8 yuan, and the new mass price band is 8-10 yuan.
In the 8-10 yuan price band, domestic brands include Tsingtao Pure Draft and Whole Wheat White Beer from Tsingtao Brewery, Yanjing U8, and Snow Pure Draft from China Resources; international brands include Tuborg, Tiger, Budweiser, and Budweiser Pure Draft. A galaxy of stars, the new mass product group is rising.
If the beer industry did not have the support of new mass product group upgrades, with a 40% decline in sales since its peak, it would be disastrous. However, the beer industry's revenue is basically stable, and profits are growing.
The K-shaped divergence in consumption gives two major marketing directions: one is hard discount, private brands, and more aggressive promotions; the other is new mass products.
Besides beverages and beer, the recent success of Pangdonglai (胖东来) in assisting Bubugao (步步高) and Yonghui (永辉) also gives confidence in new mass products. Pangdonglai's products are not cheap (though with high cost-performance), typical of the new mass price band. The success in various places through assistance shows that new mass products have a broad demand base.
After the success of the first assisted store, Bubugao's chairman Wang Tian (王填) said that when frequent promotions were ineffective, he thought consumers no longer shopped at stores. Now it seems the problem was with the products.
Facing the shrinking environment, when industry leaders engage in involution, waist and bottom enterprises face greater involution pressure; but when industry leaders open the ceiling upward through new mass products, all enterprises in the industry have more growth space, and involution pressure is alleviated.
New Mass Products and Billion-Yuan Mega Single Products
After entering the Internet era, a viewpoint became popular: In the Internet era, there will be no more billion-yuan mega single products. In the future, 1-billion-yuan mega single products will become the mainstream.
I initially agreed with this view, but now I realize I was wrong.
Where was I wrong? I was wrong in thinking that the Internet changed the laws of product upgrading. The laws of product upgrading have nothing to do with the Internet. But the marketing methods for upgraded products are highly related to the Internet, which I will discuss later.
The higher the end, the fewer mega single products. Because the characteristic of high-end is scarcity, which gives some consumers a psychological sense of superiority.
Low-end has mega single products, which are legacy mega single products from old mass products.
New mass products must be mega single products. Otherwise, they are not mass products. In the FMCG field, only billion-yuan mega single products can have enough influence to open the industry ceiling.
Why must new mass products have mega single products? This is determined by the word 'mass' in new mass products. They satisfy not individual needs but common needs, the greatest common denominator of consumers.
As long as it is a common need, 1.4 billion consumers constitute a considerable consumer group. Many people may find it hard to imagine that Eastern Leaf, which just became popular not long ago, is already heading toward 20 billion yuan.
New mass products return to the rhythm of creating billion-yuan mega single products. Leading enterprises in the industry must have this confidence.
A billion yuan is appeal!
A billion-yuan new mass product will surely attract more followers, thereby activating the entire industry.
New Mass Products Must Have Brand Premium
This round of new mass products is very different from past mass products, mainly in brand power.
Marketing expert Mr. Jin Huanmin (金焕民) said: A so-called brand either sells more than others at the same price, or sells at a higher price than others with the same quality.
As the world's factory, China has the capability to produce any consumer product in the world. However, with different brands, prices vary greatly.
Mr. Jin and I once discussed that the first step of Chinese marketing is to become a world-class enterprise even if only serving the domestic market. Currently, China's leading FMCG enterprises mainly focus on the domestic market and have indeed become world-class in scale.
Then, the second step of Chinese marketing is to become a brand with premium capability in the world.
Completing the first step of Chinese marketing mainly relies on cost-performance. Use cost-performance to defeat the premium of multinational brands; the second step is to achieve brand premium through premium.
In my book with Mr. Jin, 'Sales as King' (《销量为王》), we divided it into two steps: use sales to defeat brands, and use sales to support brands.
Over more than 40 years of reform and opening up, Chinese enterprises have completed the first step, forming world-class scale. Cost-performance is huge, and scale is huge. The basic logic is China's rapidly growing market capacity—the growth environment.
Chinese enterprises have now entered the second step: creating premium brands. Because China has entered the era of shrinking volume, the marketing logic of the incremental era no longer applies.
So, where does brand premium come from?
Of course, premium does not mean high price. Like Pangdonglai's products, prices are not low, but they do not necessarily seem expensive. Mainly because in the shrinking era, there must be a supply chain revolution. The channel efficiency of the supply chain revolution reduces costs. Therefore, brands have high premium, but retail prices are not expensive.
The current problem for Chinese enterprises is that their marketing thinking remains in the incremental era, still the cost-performance incremental model. Once they encounter incremental difficulties, they resort to cost-performance (promotions), an immediate-effect marketing tool, without entering the brand logic of brand premium.
Let's look at the logic of brand premium.
What is brand value? How to define value? To define value, one must gain the discourse power to define values.
What are values? For example, beauty, fashion, and trend are highly subjective. Whoever masters the discourse power to define subjectivity has the ability to define brand value. With the ability to define brand value, one has the qualification to create brand premium. Otherwise, under European and American consumption values, it is difficult for Chinese enterprises to have brand premium.
This round of new mass products precisely shows that Chinese enterprises have basically gained the qualification to define consumption values. For example, Eastern Leaf is a typical Chinese characteristic.
There is a premise for brand premium: the strength of the country and consumers' recognition of the national brand. From the brand tone of Eastern Leaf, this is a signal. Brands with Chinese elements can create high-premium brands.
Now there is even a saying that Coca-Cola has become the bottom price for beverages. Although it is a joke, it also proves the arrival of the era of Chinese brand premium.
New Mass Products and New Marketing
How should marketing be done for billion-yuan new mass products? Let's start with the media environment.
The major media environment Chinese enterprises currently face: first, mass communication is no longer effective; second, the tone of Internet communication is not suitable for premium brands, and IP-based communication models are not conducive to long-term brand building.
The fragmentation of media in the Internet era requires integrated communication power. In summary, there are several types of communication media that are definitely effective.
First, channel media. Terminals are media, shelves are media, products are media. All contact points are communication points. For channel media, Hua & Hua's super symbols capture its essence.
Second, Focus Media. This is the main battlefield of the positioning school. Focus Media occupies the main battlefield of capturing consumers.
Third, '3K Drive.' '3K Drive' was proposed by marketing expert Mr. Miao Qingxian (苗庆显). 3K refers to KOL, KOC, and KOS.
'3K' has two major sources: one is large platforms, such as KOLs on Weibo, WeChat official accounts, and live streaming, who have massive followers. However, I prefer to call them Internet-based traffic advertising (anything paid is advertising); the other is KOLs, KOCs, and KOSs hidden in channels, whose influence lies in small circle relationships.
The above three definite communication media have different tones and are quite fragmented. Their integrated use must apply Schultz's Integrated Marketing Communications (IMC) logic. The core viewpoints of IMC are four: first, all contact points are communication points; second, information flow; third, speak with one voice; fourth, interaction.
In the early days, I thought IMC was too idealistic. Now I think IMC is tailor-made for the Internet. Especially for the current brand building of new mass products, we must neither fall into IP-based brand tone nor fail to fully utilize existing media tools.
A billion-yuan mega single product cannot achieve phenomenal Internet communication without it. Eastern Leaf's sudden popularity has attracted many marveling at the phenomenon, but few delve into its marketing logic. Because the communication logic of IMC is relatively hidden.
From August 20-22, 2024, the '2024 6th China FMCG Conference' with the theme 'Crossing the Shrinking Era' will be held grandly in Shanghai. Concurrently, the '3rd China FMCG Distributor Conference' and the '3rd China FMCG Hard Discount Conference' will also be held. The conference will release the 'FMCG Industry Distributor B2b Platform Strategy Guidance Report,' '2024 FMCG Distributor Operating Conditions Survey Report,' 'FMCG Industry O2O Regional Practical Implementation Guidance Report,' and '2024 China Hard Discount Development - FMCG Industry Insight Report.' Interested friends are welcome to scan the QR code to inquire about the conference details!