Last month I went to Hangzhou and had a barbecue with my former boss at Alibaba, Teacher Xia. Teacher Xia is one of the few people I'm willing to have in-depth industry discussions with. We talked about various topics, including marketing departments and brands. Here I'll sort out the brand-related issues. Teacher Xia has left Alibaba and is doing other exciting things. After Double 11, I'll probably go to Hangzhou again for a deep chat, and I'll recommend him then.
Including me, we talk about this brand and that brand every day. My position before resigning was also "Brand Director." So, are brands really everywhere? Are we really building brands? If not, what are we doing?
Let me start with the conclusion: Among the many in-house marketing departments in China, the many B2B suppliers serving Chinese companies, and the many social media marketing practitioners, not all are building brands. Most Chinese companies don't build brands, or don't need to yet. Here we need to clarify the scope: today's discussion is limited to Chinese companies; global companies operating in China are not included.
Second conclusion: The work of most Chinese companies' marketing departments is to do "marketing"—how to capture more market share, how to sell more products, how to become the market leader. Only by expanding the market can the company survive; then it's time to consider branding. Advertisers might say that branding is also for expanding market share and selling goods. This logic might be true in developed countries, but not so much in China, which is closely related to the needs of the Chinese people and the Chinese business environment.
Today we try to clarify what the core work of China's vast marketing communications practitioners is. We'll mainly sort out two questions: first, why not build brands; second, what does doing marketing mean.
Why not build brands?
First, let me explain what a brand is. I won't recite bookish concepts; you can search for yourself. For example, Robert Woodruff, the second chairman of Coca-Cola, is known as the father of Coca-Cola. He personally promoted Coca-Cola globally and established its global brand. He said: "If my factory were destroyed by fire, if I encountered a world financial crisis, but as long as I have the Coca-Cola brand, I would stand up again the next day."
Woodruff's confidence is the power of the brand. This sugar water that has been sold for over 100 years is called a brand. Ask which Chinese company dares to make such a bold claim. Now think: which Chinese company can rise again with just a trademark? I can't think of one.
Chinese companies don't want to build brands; everyone thinks brands are important, but the current market environment and company stage are not suitable for branding.
The core is that the consumer environment is not mature enough. To analyze the consumer environment, we need to look at China's big picture. What I despise most is consumer insight like "young people, white-collar workers, strong purchasing power, high education"—these one-sided analyses. China just emerged from an era of material scarcity not many years ago. People with bachelor's degrees account for 3% of the total population. How many white-collar workers are there in China? Excluding Beijing, Shanghai, and Guangzhou, plus migrant workers and temporary workers, what is the per capita income? Is Taobao, Tmall, or JD.com not well-known enough or is their brand weak? Why could Pinduoduo rise overnight to a giant with a market value of hundreds of billions of dollars? Does Pinduoduo have a brand?
We talk about consumption upgrading every day. From the big picture, I think it's upgrading from having goods to buy to having better goods to buy. "Better" means better quality and better aesthetics. Quality and aesthetics upgrade, but prices don't. Chinese consumers are still most sensitive to price.
From the vertical axis of time and the horizontal axis of space, in China's consumer environment, overall, cost-performance is more important than brand power. I buy this product because it happens to be in this position in this market, not because its brand power moved me. So for Chinese companies, the most important thing is to expand the market, first occupy a leading position in a certain market, then wait for the market and consumers to mature, and do the right things at the right stage.
How to do marketing?
In China, there is more need to do marketing than branding. So the core work for people in marketing communications is to do marketing. The question is: how to do marketing in China? How to influence Chinese consumers' purchase decisions through marketing communications? What is the core work of doing marketing in China?
Most Chinese companies are doing two things: one is awareness, the other is influence. But neither of these is branding, though many mistake them for branding. In order, you should first build awareness, then influence, and finally build a brand to become a true brand. But it's not that each is independent and you do one without the other; rather, the focus differs at different stages. Building awareness and influence are both groundwork and accumulation for becoming a brand. They are not conflicting or opposing, but integrated.
Building awareness
For a new product or a new company, the first stage of marketing communications must focus on awareness—let people know about it first. Before building awareness, first confirm it's a good product. The standard for a good product is whether it solves a social problem or meets consumer needs, i.e., confirm there is market demand.
In the traditional era, building awareness was relatively simple: channels plus advertising. Take the often-cited example of Brain Gold. Brain Gold dared to advertise on CCTV and various local TV stations because of its channels. In Brain Gold's demand scenarios, it was available for purchase, so naturally the awareness brought by advertising also led to sales growth and captured more market share.
For a long time, channels were king. Many products had no awareness and never cared about brands, but they perfected their channels, capturing every sales channel and consumption scenario, becoming profitable products. The most representative channel products in the internet era are "Taobao brands"—brands sold only on Taobao. Many Taobao brands have no name, let alone a brand, but they manage to sell a lot. Look at the top five in various Taobao categories; you probably haven't heard of most of them, but they might be in your purchase history.
The biggest drawback of channel products is that they are too replaceable. Now in China's county towns and villages, there are basically no pure channel products. Ultimately, consumers still prefer to buy products with a clear source and that they know. Now many large Taobao brands are starting to build awareness to improve product recognition and competitiveness.
At this stage of building awareness, one person must be mentioned: Ye Maozhong. His success must be due to doing some things right. Ye Maozhong's advertising methods are obsessed with building awareness and limited to building awareness. All of Ye Maozhong's theories revolve around awareness tactics, and awareness has been the biggest need for Chinese companies in the last 20 years.
Ye Maozhong indeed achieved near perfection at the awareness stage: creating conflicts, capturing minds, instilling the product's superiority and irreplaceability. But in the all-internet environment, Ye Maozhong's mass awareness strategy seems less effective.
In the internet era, building awareness is a more systematic thing. It requires both precise targeting and broad coverage. Depending on the target consumers, you need to combine various media. In the current internet environment, media strategy is especially important for building awareness.
Of course, every brand is different; each solves a unique problem and meets a unique need, so each brand's approach will be different. But the important thing is that you should know what you are doing, what you should do, know what is right, and have a reason for everything you do, with a basis to follow.
Building influence
The second stage for Chinese companies focuses on influence. Many people mistakenly equate influence with brand power, which is wrong. For example, JD.com has influence today: it's a big platform, fairly trustworthy, delivers faster than Taobao, and I often buy from JD. But what if JD went bankrupt? It wouldn't affect consumers much; they'd just go to Tmall and choose SF Express for delivery. SF Express also has influence, but if another courier company suddenly could deliver nationwide same-day without raising prices, I would switch without hesitation. So these are not brands but influence. Influence is very important; it determines whether consumers are willing to consume.
Influence is when a product reaches a certain position, and the product at that position happens to be the consumer's optimal choice, so they buy. Which product reaches that position doesn't matter much to consumers; what matters is that there is a product at that position. So influence is not a brand; it's just a good product.
So, how should you build product influence? If at the awareness stage you can do anything and everything, as long as you get exposure, then at the influence stage, what you do and what you don't do become equally important. For example, at this stage you no longer do pure exposure marketing, no over-marketing, make the product live up to the advertising claims, and start taking on some social responsibilities.
Currently, most of China's leading internet companies are at this stage. They have awareness but are not yet brands. The marketing departments at this stage are somewhat confused about what they should do. Many things they do seem irrelevant to corporate development and decisions. Today it's viral, tomorrow it's heartfelt, the day after it's nostalgic. How much do these communications really help the company? Have they seriously thought about the purpose of doing these things?
I think companies at this stage mainly do two things: First, improve product competitiveness. After gaining awareness, the initiative shifts to the consumer, who decides whether to buy. The consumer's decision is not based on loving the brand, but on whether the cost-performance is suitable, whether it's practical, whether it fits their identity, etc. So the product side should strive to improve competitiveness. Marketing communications can reduce the difficulty of purchase decisions through marketing behaviors, even leading to impulsive trial purchases. For example, a cup of coffee costs 30 yuan. If you magically get a 90% discount coupon and you love coffee, you're likely to spend 3 yuan to try it.
Second, expand market scope. Companies need to keep growing, getting more people to consume or use their products. There are many ways to expand market scope. In the current internet environment, there aren't many channel barriers; the main barriers are the product itself and consumer minds. For example, Momo. Everyone in China probably knows this product, so it has awareness. But for a while, monthly active users hovered around 70-80 million and stopped growing. So Momo needed to consider how to expand market scope, enhance influence, get more people to use Momo, and break through the user growth ceiling. On the product side, they did video and live streaming; on the mind side, they broke through male-female social boundaries and conveyed broader stranger social networking. So in the past year or two, users started growing rapidly again.
That is to say, Chinese internet companies with significant influence should focus on enhancing corporate influence, occupying and consolidating their market position, creating unique brand influence, so that consumers can think of you in certain consumption scenarios. At the same time, expand into broader markets, perhaps by breaking through consumer mind barriers, or making the product more widely applicable, or other means.
Actually, after all this, what I most want to say is: once awareness is sufficient, don't do pure exposure anymore. Instead, truly influence others and have very clear purposes for what you do. Since the internet has data, since the advent of "100,000+ reads," any KPI has been tied to how much exposure it generated. This is a huge mistake. 100,000+ has never been the goal. At this stage, you should substantively solve some product problems, improve product competitiveness, expand the consumer base, and occupy and stabilize a good market position.
Brand is values
Let's sort out the above. After a new product appears, the first thing is to build awareness, letting more people know about the product. In the traditional era, it was channels plus mass media advertising, and the ad content mostly directly stated product benefits, like the ad cases handled by Ye Maozhong. For internet products at this stage, exposure advertising is usually auxiliary; more often, "growth hacking" methods directly prompt people to download or try, because it's free.
The second stage is to build influence. No longer exposure without regard for results, but doing influence with segmented and clear purposes. By improving product competitiveness and expanding market scope, you occupy a more powerful position in the market and consumer minds, becoming an influential product or company.
Trolls might be ready with their arguments: Can't you do branding and marketing simultaneously? Wouldn't it be simpler to do marketing with a brand from the start? Companies without brands can't survive; brands are the most important!
As I said earlier, doing one thing doesn't mean you can't do another. Of course, you can do both simultaneously, but the focus differs at different stages, and the primary need versus secondary need differs. So in the process of doing marketing, building awareness and influence, you should also consider branding, but you don't need to put major effort into it, because most consumers at this stage don't pay for brands.
Then you'll definitely ask: What is a brand, and how should you build one? If I had to summarize this intangible asset in one word, I'd have to use another vague term—values. Brand is values. When consumer needs go beyond product influence, they develop a need for identification with values. Chinese companies can propose and uphold their values from the very beginning. Under a set of values and culture, they build awareness and influence. Those who can discern and like will naturally identify with the values, while most who only consider product practicality can just enjoy the product's practicality.
For example, one person buys Nike because it's on sale at season changes and is very durable, lasting a year without wearing out, so they buy for product practicality. Another person buys Nike because Nike represents the spirit of sports, a kind of uplifting greatness, so they buy Nike because they identify with Nike's brand values.
So, a brand is co-owned by consumers and the company; it's a consensus reached by all consumers and the company. For Chinese companies, most current "brands" rarely have brand spirit or values mentioned, so they can't be called brands. They exist more as necessities that meet user needs and solve social problems.
At this stage, consumers may still buy or use a product for cost-performance and practicality. Although they don't need brands yet, young people in first-tier cities like Beijing, Shanghai, and Guangzhou are starting to have brand awareness. They are probably the first batch of Chinese people with brand awareness. They are more willing to consume products that represent certain values or culture, and these value-representative products are also shaping the consumers themselves. Whether a product can become a brand depends more on consumers—whether they can understand and identify with certain values.
So Chinese companies should start preparing to become brands, because there is already a small group of people who understand what a brand is, and this small group is likely to lead the majority in the future. Chinese companies should shape value differences for their products and strive to maintain and expand these values, because a brand is a company's strongest business moat.
Source: Yang Bu Huai (ID: yangbuhuai01) -END-