Wang Laoji vs. JDB, Robam vs. Fotile, Aima vs. Yadea, Jinmailang vs. Baixiang—how did the protagonists of these four highly anticipated 'positioning battles' deploy their forces to reverse the offensive and defensive dynamics?
As a classic business theory of biblical significance, Positioning Theory has been highly valued in the growth of international giants like Apple, Tesla, Toyota, Coca-Cola, and Nike. In 2001, Positioning Theory defeated Reeves' USP Theory, Ogilvy's Brand Image Theory, Kotler's Marketing Management Theory, and Michael Porter's Competitive Value Chain Theory, and was voted by the American Marketing Association as the concept that had the greatest impact on marketing in U.S. history.
However, the founders of Positioning Theory, Al Ries and Jack Trout, did not let it remain merely a 'classic'; they continuously sought iteration and new developments in theory and methodology.
Opening: Major Chinese Business Battles Feature Active Roles for Positioning Theory
In 2004, Al Ries and his partner Laura Ries defined the greatest commercial power—'division'—in their book The Origin of Brands, establishing a 'species origin' system in the business world and forming the 'category strategy' thought system for brand creation. As a definitive work on brand strategy theory, it achieved a high degree of unity between the two basic functions of enterprise (marketing and innovation) that management guru Drucker always emphasized.
On Al Ries's side, in the decades after founding Positioning Theory, he continuously advanced the upgrade and iteration of the theory and methodology system—from focus, brand origin, and category strategy to 'PR first, advertising second,' the visual hammer, and 'battle cries'—in response to changes in the competitive environment.
On Jack Trout's side, in addition to co-authoring positioning books with Al Ries such as Positioning, Marketing Warfare, Marketing Revolution, and The 22 Immutable Laws of Marketing, he also wrote The New Positioning and What Is Strategy, focusing on the application of Positioning Theory at the corporate strategy level.
Since the 21st century, the practice of Positioning Theory has entered a new historical stage: it began to profoundly influence Chinese business, and major business battles in China began to feature active roles for Positioning Theory.
In 2002, Trout & Partners China was established, dedicated to helping Chinese companies lead strategy with positioning. Concepts like 'positioning is strategy' quickly refreshed many Chinese businesspeople.
In 2007, Ries China was established, introducing theories such as focus, category strategy, and the visual hammer to China.
Although both companies were founded by global partners of the 'fathers of positioning,' Chinese companies soon discovered that the two firms actually formed two major branches of Positioning Theory research and practice. In the view of many Chinese businesspeople, Trout & Partners China emphasized the strategic nature of positioning and often closely integrated positioning communication with large-scale advertising. Ries China, on the other hand, frequently emphasized new concepts emerging from the positioning theory tree, such as focus, category strategy, 'PR first, advertising second,' and the visual hammer.
These two companies, dedicated to the research and practice of Positioning Theory, profoundly influenced the course of Chinese business battles and engaged in head-on clashes in battles such as Wang Laoji vs. JDB, Robam vs. Fotile, Aima vs. Yadea, and Jinmailang vs. Baixiang. This article will focus on interpreting the strategic and tactical decisions of these brands that simultaneously applied Positioning Theory when they encountered and collided, so that readers can gain a deeper understanding of this classic business thought in these 'positioning battles.'
Battle One: Wang Laoji vs. JDB—A Positioning Offensive-Defensive Battle in a Highly Complex Environment
The business battle between JDB and Wang Laoji is famous, but many people still see only the surface.
In particular, after the Wang Laoji trademark was taken back by Guangzhou Pharmaceutical Group (GP Group), the process by which 'Wang Laoji' went from being widely shorted by industry insiders to quietly completing a reversal is little known. The defensive and offensive details and brand laws behind this battle have not been truly seen.
Origin: A 'Bloodbath' Triggered by Commercial Bribery
The origin of this battle dates back to JDB Group's leasing and brand operation of the Wang Laoji trademark. Before GP Group took back the trademark, Trout & Partners' consulting on the Wang Laoji brand was highly effective, from the positioning and widespread communication of 'Afraid of getting heaty? Drink Wang Laoji' to the years before the 2008 Olympics, when resources were concentrated on operating the Beijing market with the highest national momentum—several key steps were highly successful.
But the hidden dangers of the business battle were already laid, with the biggest risk coming from commercial bribery. In 2000, JDB's parent company, Hong Kong Hongdao Group, signed a second contract with GP Group, extending the trademark usage rights to 2010. Subsequently, through bribery of GP Group's former deputy chairman Li Yimin, a supplementary agreement was obtained to extend the contract to 2020, leasing the Wang Laoji trademark for just over 5 million yuan per year.
After the incident, Li Yimin was sentenced to life imprisonment by the court, and the dispute over the Wang Laoji trademark usage rights between GP Group and Hongdao Group gradually surfaced. GP Group hoped to change the situation where the annual usage fee for the Wang Laoji trademark was only about 5 million yuan in new negotiations, but JDB avoided meetings, and negotiations could not proceed. GP Group then began the process of taking back the trademark, thus slowly raising the curtain on this nationally famous business battle.
In 2012, when GP Group took back the usage rights to the Wang Laoji trademark, JDB launched a new herbal tea brand, and the first round of the battle began.
First Round: JDB's Core Strategy
In this round, Trout & Partners China played an important role. Deng Delong, general manager of Trout & Partners China, interpreted JDB's decision-making at the time: 'When JDB restarted a new brand name, it told a story that merged the position in the customer's mind (the herbal tea category) with the JDB brand—we still have the original authentic formula, still the familiar taste you've had, just a name change, still that mental position, but the can of herbal tea you drink is still the consistently good herbal tea you've always known.'
In this round, JDB's core strategy can be summarized as transferring the core mental resources of the Wang Laoji brand to the newly launched JDB brand. It ran advertisements claiming Wang Laoji 'changed its name' to JDB, and fully utilized channel advantages to block the Wang Laoji brand at sales terminals as much as possible, ensuring the effective execution of this brand strategy.
Although the court later ruled that the 'name change' advertisements were illegal, JDB did well in the first stage of the battle. In contrast, GP Group's commercial response in this stage was quite conservative. As a listed state-owned enterprise, GP Group at the time could not spend much money on advertising, in stark contrast to JDB's resolute 'name change' advertisements.
At the same time, just after taking back the Wang Laoji brand, GP Group faced a 'three-no' situation: no production lines, no sales channels, and no team. Therefore, in the first stage of the battle, the strategic balance clearly tilted toward JDB, and almost all marketers believed GP Group was bound to lose.
Turning Point: 'Positioning Father' Al Ries Stood Alone
But at this time, shareholders of GP Group in the secondary market discovered that Al Ries, the 'father of positioning,' in an exclusive interview with Sino-Foreign Management magazine, placed great value on the Wang Laoji brand, contrary to the prevailing opinion in the marketing circle. He believed that the recovery of the Wang Laoji trademark actually tilted the strategic balance toward GP Group, and it was up to GP Group to seize the advantage. He also pointed out that after the trademark recovery, the ownership of the 'red can' would be another key factor dominating the battle.
Driven by GP Group shareholders holding billions of shares, GP Group's senior management began communicating with Ries China. Ries China believed it would be a great pity to lose the historical Wang Laoji brand and, from a brand perspective, intended to save this 'time-honored brand.' More than a year later, GP Group and Ries China began cooperation.
The situation where two companies promoting Positioning Theory respectively steered the brand operations of JDB and Wang Laoji made the battle increasingly interesting and quickly pushed it into the second stage.
Second Round: Wang Laoji's 'Defend on the Mind, Attack on the Channel'
In the second stage, Zhang Yun, general manager of Ries Partners China, said in a case sharing that although JDB's offensive momentum was fierce, Wang Laoji was still the leading brand with mental resource advantages in the herbal tea category. Therefore, the tone set for this battle was: Wang Laoji was to fight a brand defense war—defending on the mind and attacking on the channel.
Ries China's interpretation of the battle pattern was that Wang Laoji's mental assets had already been transferred a lot. The first step of Wang Laoji's defense was to stabilize mental resources: from a category perspective, refocus the Wang Laoji brand on the herbal tea category, stop GP Group's tendency to use Wang Laoji in non-herbal tea categories, and maintain the professionalism of the Wang Laoji brand. At the same time, in marketing communications, continuously strengthen Wang Laoji's mental resources as the originator of herbal tea. During this period, it continuously leveraged key moments, such as court rulings and the switch between red and gold cans, to remind consumers to distinguish between the two brands, further strengthening Wang Laoji's mental resource advantage. While defending mental resources, it also assisted channel attacks.
Brand 'Surgery': Subtraction to Stabilize the Position
The implementation of Positioning Theory has always been easier said than done. After GP Group took back the Wang Laoji brand, there were already cases within the group of using the Wang Laoji brand for eight-treasure porridge and vitamin drinks.
Therefore, this brand defense war first started with 'subtraction' within the enterprise. People who were shocked by GP Group's brand extension of Wang Laoji soon discovered that GP Group had begun cutting non-herbal tea businesses under the Wang Laoji name. Careful consumers noticed that even products endorsed by 'Wang Laoji' used a font different from the Wang Laoji herbal tea trademark.
Within the herbal tea category, Wang Laoji also began 'subtraction': it began to abandon non-liquid herbal tea products like solid herbal tea, and low-sugar and sugar-free herbal teas were also abandoned. Clearly, this was to strengthen the mental association between the Wang Laoji brand and the herbal tea category. Zhang Yun of Ries China Partners explained externally: 'If the opponent attacks with focus, and you are scattered, you will cut off your own path. You must also defend with focus, first ensuring Wang Laoji's position in the consumer's mind as representing herbal tea.'
After category focus, a series of PR actions around 'originator of herbal tea' and 'authentic herbal tea' appeared in Wang Laoji's brand positioning. From reports on this stage of the battle, these included storing the traditional formula in a bank, promoting the herbal tea museum, spreading Wang Laoji's traditional culture, and cooperating with other time-honored Chinese brands.
It should be said that the historical resources of the Wang Laoji brand as the inventor of herbal tea were fully exploited in this round of the battle.
The War of Public Opinion Did Not Become the Key to Victory
In the second stage of the battle, an important issue facing Wang Laoji was how to deal with the war of public opinion.
Objectively speaking, Wang Laoji suffered a lot from JDB's public opinion warfare in this battle. Few media paid attention to the fact that GP Group's original intention was not to take back the Wang Laoji brand but to negotiate a brand licensing fee, and few paid attention to the commercial bribery behind JDB's 'cheap rent' of the Wang Laoji brand.
On the thorny issue of public opinion, Wang Laoji began to change: it stopped responding to any attacks or 'provocations' from JDB. Previously, when JDB said 'sorry,' Wang Laoji would respond with 'it's okay,' but such PR actions disappeared. Later, when JDB engaged in PR like 'selling herbal tea is the world's best, but lawsuits are the world's worst,' Wang Laoji did not respond but instead vigorously promoted 'originator of herbal tea' and 'authentic herbal tea.'
From then on, it no longer responded to various public opinion attacks from the challenger, and the challenger gradually lost its 'handle' for challenge.
From Ries Company's sharing on this battle, they believed that for Wang Laoji as a leading brand in defense, an important principle is: as a leading brand, you can only fight upward, not downward. JDB's constant attacks and 'provocations' were intended to divert Wang Laoji's consumer mental resources. As long as the leading brand responds, it loses.
This strategy not only played an important role in this battle but also has great reference value for other business battles faced by Chinese companies.
Key Battle: The Red Can vs. Gold Can Dispute
At this point, the key battle was about to begin.
In December 2014, the first-instance judgment in the 'red can dispute' between Wang Laoji and JDB was announced. The court ruled that JDB should immediately stop producing and selling products with packaging similar or identical to Wang Laoji's red can herbal tea.
After this, the two companies took important brand actions respectively.
JDB launched a 'gold can offensive' a few months later. Deng Delong of Trout & Partners China interpreted this: 'We used a gold can, a completely new identity, to completely strip the original leadership position from the red can, forming a new identity system, and also marking a symbolic watershed for JDB's return to the leadership position in herbal tea.' 'This completely marks that the new JDB brand is fully independent and autonomous, enjoying its own unique position.'
Wang Laoji's brand action was to immediately publish the court judgment so that public opinion knew the red can belonged to the Wang Laoji brand. On the other hand, it turned the court judgment into advertisements sent to terminals and sent lawyer's letters to JDB's major distributors, informing them that according to the court judgment, distributors selling JDB red can herbal tea were suspected of selling illegal goods.
Ries China's interpretation of Wang Laoji's brand action was: the red can is the most powerful visual hammer carrying Wang Laoji's mental resources. Although JDB also hoped to establish a visual hammer with the gold can, no matter how loud the gold can's communication was, it ran counter to the core strategy of this battle—transferring Wang Laoji's mental resources.
In Ries China's view, Wang Laoji had previously missed an important opportunity: when JDB first 'changed its name,' Wang Laoji, as a time-honored brand, should have launched a very loud campaign to avoid mental resources being seized by other brands. But the recovery of the red can was another major opportunity. 'At this time, spending 1 yuan on advertising is equivalent to 10 yuan in effect; later, there will be no such opportunity.' At this stage of the battle, the change in the situation was decisive.
Battle Situation: The Struggle for Mental Resources Determines Long-Term Brand Trends
Whether Wang Laoji or JDB, both brands have their own interpretations of the new strategic direction, and new variables may appear in the future. But from current market data, two years later, Wang Laoji, from the 'three-no' state after GP Group took back the trademark, saw annual sales reach 15 billion yuan by 2013. According to a survey by third-party institution Ipsos, 70% of consumers chose Wang Laoji as their first choice for herbal tea.
By 2017, according to Nielsen Retail Measurement Service data cited by third parties, although the entire Chinese herbal tea category declined in 2016, Wang Laoji's herbal tea sales in 2016 grew positively by 6% compared to 2015, while JDB's sales declined by 6% compared to 2015.
The result of the struggle for mental resources will determine the long-term trend of brand market share.
Battle Two: Robam vs. Fotile—The Peak Positioning Battle in the Kitchen Appliance Industry
The business battle between Robam and Fotile originated from Fotile's sudden 'acceleration.'
The Kitchen Appliance Industry Positioning Battle Begins
In the years after 2005, Robam, Fotile, and Sakura formed a three-way standoff in Ningbo, with roughly similar development. By 2010, Fotile began cooperating with Trout & Partners China to introduce Positioning Theory. According to reports, Trout & Partners China advised Fotile to position the brand as 'China's kitchen appliance expert and leader,' and another suggestion was that Fotile's business should focus on high-end kitchen appliances, not making other ordinary kitchen appliances except embedded high-end ones.
The practice of Positioning Theory at Fotile brought pressure to Robam. At that time, Robam was still widely involved in home appliances and kitchen appliances. Fotile's focus of large resources on high-end kitchen appliances brought a certain impact to Robam, both in market and strategic thinking.
Thus, another classic business battle of Positioning Theory's implementation in China began.
Two Key Issues Determining the Direction of the Battle
Robam established cooperation with Ries China, which also practiced Positioning Theory. Ries China interpreted the situation facing Robam: Although Fotile positioned itself as high-end kitchen appliances, first, is 'kitchen appliances' a category? That is the first question. The second question is: Is the positioning of 'high-end range hoods' actually attractive?
The key to answering the first question is: Category solves the problem of what you are, while positioning solves the problem of why consumers choose you. Therefore, the first step for a brand is to choose which category to focus on.
So, is 'kitchen appliances' a category in the consumer's mind? Ries Company's judgment was negative: 'Kitchen appliances' is an industry classification, not a category in the consumer's mind. The category in the consumer's mind is 'range hoods.' So when Fotile positioned itself as 'kitchen appliances,' Robam focused on the 'range hood' category, and on that basis, solved the second question.
The second question is: Is the positioning of 'high-end range hoods' attractive? Ries China's view was that from a category perspective, the positioning of high-end range hoods has problems because range hoods are installed in the user's kitchen, not like cars that can be driven around to show off. The category attribute of range hoods is practical, so the market motivation for hyping high-end is insufficient.
Accordingly, Robam subsequently focused its brand positioning on 'large suction' range hoods, combining the practical characteristics of the range hood category itself with the 'large suction' positioning.
Category Focus + 'Visual Hammer' Brings Strong Market Momentum
From Robam's subsequent actions, it can be seen that this positioning was implemented in the battle. First, company resources were focused on the single 'Robam' brand, with other brands no longer being the focus. Then, the product series of Robam range hoods completely bid farewell to 'small suction' and focused exclusively on 'large suction.'
According to Robam's president Ren Fujia, as stated in the media, Robam began making large-suction range hoods in 2010. After the exhaust volume indicator was raised, market recognition was very high, and it became the first product in the range hood industry to break the 4,000 yuan price point.
In addition, Robam's positioning used an important tactic in visual identification at sales terminals: using a seven-kilogram hollow wooden board as a prop, letting the range hood firmly suck it up. This scene had a huge impact on terminal consumers.
After a period of strategic adjustment and communication, according to data from market research company CMM in 2013, Robam defended its title in both retail volume and market share in the range hood market. In addition, the halo effect of being the sales champion in range hoods also drove sales of Robam's other products; Robam's cooktops and disinfection cabinets also became national sales champions. Previously, when Robam communicated with 'kitchen appliances' as the category, it did not affect consumer minds or drive cooktop sales.
Positioning Is a Long-Term Strategy Focused on the Competitive Environment
As a strategic thought, Positioning Theory's influence is never limited to a single moment. By 2017, a monitoring report released by CMM showed that in 2016, in the domestic range hood market, Robam ranked first with 484,400 units in retail volume, Fotile followed with 425,600 units, and Midea ranked third with 327,200 units.
According to Robam's 2016 annual report, its 2016 operating revenue was nearly 5.8 billion yuan, an increase of 27.56% over 2015, while net profit growth reached 45.32%. Based on this, CITIC Securities titled its review of Robam's 2016 annual report: 'Net Profit Growth Exceeds 40% for 8 Consecutive Years, Company Growth Is Still in the Future,' and continued to strongly recommend it.
Regarding Positioning Theory, Robam's president Ren Fujia once commented: 'Positioning is a very effective method, completely from a competitive perspective. Previously, we contacted many consulting firms, which mostly focused on the self, paying more attention to their own development and ignoring many competitive environment factors. Therefore, we adopted this competition-oriented strategy.'
Battle Three: Aima vs. Yadea—The Offensive and Defensive Battles of the Top Two in the Industry
In the business battle between Aima Electric Vehicles and Yadea Electric Vehicles, it seems that Yadea was quite proactive and active in offense, while Aima generally did not have many dazzling moves. It was more like a seasoned swordsman, consistently implementing its strategy, perfectly demonstrating the offensive and defensive tactics required of a market leader.
First Stage: The Defensive Strategy of the Industry Leader Against the Second
The first battle between Aima and Yadea began in 2012, when Yadea changed its past follow-the-leader strategy and launched an attack on the industry's top position.
The offensive began with an advertisement for 'China's leading electric vehicle brand,' focusing on advertising with annual ad spending of over 100 million yuan. The initial effect of this attack was quite good, largely because the leader did not counterattack.
In 2012, when Aima was frequently challenged by the second-place Yadea, it approached Ries China to introduce Positioning Theory. From the strategic plan provided by Ries Company, it did not only focus on advertising-level offense and defense but first clarified Aima's strategic goals.
Why is the industry leader position so important in Positioning Theory that it became the core battlefield for both sides? Zhang Yun of Ries China mentioned in a case sharing: 'For example, although the water everyone sells is similar, many consumers will ask at the terminal, which one sells better? In consumer common sense, the leader represents the best-selling one. And in the consumer's mind, this means it does the best in all aspects from cost performance to performance; otherwise, why would it have the largest sales volume?'
From the sales data at the time, Aima Electric Vehicles was at the node of breaking 3 million units in annual production and sales in 2012, while Yadea's production and sales were between 2.6 million and 2.8 million. Therefore, under the relatively high homogeneity of Aima and Yadea products, Aima's positioning as the industry leader was also the most suitable differentiation strategy for Aima.
Therefore, in this round of competition, Aima launched communication of its 'leader' status—'Annual sales first to break 3 million units, the true leader in electric vehicles'—using numbers to speak, also with over 100 million yuan in advertising, suppressing Yadea in both content and volume.
Second Stage: 'Flanking Attack' Meets the Defender's Sub-Brand Counterattack
In 2013, the battle between Aima and Yadea escalated. Yadea adjusted its strategy: focusing on single products, launching self-developed models, trying to launch an attack from a narrow point to tear open Aima's defense line.
But Aima quickly followed up. In the Positioning Theory described in The Origin of Brands, when a company has gained a leadership position in a category, it can let the brand grow like a 'tree': following the trend of category division, on the basis of the original 'trunk,' develop new sub-brands in market segments, creating new 'branches.'
In Aima's layout, on the basis of the reliability and durability required of all electric vehicles, it launched the sub-brand 'Qiji' for the plain market, focusing on endurance mileage; and the sub-brand 'Badao' for the mountainous market, focusing on climbing performance. The newly cultivated sub-brands not only effectively countered Yadea's single-product breakthrough strategy but also impacted brands like Tailg and Lima, which occupied regional markets with a single feature.
Third Stage: 'High-End' Shockwave vs. Industry Leader Positioning
From 2015 to 2016, the battle between Aima and Yadea entered a new stage. Yadea chose the 'high-end' direction to break through, investing heavily in advertising—'higher-end electric vehicles'—trying to occupy the high ground in the category, 'shrinking' to the high-end field to gain competitive advantage.
The positioning strategy behind it, according to Xie Weishan, former partner of Trout & Partners China, was: Although Aima had more sales, its average price was lower, while Yadea had the customer perception of being more expensive, thus having the brand recognition foundation for 'higher-end.'
In this round, Aima did not directly counterattack in the high-end market but instead promoted its 'first to break 20 million,' emphasizing its market share leadership, potentially still strengthening its leader positioning.
As for why Aima did not respond to the high-end market competition, Ries China's view was: Consumers of electric vehicles will ask at the terminal which brand sells better, but few consumers will ask which electric vehicle is more high-end. Because the electric vehicle category itself is not a high-end category. There are high-end cars, high-end tobacco and alcohol, but riding an electric vehicle is not about pursuing high-end.
The effect of the high-end shockwave can be seen from Yadea's 2016 listed company annual report: its 2015 sales were 3.319 million units, and 2016 sales were 3.321 million units, meaning that in 2016, which emphasized high-end positioning, sales did not increase but decreased. Due to the increase in the unit price of electric vehicles, annual sales revenue increased by 3.6% (about 200 million yuan), but the 300 million yuan advertising investment in 'high-end electric vehicles' naturally offset the revenue increase. At the same time, Yadea stated in its annual report that it 'plans to launch economy electric vehicles in 2017,' which seems to indicate a shift in high-end positioning.
At the beginning of 2017, Aima announced that global sales exceeded 24 million units, still leading the industry.
From this battle, the industry leader is the most effective positioning. The specific implementation of the industry leader positioning is that sales volume is the hard truth, but it also requires quality, style, and a combination of punches such as establishing advantageous sub-brands in segments.
Battle Four: Jinmailang vs. Baixiang—A High-Difficulty Transformation in a 'Zero-Growth' Industry
In the cases mentioned above, the battles mainly occurred during the rapid growth period of the industry, but the battle between Jinmailang and Baixiang is clearly different, occurring in an industry that has almost entered 'zero growth,' making it even more brutal.
From the data, from 2005 to 2011, China's instant noodle sales scale only grew from 48 billion servings to 50 billion servings, an increase of only 2 billion servings in 7 years. Compared with economic growth in these years, it was almost regarded as 'zero growth' by industry insiders.
It was against this background of almost zero growth that by 2014, the four major companies—Master Kong, Uni-President, Jinmailang, and Baixiang—accounted for 79% of market sales. Among them, Jinmailang and Baixiang were the main competitors in low-end instant noodles, staging a typical battle for market share and industry ranking when the overall market 'cake' changed little.
Jinmailang's 'Strategic Shift' and Baixiang's Successful Positioning
At that time, both Jinmailang and Baixiang were in a strategic situation of being attacked on two fronts. For Jinmailang, on one side, it had to compete head-on with Master Kong in the urban market; on the other side, it had to fight for every inch in the rural market against domestic companies led by Baixiang. Moreover, facing the growth bottleneck of the instant noodle market, Master Kong was also squeezing the low-end market from top to bottom.
Facing pressure, Jinmailang and Baixiang showed different strategic choices.
For Jinmailang, understanding its strategic choice requires understanding its history. The company was formerly Hebei Hualong Food Co., Ltd. Many people still remember the advertisement 'Hualong noodles, see you every day!' Its early strategy was 'rural areas surround cities,' with the brand mainly Hualong and products mainly mid-to-low-end, making it the first in the rural market and second in the entire industry in China's instant noodle industry.
After establishing a strong position in the rural market, Hualong began to enter cities and challenge the mid-to-high-end market, resolutely launching the new Jinmailang brand, targeting the industry's top rival—Master Kong. But after several encounters, it still could not shake Master Kong's position.
At this time, Jinmailang Food Company faced greater strategic risks. The original mid-to-low-end market had been massively challenged by Baixiang instant noodles. Baixiang Food Group, as the largest enterprise in the Henan army in the instant noodle industry, successfully positioned itself when Jinmailang moved to mid-to-high-end, becoming the first in the low-end bagged instant noodle market. Data showed that by 2011, Baixiang Group had captured nearly 18% of the national instant noodle market share.
Baixiang's Strategic Expansion: High-End and Brand Diversification in Parallel
At this time, not only was Jinmailang's situation passive, but Baixiang also faced important strategic choices and increasingly valued Positioning Theory. Under the advice of Trout & Partners, Baixiang began to move toward high-end, using Baixiang Big Bone Noodles as the banner to challenge the mid-to-high-end market. It is worth mentioning that Baixiang Big Bone Noodles was the first instant noodle in China to use big bones as a selling point.
In addition, when the market situation was very good, Baixiang quietly completed a logo change, replacing the image of a small white elephant holding a bowl of instant noodles with a cloud-like logo that does not reflect instant noodles—clearly, this meant that Baixiang's brand diversification strategy was accelerating. In addition to the instant noodle business, the Baixiang brand also began extensive brand extension in fresh noodles, hanging noodles, flour, steamed buns, and other fields. In addition, the Baixiang brand also entered the beverage industry in 2012.
Jinmailang's Strategic Breakthrough: Returning to the Most Promising Mass-Market Category
While Baixiang was advancing high-end and brand diversification, what was Jinmailang doing?
In fact, the path Baixiang was taking, Jinmailang had already traversed before. It had not only challenged the mid-to-high-end instant noodle market but also entered the beverage industry in 2006, but the effect was not good at that time.
Ries China began providing brand strategy consulting to Jinmailang in 2013. The situation it faced was that Jinmailang had not yet achieved top-two status in any category. Not only was it extending the Jinmailang brand in beverages, but even in its original instant noodle business, Jinmailang had a full layout across high, mid, and low ends, instead giving up some of its original advantages in the low-end market to Baixiang.
The corresponding plan was that Jinmailang's most promising category at the time was still the most mass-market low-end instant noodles. It should restore its position as the market leader in that category, and only after establishing advantages in that category should it consider other things.
Reversal: Jinmailang Returns to the Low-End Mass Market, 'Tree Strategy' Replaces 'Shrub Strategy'
So, what was the chance of success for Jinmailang, which had already 'upgraded' from low-end instant noodles to mid-to-high-end, to refocus on the low end?
According to Ries Company's external interpretation, the Baixiang brand was 'upgrading' to mid-to-high-end, but the mid-to-high-end market had not broken through, and it had not maximized its most advantageous low-end market by pressing the advantage. If it had done the low-end mass market to the extreme, it might have achieved a market size of 8 billion to 10 billion yuan.
So, opportunities are often given by competitors, whether for Jinmailang at the time or Baixiang before.
Jinmailang's breakthrough plan at this time was to establish the 'trunk' before considering other things, that is, using the brand's 'tree strategy' to replace the 'shrub strategy'—first owning the most promising 'trunk' category, then using sub-brands for 'branch' expansion.
Thus, contrary to Baixiang's brand extension strategy, Jinmailang at this time, in the low-end instant noodle market, targeted the previous 'Jinye' brand and changed it to 'Dajinye' for focused promotion. The emphasis on the word 'big' is because Dajinye's positioning is reflected in the main selling point of high cost-performance 'large noodle blocks.' 'Six bags equal seven bags, one box equals four extra bags' became a very competitive slogan in the low-end instant noodle market.
From the results of strategy implementation, three years ago, Baixiang Group's overall sales were 4 billion yuan, and Jinmailang's were 3 billion yuan. After Jinmailang refocused its brand in the low-end instant noodle market, now Baixiang's sales are 3 billion yuan, and Jinmailang's are 4 billion yuan—the sales of the two companies reversed in these three years.
It is worth mentioning that Jinmailang's advantage in the low-end market also significantly drove its sales in the mid-to-high-end market. It should be said that the establishment of the 'trunk' advantage laid a good foundation for Jinmailang's 'tree strategy' of category diversification and brand focus.
Epilogue: Positioning Theory Is a Continuously Evolving, Endless River
In summary, from the 'positioning battles' that have appeared in the practice of Positioning Theory in China, although Positioning Theory has appeared in different 'tributaries' in practice, it is not a communication strategy at the advertising level, but a marketing strategy based on the laws of category evolution. Nor is it a dogma advocating single-business operation, but rather, on the basis of consolidating category advantages, it promotes the 'tree-like growth' of enterprises through timely diversification and brand focus. Nor is it a single positioning concept as it appears on the surface, but like species evolution, it upgrades and iterates its thought and methodology system as the environment changes.
If every classic business theory is an endless river, then Positioning Theory, this great river in business thought, is a typical representative of continuous evolution with environmental changes and the passage of time.
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