After five years of entrepreneurship since returning to China, tears and laughter are all in the gathering of brows. With 300 consulting cases, he has taken root in the consumer sector. Since returning from Japan in 2013 and founding Jishi Consulting in 2014, a brand strategy and marketing consulting firm long focused on new consumer enterprises in 'clothing, food, housing, transportation, and entertainment,' Shi Yuan has witnessed and fully integrated into the development and transformation of China's consumption upgrade. Jishi has successfully served as the strategic marketing consulting company for a number of leading consumer and service industry enterprises, including K11 shopping malls, CP Lotus Plaza, Himalaya FM, MUJI, Bamboo Leaf Green Tea, Qian Wufu, Hezhong Culture, Noah's Ark, Wang Xiangyuan, Yao's Sauerkraut Fish, and more. "The secret of positioning is not that the brand positions the product, but that it positions in the consumer's mind." This is easy to say but hard to do, because companies often habitually think from their own perspective, forgetting that business is not determined by themselves but by the market and consumers. Today, we talk with Mr. Shi Yuan, founder of Jishi Consulting, to get closer to Jishi's brand marketing philosophy. Here are the highlights for your mutual encouragement. Founder of Jishi Consulting: Shi Yuan Since its inception, Jishi Consulting has focused on serving enterprises in the consumer sector. From Jishi's perspective, what opportunities exist in China's future consumer market? Which categories do you favor? Shi Yuan: The most typical characteristic of China's consumer market can be described as diversification or stratification. Trendy people in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen may have entered the fourth consumption era, while small-town youth in lower-tier cities may have just entered the second consumption era. Therefore, consumption stratification is the first major trend in China's consumer market. I often tell industry friends: China's consumer market is worth redoing. Because most existing consumer brands are too traditional and find it hard to give young consumers a reason to buy. Services such as medical aesthetics, education, healthcare, and elderly care will account for an increasing share, offering good market opportunities. Recently, I have been personally researching the liquor and seasoning markets. Finally, in the new retail era, the three basic elements of people, goods, and venues are undergoing major changes, thereby restructuring the ecological scenarios of many consumer industries. With the upcoming launch of 5G, I believe it will also have a significant impact on the consumer sector. I think consumer brands can focus on brand innovation (building value identity), product innovation (affordable and healthy products), store innovation (providing convenience and time-saving), and marketing innovation (customers sharing on their own), and start building their core brand barriers as soon as possible. The secret of brands: differentiate or die. How should newly established consumer brands differentiate their strategic direction? Shi Yuan: The famous psychologist and author of the bestseller "The Tipping Point," Malcolm Gladwell, said that people think something tastes good not because it is well-made, but because they feel it tastes good in their hearts. The secret of positioning is not that the brand positions the product, but that it positions in the consumer's mind. This is easy to say but hard to do, because companies often habitually think from their own perspective, forgetting that business is not determined by themselves but by the market and consumers. We use different methods to formulate strategic positioning for enterprises of different categories, brands, and scales. It is a complex project and hard to generalize, but traditional marketing is inside-out, while the basis for strategic positioning is outside-in, with very different logic. Becoming first is the best rule for building a brand, and the key is to strongly occupy customer mind. How do you think brands should utilize every touchpoint with consumers? Shi Yuan: There are two keywords here: 'product' and 'experience.' In the early stage of brand building, when market awareness is low, rather than letting the brand occupy customer mind, it is more pragmatic to let a hit product occupy consumer mind. Therefore, sufficient market research and validation are needed in the early stage of product development to use the product to ignite the market. For example, Starbucks' cat paw cup, the Palace Museum's lipstick, and Uniqlo's KAWS collaboration T-shirts are all good evidence. Good products come with their own traffic. We have ample successful case experience in creating hit products. Consumers actually play four roles in the entire consumption process: before purchase (audience), during purchase (buyer), during use (experiencer), and after use (communicator). Brands must fully understand and respond to these four role changes to interact with consumers and build emotional connections. We often say that consumers pursue products that are good and cheap, but some brands only understand the first part, resorting to low-price promotions or clearance sales, which actually harms the brand greatly. How do you understand the statement 'Brand value is reflected through price'? Shi Yuan: An interesting phenomenon is that after Jishi Consulting's cases, we usually suggest appropriate price increases, using brand pricing, never low prices to gain market share. The result is that our clients' profit margins increase, they have more ammunition for marketing, and sales volume increases, creating a positive cycle. In contrast, merchants using low-price strategies are still struggling in homogeneous competition. In November 2017, as a strategic marketing consultant for a major bar group, we found through nearly half a year of financial statements that liquor sales were weak, with prices ranging from 40 to 260 yuan. After strategic sorting, we adjusted the core product line and developed a hit product, changing the price from 40-70 yuan to 90-120 yuan. Four months later, liquor sales increased by 20% and net profit by 12%. In fact, consumers have a 'middle price psychology' in their minds. If the price is too high, it scares away customers who don't want to spend that much; if it's too low, customers may doubt the quality. So most consumers choose mid-range products, but the premise is to know your customer group very well. Ed Meyer proposed the famous '44-2 theory' in marketing: simply put, 40% of success depends on positioning, i.e., the marketing target; 40% depends on product and price; and 20% depends on marketing. In real marketing, the marketing target is often largely influenced by price. We habitually divide the market into high, middle, and low-end, and also habitually segment consumers into high, middle, and low-end. Therefore, according to the '44-2 theory,' price accounts for 80% of the key success factors. Pricing is setting the market. Price strategy determines the success or failure of product operations and the life or death of the enterprise. I think the problem is not that companies don't want to raise prices, but that they don't know how to reflect brand value. If brand value is not reflected, customers naturally feel the price is high. In practice, although many brands start well with unique positioning, the later execution and investment do not revolve around the established positioning, leading to disproportionate input and output, or even exhausting sufficient resources and ending in failure. What principles or methods do you think brands should follow in subsequent operations and deepening? Shi Yuan: There are many enterprises where accurate brand positioning fails due to poor execution, and they later think it was a positioning failure, but in my view, it is due to inadequate execution. This is why Jishi Consulting insists on providing full-case consulting services, from strategic positioning formulation, to hit product development, to final marketing implementation. Only this way can we truly help clients implement strategy; otherwise, it is hard to execute. Brand strategy = positioning + fit (4P principle). After positioning is set, precise 4P must follow, i.e., product, price, place, and promotion. If any link is disconnected, strategic positioning is hard to land. This is a long-term process. Jishi is a consulting firm positioned in brand strategy and marketing, having successfully helped many consumer enterprises achieve brand upgrades and profit improvement. How do you view the significance of consulting firms to enterprises? Shi Yuan: As a brand strategy and marketing consulting firm founded in 2014, focusing on new consumer enterprises in 'clothing, food, housing, transportation, and entertainment,' we are fortunate to have gained the trust of many excellent client enterprises. To date, 70% of our business comes from referrals from old clients or acquaintances, so the biggest difference in our organizational structure compared to other consulting firms is that we do not have a market sales team. Our clients are distributed across more than 60 cities nationwide. Before signing, clients often ask us whether we understand their city. I always use an analogy: China has dozens of cities, and if you were born and raised in one, your understanding of that city certainly exceeds mine. Although I stay in one city for a short time, I have been to dozens of cities, staying half a year in each. You have deep understanding of your city, and my breadth combined with your depth can bring multiplied value. Although the catering, apparel, real estate, and other enterprises we serve have their own specificities, for a consulting firm, the core is the working methodology. The essence of building brands and marketing is universal, and the core consulting methodology for a strategic marketing consulting firm is also universal. The consulting work method is a joint project team. If clients just pay the consulting firm and expect to become hands-off, leaving everything to the consulting firm, that is wrong. A successful project is always completed through close cooperation between the consulting team and the client team. Excellent clients are those who actively participate and contribute, and we bring industry experience from this. The value of consulting is mainly reflected in three aspects: First, the third-party perspective, because bosses are in the midst of it and sometimes cannot see their own problems clearly; second, the excellent talents gathered by consulting firms, whose thinking can generate new viewpoints and ideas on industry issues and competitor research, and stones from other mountains can polish jade, providing solutions clients never expected; third, the consulting firm's years of project experience, case library, and database, which are also an important part of the value. Tips will be paid 400-2000 yuan once adopted. China FMCG + Internet Professional New Media Committed to FMCG manufacturers' transformation and upgrading and channel digital solutions