Click 'Read Original' for details. Behind the industry-shaking 'Lidu Model' lies a thorough revolution in marketing. Text | Lin Feng, Liu Zhiqiang Lin Feng is a senior researcher at Yunjiu·China Wine Brand Research Institute and CEO of Beijing Lian-e-Lian New Marketing. Liu Zhiqiang is a senior consultant at Beijing Lian-e-Lian New Marketing. This article is republished with permission from Yunjiu Toutiao (ID: YJTT2016). A liquor company with no channel promotions during Mid-Autumn Festival and Spring Festival, yet sales uncontrollably doubled; from years of losses to rapid development, with significant increases in per-ton liquor price and product gross margin; boss Wu Xiangdong proposed a transfer fee of 300 million yuan for distillery operator Tang Xiangyang... Over the past two years, Jiangxi Lidu Liquor Industry, previously unknown, became an industry internet celebrity: not only did a bare-bottle liquor sell for 720 yuan, selling out and becoming hard to find; not only did corporate performance turn from continuous losses under five previous general managers to profitability and consecutive sales doubling under the sixth general manager, Tang Xiangyang; but also behind the Lidu model, a new era has arrived. Before the Mid-Autumn Festival, Wei Kai, general manager of Henan Yangshao Liquor Industry, led a team to Nanchang and Jinxian to inspect the Lidu model on site. He highly praised Lidu's user cultivation of 'small temples for traffic, medium temples for rituals, large temples for conversion' and the digitalization of online-offline integration with 'store-to-store connectivity, person-to-person connectivity, village-to-village connectivity.' During the inspection, Wei Kai exclaimed that his 'three views were overturned,' that it was 'the most valuable learning among all the distilleries visited in the past two years,' and that 'most liquor companies sell at high prices through gimmicks—concepts and packaging—but Lidu relies on hard selling—telling good liquor stories and experience education to sell at high prices.' Wei Kai also said that upon returning, he would quickly integrate new marketing with Yangshao's actual situation. This is the evaluation given by the operator of the No. 1 Henan liquor brand. Outsiders watch the excitement, insiders watch the craft. For Lidu, with revenue less than 300 million yuan, many still believe Lidu's success is solely due to experience marketing, that it cannot scale up, and that it has limited reference value for large enterprises. As a strategic partner in Lidu's marketing consulting, the author believes the above evaluation underestimates the value the Lidu model brings to the industry. This article will interpret Lidu from two aspects: 'Lidu's New Marketing Practice' and 'The Third Marketing Revolution,' hoping to inspire the industry. Part I: Lidu's New Marketing Practice Lidu's 680-yuan bare-bottle liquor sold out in Nanchang and became hard to find, while also driving rapid volume growth in the 100-300 yuan price band. What successful practices lie behind this? With top-down coordination, high-end products build image and momentum, mid-range products drive sales and kinetic energy. Momentum requires a new cultural movement, and kinetic energy requires new marketing. The author summarizes Lidu's successful practice as 'New Culture + New Marketing.' The author divides corporate business activities into two major links: 'value creation' and 'value realization.' The new cultural operation system, which 'uses experience as an entry point and aims to deepen user relationships,' belongs to the 'value creation' link; the new marketing system, which features 'online-offline integration, channel digitalization, and user privatization,' belongs to the 'value realization' link. As shown in the figure below: All successful models fit the market demand of a particular stage and era. Because Moutai's price increases drove up the price bands of Wuliangye and Guojiao, China's liquor industry faces a 'supply shortage' in the sub-high-end market: there is demand for sub-high-end products, but supply is insufficient. Here, supply is a comprehensive supply system composed of brand, product, channel, marketing, transaction, after-sales, and other elements. Nationwide sub-high-end brands—Jiannanchun, Dream Blue, Shuijingfang, Shede—only have advantages in some regions; more regions nationwide still need development. Regionally, apart from Gujing Gongjiu Nianfen Yuanshi (Gu 8, Gu 16) and Guoyuan beginning to gain momentum, more second-tier famous liquor sub-high-end products are still in the cultivation stage. After Moutai's rapid price increase, mainstream high-end consumers in China remain in the sub-high-end range. How to identify a good liquor is a challenge for them. In the past, the manufacturer supply model oriented by 'advertising shaping' and 'channel transactions' is increasingly ineffective as TV viewership declines and media becomes 'mobile-centric.' Consumers are increasingly indifferent to these methods. Lidu's 'New Culture + New Marketing' model, representing the industry's 'third-generation marketing transformation,' emerged as the times required. Below, the author will introduce the Lidu model from 'above the visible water surface' and 'below the invisible water surface.' 1 Above the Visible Water Surface 'Above the visible water surface' refers to Lidu's business innovation operation system, including the experience system, activity system, and the three-connectivity system of online-offline integration. First, the Experience System In the past, we liked to talk about 'user-centricity.' To implement this concept, we need to enter users' life and work scenarios, stir their emotions, 'instantly penetrate and capture' their inner needs, and create the psychological basis for transactions and sustainable transactions. Scenario design becomes the key anchor for transaction success, but capturing scenarios consumes significant enterprise resources, so trade-offs are necessary. Lidu defined three scenarios, which the author calls 'small temple - Lidu Sorghum Cooperative,' 'medium temple - Zhiweixuan,' and 'large temple - distillery.' 'Small temples for traffic, medium temples for experience, large temples for conversion.' Progressing layer by layer, with three-level interaction. The author uses the experience process at Zhiweixuan as an example to demonstrate Lidu's experience system.
Lidu Medium Temple - Zhiweixuan ▲Zhiweixuan Terminal store owners or group-buying personnel lead consumer users to visit Zhiweixuan, where there are 'five experience steps.' Eat distiller's grain popsicles. Regardless of season, consumer users taste Lidu's distiller's grain popsicles. The sweet, slightly distiller's grain-flavored popsicle reinforces consumer users' perception that Lidu 'old liquor' is self-brewed, establishing the first layer of goodwill and trust. Cultural baptism. Visit the history of the liquor industry and the distillery's history, with the store manager explaining, reinforcing Lidu's historical culture, especially the Yuan Dynasty cellars and Ming-Qing-Republic cellars, laying the material value foundation for the high-priced old liquor later. Liquor King Competition. At a dedicated experience table, pour five glasses of liquor for each user: sauce-aroma, strong-aroma, light-aroma, special-aroma, and Lidu Sorghum 1955. The store manager explains the characteristics of each for nose and palate, then shuffles the order, and users blind-taste and score. The highest score wins the title of Liquor King; ties are broken by submission time. Dinner tasting. After the above steps, dinner begins. Before dinner, the store manager spends about ten minutes explaining the color, aroma, and taste of Lidu Sorghum 1955, then says, 'Drink less, drink better,' and 'Total amount controlled tonight!' By the end of dinner, consumer users' emotions and demand cultivation are fully developed, creating anticipation for Lidu Sorghum 1955 and a desire to purchase Lidu products. After dinner, there is a self-blending session. Each user sees an 'old formula' at the blending station: proportions of high-proof liquor, low-proof liquor, and a few drops of flavoring liquor. Under the store manager's guidance, users blend their own, then receive a bottle label to write their name or a sentence, and stick it on their sealed bottle. Thus, 'the first self-blended liquor in life' is created. Later, in follow-up surveys of consumer users, the five steps above showed that the most widely experienced was 'eating popsicles,' and the deepest experiences were 'Liquor King Competition' and 'self-blending.' As a veteran in the liquor industry who has tasted hundreds of distilleries' products, the author felt secretly pleased when scoring full marks in Lidu's Zhiweixuan Liquor King Competition, even taking a photo of the answer sheet as a souvenir. Lidu Small Temple - Lidu Sorghum Cooperative + Hotel Cultural Private Room ▲Lidu Sorghum Cooperative Lidu Sorghum Cooperative is transformed from famous cigarette and liquor terminals. These 'small temples' are traffic entrances, equipped with two 'standard items'—a refrigerator for popsicles and a blending station for the Liquor King Competition. Hotel cultural private rooms are a cultural experience and tasting base Lidu creates for target consumers, where not only one-table tasting sessions can be held, but also serve as a promotional window for Lidu's corporate culture and product brand. Through small experiences in these two scenarios, users develop a longing for Lidu, laying the foundation for inviting them to Zhiweixuan. Lidu Large Temple - Distillery Lidu Large Temple - the distillery offers users richer experiences: cellars, distiller's grain eggs, distiller's grain foot baths, cultural experiences, etc. After being guided through small temples and experiencing medium temples, consumer users are more likely to customize after deeper distillery experiences. Customizing a jar of liquor and storing it at the distillery connects consumer users' interests and emotions with the distillery, and they will tell Lidu's story on various occasions and scenarios in the future. This is the sign of consumer users' 'conversion.' Next, the Activity System The three-level experience system of 'large, medium, and small temples' successfully immerses users in scenarios, achieving the goal of convincing users that Lidu old liquor is good liquor. However, 'work outside poetry' activities are also indispensable means to enhance Lidu's credibility. According to incomplete statistics, in Jinxian County, Lidu's base market, nearly 30 types of consumer activities were held in 2018, with over 100 sessions in total. It can be said that there are monthly themes and weekly activities. In summary, Lidu's activities are divided into three types: 'festival-making activities,' 'ritualized activities,' and 'word-of-mouth activities.' First are 'festival-making activities.' With Lidu's rapid development in recent years, it has accumulated more resources in the industry and regional markets, and its organizational team has become more mature in planning and executing activities. Therefore, activity types have gradually shifted from 'riding hot topics' to 'creating key events.' Following the principles of activity branding and activity productization, Lidu has begun to create its own unique activities, with the National Treasure Lidu Fengtan Culture and Art Festival and the National Fans Festival being representative. Taking the National Treasure Lidu Fengtan Culture and Art Festival as an example, 2018 marked the fifth consecutive year. After years of accumulation, this event has become a comprehensive feast deeply integrated with Lidu's corporate culture and product characteristics, highly distinctive of Lidu. From September 14-16, 2018, the China Baijiu Cultural Confidence Seminar and the Fifth National Treasure Lidu Fengtan Culture Festival covered six themed activities: the 2018 Yuan Dynasty Ancient Cellar Autumn Opening and Fengtan Ceremony, the 2018 China Cultural Confidence Seminar and China Southern High-End Old Liquor Summit Forum, the 2018 China Southern High-End Old Liquor Exchange Conference, the Second Real Vintage Famous Liquor Tasting Competition, the 2018 China Baijiu National Second-Class Taster Training and Baijiu Master Lecture Ceremony, and the 2018 National Treasure Cruise—Most Beautiful Ganjiang River, One River Two Banks Tour. With a combination punch and down-to-earth approach, Lidu has created a batch of unique corporate activities. Second are 'ritualized activities.' Examples include the Zhuangyuan Fengtan (Top Scholar Sealing Ceremony) and different levels of taster evaluation and lecture ceremonies. Combined with different scenarios, these give consumers a stronger sense of ritual, participation, and achievement, thereby achieving better communication effects. Taking the Zhuangyuan Fengtan activity as an example, material ritualization (wearing top scholar costumes, wearing red flowers, riding tall horses, reading imperial edicts, etc.), process ritualization (welcoming the top scholar, distillery tour, worship at Wanshou Palace, self-blending experience, top scholar sealing, top scholar treasure hunt, top scholar leaving calligraphy, etc.), and experience ritualization (top scholar hand-brewing, top scholar three toasts, smelling aroma to identify liquor, blending to discuss heroes, Liquor King Competition, treasured top scholar jar, etc.) run throughout the entire activity. The Zhuangyuan Fengtan activity has become a signature event and local specialty for Lidu, a high-quality IP. Third are 'word-of-mouth activities.' Lidu combines its own characteristics, fully leverages local resource advantages, and around target consumers, carries out a large number of word-of-mouth activities directly facing users. Through these activities, it achieves good results in direct sales or indirect sales promotion. For example, the National Treasure Grand Tour delivers Lidu's corporate publicity, product features, and promotional activities directly to consumers through marketing into communities; sponsorship and support for various sports events, such as organizing table tennis matches, badminton matches, and outdoor activities, establish and deepen word-of-mouth with target consumers; using Women's Day on March 8, inviting women's directors from all townships and towns in the county to the distillery, letting them understand, identify with, and like Lidu, and later they play a leading role in village-to-village projects with village cadres and rural red-white council; through multiple charity activities, such as sponsoring impoverished students, visiting nursing homes, and establishing public welfare funds, Lidu has formed a good reputation among mass consumers and laid the foundation for government relations. There are many more such word-of-mouth activities, not listed here one by one. Introducing the Three Connectivity Projects Through years of practice, the author developed the online-offline integration system 'Lian-e-Lian' to help enterprises achieve online-offline integration. The Three Connectivity Projects are the specific application of the 'Lian-e-Lian' system. The author introduced the Three Connectivity Projects to Lidu: 'Store-to-Store Connectivity,' 'Person-to-Person Connectivity,' and 'Village-to-Village Connectivity.' Store-to-Store Connectivity is a channel digitalization transformation project that connects 'manufacturer, distributor, and store' in a trinity, making the supply-side channel online and digital. Person-to-Person Connectivity targets consumer users. Village-to-Village Connectivity links rural opinion leaders. As shown in the figure: First is Store-to-Store Connectivity. Lidu sells products to distributors, who sell to retail stores. How to make the transaction process between retail stores and distributors online and visible, how to make sales representatives' visits online and visible, and how to match Lidu's marketing expenses more efficiently to retail terminals—these are the problems Store-to-Store Connectivity aims to solve. As shown below: Through the system backend, Lidu headquarters and even Beijing Jindong Group headquarters can see order information from each retail terminal at any time, and the value contribution of each terminal is clear at a glance. Lidu's support to terminals can be delivered directly through the system, reducing expense interception at intermediate levels. Through data accumulation over a period, the potential value of each terminal store can be analyzed, and resources can be allocated differentially for support. The mobile interfaces for retail store owners and sales representatives are as follows: ▲Store Owner Page ▲Sales Representative Page Retail store owners can place orders on their phones, and sales representatives can see them at any time on their own phones. Sales representatives can also place orders on behalf of store owners who find it inconvenient to order online. Lidu's sales team is highly executive. In a county-level market with over 1,200 retail terminals, installation was completed in one week. Distributors were required not to deliver if terminal orders were not placed online. Soon, Lidu's retail terminal online order rate reached 100%, and sales representatives were required not to place orders on behalf of store owners; store owners must order online themselves. Since distributors have their own independent backend, they can upload product photos, price policies, and activity information. In addition, all products they distribute can share terminals, and even one store, one policy is possible. Store-to-Store Connectivity truly achieves 'helping without adding trouble' for manufacturers and distributors, and is very popular among distributors. Second is Person-to-Person Connectivity. As a tool, Lian-e-Lian has played a huge role in helping Lidu connect with consumer users. There are two specific and effective scenarios. The first scenario is the 'member system + points mall + cross-industry alliance' small C integration. Each Lidu bottle has a QR code inside the cap. Scanning it enters the Lidu member platform (enterprise service account), where users can enter lucky draws and earn points. Consumers can use points at Lidu's cross-industry partners, such as free car washes, free liquor coupons, and free meals at designated hotels. In this process, Lidu gains consumer fans, consumption data, and user behavior data. Based on local influence, each cross-industry partner Lidu cooperates with is very active and cooperates with Lidu in various activities for consumer users, making Lidu members feel privileged. After these consumer users are accumulated on the Lidu member platform, they can be connected with nearby retail terminals, achieving online-offline integration and directing traffic to retail terminals. Terminal store owners are generally very enthusiastic. Store-to-Store Connectivity solves the problem of store owners' ordering and timely policy transmission; Person-to-Person Connectivity solves the problem of store owners selling goods. Traditional liquor enterprises have two consumer traffic entrances: the product itself and the retail terminal. In this model, using the liquor bottle as a traffic entrance is immediately effective, efficient, and controllable, greatly extending the marketing value chain. In the past, marketing activities ended when the enterprise sold liquor to consumers. Now, after consumers buy the liquor, they enter the consumption stage. Through traffic direction, the enterprise's marketing is a new beginning, greatly expanding the value chain. The second scenario is the integration of opinion leader big C. For big C in urban high-end car clubs, chambers of commerce, hiking clubs, military transfer cadres, doctors, and other organizations, through activities such as sending liquor, they are registered as members. Big C are associated with the manufacturer or designated distributors and core stores, and follow-up services are provided. This includes points during transactions, points during consumption, online activities, offline activities, and other means to strengthen user relationships. Person-to-Person Connectivity establishes a deep integrated relationship between Lidu and consumer users, making market resource allocation more effective. Below are the points mall and cross-industry resource consumption vouchers. Third is Village-to-Village Connectivity. The countryside is a vast market. How to grasp rural opinion leaders such as village heads, matchmakers, and chefs is a very important task. However, due to inconvenient rural transportation and daily communication, no effective methods have been found, and per capita output of market activities is low, making this task highly challenging. Lian-e-Lian and Lidu together target rural big C for installation and connection, even involving local retail terminal stores in operating rural big C. Generally, rural areas focus on two scenarios for marketing: village affairs receptions and wedding banquets. These are two very typical and objectively consuming scenarios, especially wedding banquets, which have strong convergent consumption, such as demand for home appliances, wedding photos, and wedding hosting. Based on the 'points mall' principle of Person-to-Person Connectivity above, Lidu integrates suppliers such as home appliances, wedding photo studios, and wedding planning companies to jointly serve wedding banquet crowds. By connecting with key people like rural matchmakers and chefs, smooth communication channels are established. The enterprise spends little but achieves good results. The 'experience system,' 'activity system,' and 'three connectivity systems' mentioned above are all effective innovation systems in the industry. However, learning only the surface will not capture the essence; it may even be counterproductive. Any business effectiveness and sustainability are supported by the internal organizational system, which in turn embodies financial logic and cash flow management. This belongs to 'below the invisible water surface,' described below from the organizational level. 2 Below the Invisible Water Surface All experience systems and activity systems are explicit and externalized, making them easy for peers to imitate. But 'Lidu cannot be learned' because behind this explicit system is the organizational operation system. Matters first, people second; business logic first, organizational logic second. Hui liquor dominated the industry for over a decade with 'plate-in-plate.' Peers imitated the external business model of 'plate-in-plate,' but Hui liquor practiced internal organizational skills and team culture. I use a 'twenty-character formula' to guide my consulting team: strategy as momentum, marketing as tool, organization as foundation, culture as soul, human resources as root. After business logic is established, corresponding organizational models need to be matched to strengthen business vitality; after organizational models are established, corresponding human resources need to be matched to ensure organizational efficiency; after human resources are established, corresponding corporate culture needs to be linked to ignite each employee's inner enthusiasm. The twenty-character formula, five dimensions, each dimension forms its own system. Lidu's business model is equally inseparable from the support of Lidu's organizational model. Lidu's organizational model includes four dimensions: organizational structure, business processes, assessment indicators, and business skills. Whatever business logic exists requires corresponding organizational logic. Lidu has developed 'organizational capabilities to define a good bottle of liquor,' which is not easily visible to outsiders. But without developing such an organizational system, Lidu's business model would indeed be 'unlearnable.' Lidu Organizational Structure ▲Lidu Regional Market Organizational Structure Chart (Click to enlarge for high-definition content) Lidu's regional market organizational structure is divided into two major sections. The blue part is sales positions, responsible for traditional channel work such as outlet development, order acquisition, basic customer relationship maintenance, and sales management—the 'sell' part. The red part is marketing positions, responsible for 'marketing' work such as activity planning, activity execution, consumer acquisition and operation, brand planning and promotion, and in-depth maintenance of core terminals. At the organizational level, Lidu has achieved separation of marketing and sales, which is the most basic guarantee for the execution of the extensive experience and activity systems. Lidu Business Processes At the business process level, Lidu implements 'let those who hear the gunfire make decisions.' Headquarters gives full authority to regional markets; regional managers delegate to supervisors; supervisors delegate to team leaders. According to this principle, most of Lidu's activity initiation processes and policy initiation processes are bottom-up. This bottom-up business process greatly enhances the enthusiasm of grassroots combat units—in employees' words, 'it's more energetic to work.' On the other hand, it raises the capability requirements for the business team, which also allows Lidu employees to gain more opportunities and grow faster—in employees' words, 'I don't feel like a liquor seller; I feel more dignified than others.' Lidu Assessment Indicators The assessment indicators for the sales team fully reflect an emphasis on process over results. Lidu's consecutive high growth is the best reward for their steady and solid work. Sales collection accounts for 30%, based on actual terminal purchase amounts; process actions account for 70%, mainly including indicators such as the number of return-to-factory tour sessions invited, the number of return-to-factory tour participants invited, the number of National Treasure Grand Tour participation times, brand sharing competition indicators, Teacher's Banquet session indicators, consumer pull indicators, and WeChat group member increase indicators. Different levels have different process assessment KPIs, adjusted monthly. The assessment indicators for the marketing team are more detailed, with different indicators for each position. Taking the 'scenario master' position as an example, its main responsibilities include: going deep into the life and consumption scenarios of three major target groups (government agencies, social organizations, social groups) in the early stage, designing, demonstrating, researching, and communicating various consumer activities; planning activities based on research and communication results, and formulating specific execution plans; managing and commanding the execution of related activities, guiding activity execution personnel to smoothly carry out activities; and after activities, conducting later-stage operation and management of consumer users, formulating relevant management systems (such as WeChat groups), and quantifying specific assessment indicators based on job responsibilities. Lidu Business Skills Lidu's skill training and exchange learning work has reached the forefront of the industry. From the group's annual training, quarterly training, and irregular inter-enterprise exchanges (Lidu's parent company, Jindong Group), to Lidu Liquor Industry's unified training, exchanges, meetings, and internal business school, to spontaneous internal exchanges and meeting systems (daily, weekly, monthly meetings), skill PK, 'everyone is a taster,' 'everyone is a docent,' etc., all levels elevate training and learning to a strategic height. ▲P.S.: The vast majority of Lidu Liquor Industry employees are post-85s and post-90s, with a considerable number of post-95s. The overall learning atmosphere is strong; it is a learning-oriented, young organization. Part II: The Third Marketing Revolution 1 Reviewing the Three Marketing Revolutions Over the past thirty years, traditional Chinese enterprises have undergone three changes in brand and channel aspects. The First Marketing Transformation Time: 1990s Characteristics: Commodity shortage, strong demand Brand level entered the first-mover advantage stage: first-mover advantage, where competition among enterprises was about entrepreneurs' sensitivity to the market, seizing opportunities, acting quickly, and producing products first. The market basically had no worries about sales. Channel level entered the large circulation stage: dominated by large circulation and wholesale, with enterprises not building terminal construction. The Second Marketing Transformation Time: Early 21st century Characteristics: Products abound, severe product homogenization competition, supply-demand balance or even oversupply Brand level entered the cognitive advantage stage: cognition over facts, brand positioning, seizing a category concept, creating a category to become first. Channel entered the deep marketing stage: deep marketing, manpower tactics, channel sinking, terminal control. Neither of the above two marketing transformations solved the problem of integrated linkage between brand owners and consumer users. Marketing was 'seeing things but not people,' with brand owners in a state of 'user disconnection.' More than 70% of market resources and organizational energy were invested in the channel level, with very little on consumer users. With changes in the consumption environment and communication environment, and the reduction of demographic dividends, the second-generation marketing model has also come to an end. How to use technology to establish deep integrated relationships with consumer users has become a common concern for traditional enterprises. At the same time, due to the maturity and low cost of mobile internet technology, and the maturity of payment, logistics, positioning, and other industrial elements, the third-generation marketing transformation emerged. The Third Marketing Transformation Time: After 2016 Characteristics: Overcapacity, supply exceeding demand, demand is supply Brand level entered the credit advantage stage: the prerequisite for building a good brand is making good products and telling good stories. Through activities, experiences, and other methods, consumer users establish comprehensive trust in the brand from physiological to psychological levels, forming a credit advantage. Note: Explanation of credit advantage. All transactions are credit transactions. Transactions use currency as the object; currency's credit is granted and endorsed by the state, while commodity credit is granted by the enterprise. In the era of cognitive advantage, the main way enterprises granted credit to commodities was advertising—'spend 200 million to make consumers remember one sentence.' In the era of credit advantage, it is necessary to 'find the right person, at the right time, in the right place, in the right way' to interact with consumer users, involving a series of new marketing concepts and practices such as 'content, communication, community organization, scenarios, IP.' Traditional advertising expenses have significantly decreased, and dependence on a single advertising slogan has declined. However, the requirement for consumer users to 'see with their own eyes and experience personally' has greatly increased. Enterprises use new means and methods to implant credit advantages in consumer users' minds and gain competitive advantages. Channel level entered the new marketing stage of C-chain and B-chain connectivity and online-offline integration: brand owners use mobile internet tools to empower downstream distributors and retailers. After making distributor and retailer transactions online, the three form a truly integrated relationship, then jointly connect and operate consumer users, ultimately achieving channel digitalization and consumer user privatization, completely solving the problem of user disconnection. As shown below: The third marketing transformation comes with changes in the consumption environment and technological environment. China's economy has entered a new normal, and consumption dividends are exhausted. In the past, the growth logic of brand owners was to rapidly increase new user volume (customer acquisition). But under the new normal, the proposition for brand owners becomes 'how to obtain more output from old users.' Linking and serving old users well has become a consensus, and it is also the problem the third-generation marketing transformation aims to solve. New marketing provides systematic solutions at the methodological and practical levels. 2 Reference and Introduction of the Third-Generation Marketing Model The third-generation marketing model—the emergence of the new marketing model—is an inevitable result of industrial evolution. But how to reference and introduce it? Lidu's practice provides specific references for traditional enterprises in methodology and practice. Below, the author further explains the key points for successful implementation of new marketing from two aspects: 'organization and product value chain.' Developing CMO Functions In the early stage of introducing new marketing, Lidu first optimized and adjusted its organizational structure. Traditional enterprise business organizations are mostly transactional, serving distributors and retailers on the supply side. No one is responsible for consumer-side user operation, so products have long been in a state of oversupply, as shown below: How to develop the Chief Marketing Officer (CMO) function oriented toward consumer user needs is the key to the success or failure of new marketing implementation, as shown below: The above is an ideal organizational structure. Actual situations vary among enterprises. How to gradually develop new marketing functions based on their own reality? Lidu has been pragmatic, iterating in small steps, and achieved good results. In the early stage, fine-tuning was done first, and later when the time was ripe, the second stage was carried out. The first stage is shown below. ▲Lidu Jinxian Market New Marketing Organizational Structure (First Stage) Explanation of Lidu Jinxian Market New Marketing Organizational Structure (First Stage): Tour Store Manager: 2 positions, concurrently held by the team leaders of the two urban circulation groups, mainly responsible for core terminal customer relationship maintenance, atmosphere arrangement, activity execution, and mining group-buying resources behind terminals. Village-to-Village Specialist: 3 positions, concurrently held by existing township team leaders, mainly responsible for systematic development of key township figures, tool installation, customer relationship maintenance, activity execution, and sales management. Scenario Master: 1 position, temporarily concurrently held by the group-buying department supervisor, mainly responsible for activity planning, activity negotiation, activity organization around various target consumers, and guiding later-stage consumer operation. Communication Officer: 1 position, temporarily concurrently held by the brand department staff stationed in Jinxian, mainly responsible for integration of communication channels, editing of communication content, and dissemination of communication content. Data Specialist: concurrently held by the current data clerk, in addition to normal data clerk duties, responsible for backend data export, management, analysis, and irregular operation training for relevant personnel. ▲Lidu Jinxian Market New Marketing Organizational Structure (Second Stage) Explanation of Lidu Jinxian Market New Marketing Organizational Structure (Second Stage): Regional Marketing Officer: Based on the first stage implementation, in the second stage, the Regional Marketing Officer position is developed, responsible for managing Tour Store Managers and Village-to-Village Specialists, and exclusively responsible for 'marketing' work. Tour Store Manager: 2 positions, held by full-time personnel, mainly responsible for core terminal customer relationship maintenance, atmosphere arrangement, activity execution, and mining group-buying resources behind terminals. Village-to-Village Specialist: 4 positions, held by full-time personnel, mainly responsible for systematic development of key township figures, tool installation, customer relationship maintenance, activity execution, and sales management. Scenario Master: 1 position, held by full-time personnel, mainly responsible for activity planning, activity negotiation, activity organization around various target consumers, and guiding later-stage consumer operation. Operations Specialist: 1 position, held by full-time personnel, mainly assisting the Scenario Master in activity planning, activity execution, and later-stage consumer community operation around target consumers. In the second stage of new marketing introduction, 'marketing-sales separation' is fully realized in the regional market. The Regional Marketing Officer, Scenario Master, and Communication Officer positions are exclusively responsible for consumer 'marketing' work, with personnel numbers gradually increasing based on market operation. Optimizing Product Policies In manufacturer-distributor cooperation, product market policies include bare price, semi-controlled price, and fully controlled price. New marketing requires enterprises to have full control over prices, so they have 'bullets' (resources) in hand for user operation. Many manufacturers' product prices are inverted or below cost, requiring adjustment. Lidu's product price policy is a fully controlled price model, and in operation, it does not force inventory on distributors or do channel promotions. Prices are in a very healthy, smooth state. This link did not consume much energy from the project team. Many enterprises with price inversion need to adjust policies to adapt to the new marketing model. Below is a price policy adjustment plan the author made when introducing new marketing to a regional liquor enterprise: (Click to enlarge for high-definition content) According to the new marketing model plan the author provided for the above enterprise, the enterprise increased the proportion of expenses invested in consumer cultivation. The expense investment ratio among consumers, terminals, and distributors was approximately 5:3:2 (original ratio 3:4:3). Ultimately, this regional liquor enterprise in Henan achieved over 40% healthy growth in 2017, and in 2018, it could basically reach 50% growth. As mentioned earlier, business innovation requires organizational support. Below the organization is the financial investment model. Investment is the cause, is the value; output is the effect. What level of investment corresponds to what output. There are three investment targets for enterprises facing the market: consumer users, terminal merchants, and distributors. Traditional enterprises often invest less than 30% in consumers, with 70% of expenses invested in distributors and terminals. New marketing gives enterprises an investment target of '721': 70% to consumer users, 20% to terminals, and 10% to distributors. Facing this investment target, traditional enterprises' actual behavior is far from it; they have the will but not the strength. All seemingly effective marketing models are inseparable from truly 'good products.' A good product system built at both material and spiritual levels is a core component of new marketing, which the author calls the 'value creation' link. For the vast number of consumer users, without internet connectors, effectively organizing them is almost unimaginable. And after connection, continuous marketing activities are needed for support. Therefore, the development of marketing organizations facing consumer users is essential. This constitutes the author's proposed New Marketing 123 Law: 1 market-facing investment target—721; 2 support points—CMO organization and product value chain design; 3 elements—good products, connectors, and marketing functions. As shown below: Moutai's price increase provides room for regional liquor growth. How to build momentum and image at the high end and drive sales at the mid-range? Lidu has set a textbook operation method and implementation path, which is highly referential in the current liquor industry, as shown below: Secondly, Lidu's practice reveals the arrival of an era. The industrial division of labor brought by socialized mass production has improved social efficiency, but supply and demand have begun to diverge. Supply-demand imbalance has become a standard feature of industrial society, causing great waste of industrial resources. The second-generation marketing model not only failed to solve this problem but even exacerbated the supply-demand imbalance: professional managers, to complete short-term performance, would force inventory on distributors and strengthen traditional marketing functions. In the organization, no one has the willingness or ability to be responsible for consumer user needs. Ultimately, in the entanglement with channel merchants, supply-demand relationships are distorted, inevitably leading to decline. Lidu's practice provides traditional enterprises with a path and method to reverse supply-demand imbalance from the organization and value chain, allowing enterprises to step out of the vicious competition of channel warfare, enter the lifestyles and scenarios of consumer users, make friends with them, and solve problems, thus moving toward a thriving future. More importantly, Lidu's practice in new culture and new marketing shows traditional enterprises a roadmap for the successful transformation of third-generation marketing. Traditional enterprises embracing the internet and online-offline integration has long been a consensus, but how to embrace it? Where are the paths, methods, and tools? There is no complete successful case in the industry, but Lidu's practice tells the author that embracing the internet is not just about using an internet software. It requires systematic thinking at the top level, then step-by-step optimization from organization and product value chain. Through 'Store-to-Store Connectivity' to upgrade the supply chain into the channel digitalization stage, and then through 'Person-to-Person Connectivity' and 'Village-to-Village Connectivity' to link the demand side into the consumer user privatization stage, Lidu establishes a deep integrated relationship with consumer users, deeply roots in the market and users, comprehensively optimizes enterprise resource allocation efficiency, reverses supply-demand relationships, and puts the enterprise into a sustainable growth state. This provides traditional enterprises with a highly operational sample, for the comprehensive upgrading and transformation of traditional industries, fully entering users, truly representing consumer users, thus forming a supply-demand integrated, benign, and sustainable development momentum, and entering a new situation of reduced losses and thriving development. What do you think of the 'Lidu Practice' of the third marketing transformation? Leave a comment below to share! On October 23-24, during the Autumn Sugar and Wine Fair, New Distribution will host the '2018 FMCG City Distribution Logistics Conference.' At that time, we will invite industry experts, FMCG warehousing and distribution specialists, and distributors who have transformed into unified warehousing and distribution platforms to discuss and answer questions about future trends in FMCG city distribution logistics and practical cases of distributor transformation to unified warehousing and distribution, under the theme 'New Distribution, New City Distribution.' We hope to bring you different inspiration and thinking! The specific meeting topics are as follows: List of Participating Companies In no particular order Hunan Zonglan Diandan Network Technology Co., Ltd. Jingbang (Wuhan) International Freight Forwarding Co., Ltd. Mengniu Dairy Qinghai Hanxiang E-commerce Co., Ltd. Unilever Services (Hefei) Co., Ltd. Shanghai Branch Huicong Hunan Xuan'ang Food Co., Ltd. Guangzhou Tongdaoren Information Technology Co., Ltd. Qingdao 888 Trading Co., Ltd. Uni-President Enterprises (China) Investment Co., Ltd. Hunan Province Zhongxiang Gongpei Logistics Co., Ltd. Shenglong Ingredients COSCO Shipping Logistics Warehousing and Distribution Co., Ltd. Guangxi Yongpai Liquor Industry Co., Ltd. Shangqiu Kangrong Trading Co., Ltd. Jinan Dingzhong Economic and Trade Co., Ltd. Liaoning Bimai Agricultural Technology Co., Ltd. Kunming Xiongjia Trading Co., Ltd. Shaanxi Houheng Trading Co., Ltd. Guangzhou Dingwo Enterprise Information Consulting Co., Ltd. Shaodong Jiajiale Trading Firm Boda Trading Industrial Bank Changsha Branch Wuhan Muchen Convenience Store Chain Co., Ltd. Fujian Fuxing Yuncang Logistics Co., Ltd. Guizhou Yilimi E-commerce Co., Ltd. Jiangxi Xiao Laoer E-commerce Co., Ltd. Jinshankoufu Shanxi Taixing Yuanjing Supply Chain Management Co., Ltd. Shanxi Dezhun Supply Chain Management Co., Ltd. Shaoyang Tongdeli Trading (Xiangbang Logistics) Huanfu Tongda Express City Distribution Beijing Xinjingxiang Food Co., Ltd. Wuhan Huizhong Tianhong Liquor Industry Co., Ltd. Changsha Paide Biotechnology Co., Ltd. Chao'an Tuqiang Guizhou Yihe Bopin Supply Chain Management Co., Ltd. Jiangxi Kang'en Industrial Development Co., Ltd. Xiangtan County Yisuhe Town Yuhua Paper Store Luoyang Yuanlang Trading Co., Ltd. Tongchuan Yaozhou District Huayuan Supermarket Co., Ltd. Hunan Yongfu Jiujiu Trading Co., Ltd. Zhejiang Chengchengtong Logistics Co., Ltd. Chongqing Kaiguo Materials Trading Co., Ltd. Beijing Xianmaixianmai Data Technology Co., Ltd. Hanchuan Qixing Trading Co., Ltd. Tongxin Jiuzhiru Trading Co., Ltd. Guizhou Meiguo Guoguo Network Technology Co., Ltd. ...... Distributor Transformation Representatives (Proposed) In no particular order Rong Jun, Chairman of Jiangsu Huashang City Distribution Network Co., Ltd. Wang Bo, Chairman of Hubei Yijiaren Logistics Co., Ltd. Jiang Shuming, General Manager of Sichuan Chengdu Xingrenxing Trading Co., Ltd. Liu Jichen, Chairman of Shandong Yunbang Warehousing and Logistics Co., Ltd. Tu Mingyu, Chairman of Chongqing Lingyu Consumer Goods Supply Chain Management Co., Ltd. Yang Su, Chairman of Guangzhou Zhongshan Wanrong Marketing Co., Ltd. Yuan Xia, Chairman of Sichuan Bajie Supply Chain Management Co., Ltd. Li Qiangyun, Co-founder of Hubei Pengdun Meiyitian Supply Chain Management Co., Ltd. Zhang Jianyong, Chairman of Henan Xuchang Jiulegou E-commerce Co., Ltd. Ma Haichao, Founder of Hebei Changyi Logistics Co., Ltd. Meng Yucun, General Manager of Hebei (Chengde) Wulian Yuncang Co., Ltd. Zhang Xun, Chairman of Xinjiang Urumqi Su'an Jinchi Logistics Co., Ltd. Zhang Hailing, Chairman of Jilin San Province Lian'gou Qiang Huitao, Founder of Hebei Dunjie Supply Chain Management Co., Ltd. Liao Lei, General Manager of Hunan Damei Supply Chain Management Co., Ltd. ...... -END-