---
title: "The \"New\" Scam of New Consumer Brands"
description: "New consumer brands are like a gorgeous robe infested with lice. In 2021, the robe finally couldn't withstand the wind and rain, revealing its thin lining. This round of new consumer brands is experiencing a major collapse. From a marketing perspective, the author argues that new consumer brands, despite capital's collusion, have failed to seize power because entrepreneurs haven't clarified what exactly is \"new\" about them."
author: "梁将军"
publisher: "New Distribution"
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published: "2021-10-17"
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---

# The "New" Scam of New Consumer Brands

> New consumer brands are like a gorgeous robe infested with lice. In 2021, the robe finally couldn't withstand the wind and rain, revealing its thin lining. This round of new consumer brands is experiencing a major collapse. From a marketing perspective, the author argues that new consumer brands, despite capital's collusion, have failed to seize power because entrepreneurs haven't clarified what exactly is "new" about them.

Source: Liang Jiangjun (ID: liangjiangjunisme)

New consumer brands are like a gorgeous robe infested with lice. In 2021, this gorgeous robe finally couldn't withstand the wind and rain, revealing its thin lining.

This round of new consumer brands is experiencing a major collapse. From a marketing perspective, I believe that new consumer brands, despite capital's collusion, have still not seized power because entrepreneurs haven't thought through one question:

**What exactly is "new" about new consumer brands?**

New demographics? New products? New media? New channels? In my view, these so-called "newness" is nothing but a self-deceiving scam.

**New demographics?**
### **Is Gen Z a special generation?**

The emergence of new consumer brands first stems from the rise of new demographics, such as Gen Z. Gen Z has many "new" characteristics:

* **Unlike the post-80s and post-90s who face mortgage pressure, Gen Z is the most carefree generation, with greater control over their wealth, so they are more willing to pay for their interests. Examples include trendy toys and figures represented by Pop Mart, as well as the "three pits" consumption of Hanfu, JK uniforms, and Lolita dresses.**
* **Gen Z is the internet-born generation, having grown up immersed in the internet, making them more susceptible to social media influence and consumption behavior. For Gen Z, much consumption is merely for social recognition and maintaining their persona in their social circles—a typical "persona-driven consumption mindset."**
* **Gen Z has a better educational environment than us, and their aesthetic sense is stronger than the previous generation, so they are willing to pay for good looks.**

Do you agree with these statements? I believe all the above "new" characteristics of Gen Z are pseudo-characteristics.

First, the claim that Gen Z is more willing to pay for their interests—I, as a post-80s, don't agree. When I was a child, anime figures like Gundam weren't called figures; they were called toys.

At that time, my daily allowance was only a few cents. I would save up the money my parents gave me for ice pops and potato chips, and only by the end of the year could I buy a coveted toy.

Buying a Pop Mart figure on a whim versus saving for a year to buy a figure—who is more willing to pay for interests, me or Gen Z?

Hanfu, JK uniforms, and Lolita dresses—these "outlandish clothes" in our eyes are easier to understand. Because every young generation's power grab begins with rebellion in clothing.

For example, in the 1970s, "bell-bottom pants" became popular on Chinese streets, and those who wore them were called "hooligans" by the older generation. Seeing a girl in Lolita dress today is the same as seeing someone in bell-bottoms back then.

Saying Gen Z is more inclined to "persona-driven consumption" and "social consumption"—didn't the 60s and 70s generations have persona complexes?

Mothers who take photos at tourist spots like to drape a colorful silk scarf. How did that scarf become popular? Isn't that social seeding among mom circles?

If Gen Z uses Hanfu, JK uniforms, and Lolita dresses to build personas, then post-70s and post-80s women in Northeast China use mink coats to express status, and Shanghai women use cheongsams to confirm taste.

When a Gen Z girl posts selfies on her Moments, her mother posts her daughter's selfies on her own Moments. Gen Z is showing off their trendy persona, while the mother is showing off her "successful parent" persona. Everyone is showing off, just different things.

The claim that Gen Z has better aesthetic ability and believes "beauty is justice" is even more baseless. Don't the 60s and 70s generations care about "looking good"? I think it's not that the older generation doesn't care about looks, but their standards of beauty differ from yours.

You think cyberpunk is avant-garde; your parents think it's the decor of a car repair shop. Parents think European style is the highest-end decoration, while you think it's the standard for rustic homes.

No generation of children will ever agree with their parents' aesthetics, and no generation of parents will ever admit they are old.

As the Hedgehog Band sings, "A generation will eventually grow old, but there are always people who are young." There has never been a new demographic; there are only young people. Every new young cohort enters the public eye as "rebels."

**Marketing is not about seeing how the younger generation differs from us, but about finding where the old and new generations are the same. Grasping the commonalities allows you to grasp the pulse of youth. Otherwise, we are merely manipulated by trends.**

**New products?**
### **Is "good but not expensive" the new consumer product?**

Traditional consumer brands believe in "you get what you pay for," while new consumer brands pursue "good but not expensive." This is a creed touted by many new consumer products.

For example, Perfect Diary sells lipstick at 60 yuan per piece, while a big brand of the same quality sells for 200 yuan. Industry insiders know that cosmetics have a markup rate of about 10 times, while Perfect Diary's markup is about 2 times, and they often offer a second piece at half price.

Most consumer products follow the Xiaomi and Costco route, which is "extreme cost-performance," using profit concessions to win hearts. But traditional consumer products have maintained high markups for years, not just because of greed, but because only by selling at that price can the enterprise survive.

In fact, "extreme cost-performance" is the most powerful and also the most difficult business model. It's not just about setting a low price; it involves two things: **market scale and cost structure**.

**1. Market Scale**

Extreme cost-performance means "small profits, quick returns." Only when your sales reach a certain scale can you achieve real profitability. Xiaomi uses low-price strategies to disrupt various industries, not just to win hearts but to "clear the field."

When you use low prices, you need to consider one thing: after setting such low prices, can you form a monopoly advantage before the money runs out? Some industries naturally can, some naturally cannot.

For example, using low prices to sweep the liquor industry won't work. For alcoholic beverages, especially baijiu, consumers are not buying price but prestige. But industries like smart speakers and power banks can do it.

**In essence, achieving low prices is not about how ruthless the merchant is, but about bargaining power over the supply side.**

For instance, Miniso is a representative company of quality at low prices. Its cooperation with suppliers is a "buyout system," placing massive orders at once, thereby "diluting" production costs.

After Miniso "buys out" supplier orders, it gains greater leverage over suppliers. In Miniso's procurement agreements with suppliers, there are two very strict clauses:

**1. If quality issues arise, the supplier is permanently blacklisted, and Miniso has the right to withhold payment;**
**2. If prices are higher than other partners, cooperation is immediately terminated, and all orders are canceled.**

So, the key to a low-price strategy lies in "buying out supply," ultimately achieving "price control through volume" and "quality control through volume."

The problem with new consumer products is that the founders' experience and raised capital are insufficient to achieve scale effects within the required time. Without scale effects, they cannot control the supply chain and thus reduce product costs.

**True "extreme cost-performance" means reducing costs while lowering prices. Most new consumer products can only lower prices, not costs.**

**2. Cost Structure**

Price is the surface; cost structure is the essence.

Many new consumer products are cheaper than traditional ones because their current cost structure differs. Many new consumer products fail to account for two costs:

**One is channel construction fees; the other is brand advertising fees.**

Many new consumer brands started on Douyin, sell on Tmall and JD, and have sporadic offline channels. Traditional consumer brands' core sales channels are offline supermarkets, with Douyin shops, Tmall, and JD being a small revenue source.

Offline channel layout requires enormous time and money. Not only do offline stores charge basic fees like barcode fees, display fees, and salesperson fees, but you also need to recruit distributors and build a national sales force to truly succeed in offline retail.

Because traditional consumer products' revenue mainly comes from offline stores, and consumers' offline shopping mentality differs from online.

When we shop on Tmall, it's typically **"active consumption."** Generally, you only search for products and stores on Tmall when you want to buy something.

Offline shopping is more like **"random consumption."** At 3 or 4 in the afternoon, many girls want an afternoon snack, but they haven't decided what to eat. They go to the convenience store downstairs, browse, and buy whatever catches their eye.

This difference leads to different advertising and sales models.

Online, we can directly do "advertising to drive traffic," letting consumers see and buy immediately. But offline, advertising cannot transport you to the store.

When the store and advertising are separated, the role of advertising is to make consumers remember and recognize the brand—so-called brand advertising.

Because new consumer products' stores are mostly online, they rarely run brand ads, and even if they do, it's superficial and ineffective.

**Compared to traditional consumer brands, new consumer brands omit "channel construction fees" and "brand advertising fees" from their cost structure, so they can price lower. But when new consumer brands hit growth bottlenecks online and want to expand offline, problems arise.**

Because consumers are used to the previous low prices, they cannot raise prices. Thus, 90% of new consumer products, once entering offline, lack sufficient marketing budget and quickly become growth-stagnant. Plus, unfamiliarity with offline tactics leads to retreat.

### **New media?**
### **Is new media a privilege of new consumer brands?**

Douyin, Kuaishou, Xiaohongshu, WeChat, Bilibili... The rise of new media directly drove the wave of "new" consumption. This might be the closest to the truth among all attributions of "new" consumption.

But in fact, all new brands rise by using new media to overturn old media. Media shifts have always been strategic opportunities for new brands.

Let's look at a chart. It represents how brands in China over the past two decades leveraged media dividends to rise. The rise and fall of media is essentially the migration of user time. Whoever controls user time controls brand discourse.

**CCTV + local stations, representative client: Naobaijin**

Initially, CCTV had the highest ratings, and society's perception of brands was vague. In that era, brand equaled famous brand, and CCTV's "bid champion" was almost always the best-selling brand.

**Provincial satellite TV joint investment, representative client: Marubi**

"Glorious" CCTV gradually lost ratings to more entertaining and popular provincial satellite TVs. Provincial stations like Hunan TV became the target of brand owners.

For example, Marubi spent 270 million yuan to sponsor Hunan TV's Golden Eagle Theater, carving a bloody path in the fiercely competitive beauty market.

**Search advertising, representative client: medical**

In the PC internet era, the most lucrative advertising was search. Search ads' power lies not in higher traffic or effective payment models, but in attracting small and medium clients.

Because search is pay-per-click, small clients can "sustain warfare with warfare," using today's revenue for tomorrow's ad spend, turning ads into a transactional investment. Thus, Putian's small hospitals became Baidu's big ad spenders.

Not only commercial organizations, but even political organizations must fully exploit "new" media. Two examples: **the Civil War between the CPC and KMT, and the US presidential election.**

**How did the Red Army seize the "new" media position?**

During the Civil War, China's propaganda weapons were in the hands of the KMT. Newspapers were KMT's, radio was KMT's, and these media were in cities with strong KMT defenses, like having the enemy grip your throat.

At that time, there was no Weibo, WeChat, or Douyin. The Red Army discovered "wall ads" as new media. They loved painting walls. In Yanling County alone, a revolutionary base, the Red Army left 8,473 slogans!

These slogans included: "The poor don't fight the poor, soldiers don't fight soldiers, only when there's land to divide can the poor have food"; "The Red Army takes nothing from the masses"; "The Red Army is the army that finds food and clothing for the poor"...

These wall ads not only precisely reached the target audience but also were down-to-earth, making them instantly understandable and relatable.

It can be said that the Red Army used "new media" to break through the KMT's propaganda blockade.

**Obama's victory was essentially a victory of social media**

In 2006, Obama was an obscure senator, campaigning for the 2008 presidential election. He knocked on the door of Chris Hughes, co-founder of Facebook, hoping to promote himself on Facebook.

In spring 2007, Chris left Facebook and joined Obama's campaign team as head of online promotion.

Chris planned a series of online activities, having Obama give speeches and promote policies on Facebook, MySpace, and other social platforms. He quickly accumulated a large following and raised over $500 million in campaign funds!

In 2008, Obama became the first Black president in US history, defeating "Vietnam War hero" McCain.

At that time, Obama had 115,000 followers on Twitter, 23 times more than McCain! His YouTube videos got 140 million views daily, 4 times McCain's.

Both the Civil War and the US election tell us: seizing new media traffic is not new; it's a method all successful brands have followed. You cannot use this logic to define which brands are new consumer products and which are traditional.

**Many phenomena seem new only because we are ignorant of history.**

### **New channels?**
### **Do new channels bring new opportunities?**

Placing products on more shelves naturally leads to greater sales—that's the meaning of channels.

Many entrepreneurs from OEM backgrounds fail to realize: the core capability of a consumer goods company is never product making, but channel management and brand operation.

For consumer goods, if I must rank product, channel, and brand, I choose channel management.

Products can easily find OEM factories. Brands are very hard to do well, but even copying poorly is hard to make very bad. Only channel construction, whether offline supermarkets or e-commerce like Tmall, requires heavy asset investment to truly operate well.

The reason a bunch of new consumer products emerged in recent years is that the previously high channel barriers loosened.

Douyin, Xiaohongshu, self-operated e-commerce in official accounts, live-stream selling... The greatest value of these media-type channels is not advertising but providing "channel infrastructure" for new brands. As long as you upload a few product images and fill in basic info on the media's ready-made store pages, you can sell, with almost zero channel setup cost.

It can be said that the emergence of new channels is the biggest reason for the explosion of consumer goods entrepreneurship.

But the good and bad of a thing are like two sides of a coin. New channels offer convenience but also traps.

Coca-Cola's shelf position in Walmart is determined by how much it pays. If it pays more, the product is on the shelf at hand level; if less, it's on the top or bottom shelf.

But in Douyin's bidding information feed, no matter how much Coke pays, its shelf is always controlled by algorithms—the shelf is "mobile."

A "mobile" shelf has its benefits: it can find consumers with the most matching needs. But the downside is:

**A "mobile" shelf cannot cultivate stable shopping habits.**

We often say that the key manifestation of brand power is repurchase. How does repurchase occur?

Repurchase is when a brand induces consumers to form fixed consumption habits, and consumers subconsciously buy according to past behavior paths.

For example, I bought a bag of tofu cat litter on Tmall for my cat. The cat's experience was excellent, so when the litter ran out, I subconsciously opened Tmall's order history and bought two more bags. Gradually, my shopping behavior became "fixed" into a habit.

But such "behavioral domestication" cannot be achieved on Douyin, Xiaohongshu, or Viya's live-stream rooms. Because in media channels, the shelf is mobile, and a changing shelf cannot cultivate fixed consumption behavior.

**"Mobile shelves" and "random consumption behavior" lead to one result:**

**Market sales growth cannot lead to market monopoly.**

Traditional channels are the opposite. Shelf positions are fixed; if Coca-Cola is on a shelf, it won't be replaced by Pepsi the next second. So, as consumer brands occupy more shelf space, sales grow while simultaneously kicking out competitors.

For example, in Siping City, Jilin Province, there's a beverage company called Hongbaolai, mainly selling peanut milk, old soda, and juice. It's the local powerhouse in Jilin. How strong is this local tyrant? Take peanut milk as an example.

Peanut milk has been dominated nationally by Yinlu. Yinlu has a huge brand advantage over Hongbaolai and an advertising budget dozens of times higher. But in Jilin Province, Yinlu can't penetrate at all; the peanut milk market is entirely Hongbaolai's.

It can be said that Hongbaolai achieved regional market monopoly purely through channel monopoly. If you can't monopolize shelves in channels, competition among consumer goods will be endless. Competition erodes profits, brands never have pricing power, and thus never truly profit.

Few new consumer brands truly understand this. Among them, the more rational is Genki Forest. At the start of its entrepreneurship, Genki Forest had already begun systematically entering offline channels.

China's largest consumer goods shelves come from inconspicuous mom-and-pop stores, commonly known as "small shops." There are 6.3 million of them in China, and over 70% of Chinese consumer goods giants' business comes from these channels.

To do consumer goods in China, if you don't understand these sales networks in lower-tier cities, you can't understand what consumer goods business is.

New consumer brands must remember: **These new channels are just a springboard for your cold start; don't mistake the springboard for a lifebuoy. Even if you release the springboard's maximum elasticity, you can't jump to the other side of the river.**

New demographics, new products, new media, new channels—since all the "newness" is fake, what does the "new" in new consumer products actually mean?

I believe **new consumer products can be called new only if their "growth-driving method" differs from traditional consumer products.** If new consumer products haven't found a new growth-driving method, all other "newness" is just surface.

**Are you "watching" me?**


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