Click 'Read Original' for details Dickens said, "It was the best of times, it was the worst of times." This phrase is perfectly suited to the current consumer goods industry: on one hand, users' demand for good products is irreversible, with increasing requirements for product quality, design aesthetics, brand value, and functional traceability. It is the huge gap between new demands and old products that gives new brands room for innovation—an opportunity given by the times. On the other hand, the economic downturn and the pandemic have led to weakened economic vitality, resulting in sluggish consumption, intensified competition in the existing market, and slowed investment confidence, posing severe challenges to the survival and development of consumer goods companies, especially new brands, this year. YuanNeng Sports Drink was born in such an environment, fully committed to exploring the process from 0 to 1. What is 0 to 1, and how to define it? The so-called from 0 to 1 starts with thinking from scratch, such as track selection, product planning, and definition. Through the implementation and initial operation of the solution (product), it explores a small-scale, replicable, and basically scalable profitable business model. The process from 0 to 1 is a process where the solution (product) continuously aligns with meeting needs. The clearer the understanding of actual market demand, the faster the solution iterates with the re-understanding of demand. The process from 0 to 1 is also a process of exploring and establishing the distribution of interests in the product circulation chain. Building a community of interests with ecological partners in the circulation chain is a prerequisite for achieving basic scale. The process from 0 to 1 is also a process of forming and building productivity within the organization, where agility and pioneering spirit are continuously tested to form a relatively appropriate organizational structure. Overall, 0 to 1 is a process of continuous trial and error in the right direction, and completing 0 to 1 in a short time is the only way for every new brand. For this path, I set a core principle for YuanNeng: focus. Focus seems easy, but it is not easy to achieve. What does business focus include, and how to operate it? Let me share what YuanNeng is currently doing. When talking about focus, it is important to emphasize that it is under the premise of correct category selection. If in the stage of category innovation or selection, over-focusing may bring the opposite result, i.e., the more effort on the wrong path, the more failure. 01 Focus on People and Mind When talking about business focus, many friends and even industry experts first mention market focus or product focus, but I think the most important is the focus on people and the attack point of brand mind. Take the broad sports drink category that YuanNeng is currently deeply cultivating as an example. This category is mainly divided into three sub-categories: nationally defined sports drinks represented by Gatorade (when claiming "sports drink" on the bottle, it must meet national standards for content), electrolyte drinks mainly represented by Pocari Sweat, and vitamin drinks mainly represented by Mizone. When YuanNeng chose the sub-category of sports drinks, it adjusted from the electrolyte drink of the 1.0 product (also our Demo version) to the nationally defined sports drink category of the current 2.0 version. The core logic is to converge people and mind, and in the 0 to 1 stage with limited resources, reduce user communication costs and leverage the efficiency of seizing the existing market through typical sub-category affiliation. Packaging iteration from electrolyte drink to sports drink 02 Focus on Solution (Product) 1) Stay focused on the sports category Deepening the category in a trend is the most effective way to dig gold mines. Although the era of winning with a single SKU is hard to reproduce, the differentiation of regional cultural characteristics and user personalization directly lead to the need for more products under the brand dimension to cover different types of users. In the future, we will further label sports people and develop other products under the sports category based on these characteristics, forming a sports drink product matrix with existing products to meet the needs of different sports people. For YuanNeng, deepening the category is also our team's advantage. The main founding members mostly come from JDB, who were co-creators of the herbal tea empire. We will adhere to the method of deep category to build YuanNeng into a leader of the new generation of sports drinks. 2) Focus on mainstream flavors to reduce trial-and-error risk 0 to 1 is a process of continuous trial and correction. In terms of product flavor, Genki Forest has taken a completely different path from other beverage companies in recent years by using internet user thinking. However, this method of launching multiple flavors to the market for testing requires large financial support, which is difficult for other startups to replicate. Therefore, for startups, to reduce the risks that may arise in 0 to 1, it is wiser to directly choose flavors with high market acceptance for product development. Thus, YuanNeng chose coconut and lychee as the first flavors. 03 Market Focus Market focus mainly includes two aspects: scene (and its channel) selection and regional focus. 0 to 1 is a trial-and-error stage of product-market fit. In most cases, a product just born from an idea is difficult to perfectly meet the needs of the target group in terms of content flavor, packaging, selling point hierarchy, visual presentation, etc. This requires us to quickly correct the subtle differences between demand and product in various dimensions. Focusing on sales in core scenes is key to improving correction efficiency. At the same time, from the perspective of brand momentum, focusing on sales in core scenes is good soil for the formation and growth of seed users. Only with the foundation of seed users can there be the possibility of breaking the circle in the future. As a newborn new-generation sports drink, YuanNeng focuses on sports and school scenes, especially multi-person/team competitive sports venues such as basketball, badminton, and football. Sales in core scenes have already helped YuanNeng get feedback from seed users on taste, selling point extraction, packaging, etc. Based on this feedback, we are and will continue to make micro-iterations to the product to make it more in line with the purchase and use expectations of sports people. In addition, China has a large population and high demand for beverages. The urbanized population structure leads to a large beverage market capacity per city. In the early stage of product launch, almost any first- or second-tier city can become a city with sales exceeding 10 million. Instead of spreading resources thinly across multiple markets, it is better to concentrate firepower on a few cities and build a base on this basis, forming seed users, cooperative customers, and core organizations, and creating a replicable and exportable model. YuanNeng currently uses Shenzhen, Guangzhou, and Changsha as model markets. Shenzhen has many young white-collar workers; Guangzhou has not only a large number of young white-collar workers but also over one million college students; Changsha, as a representative second-tier city in recent years, has a young population with high acceptance of new products. Choosing these three cities as model markets for focused investment in the 0 to 1 stage, we expect to form strong brand momentum and sales performance within 1-2 years, and on this basis, evolve and iterate different products for segmented groups. 04 Focus on Tactics Tactics, in a macro sense, refers to business operation methods; in a micro sense, it refers to marketing strategies. Here, we mainly talk about the latter. When a product just comes out, focusing on core scenes helps us find seed users, but how to sell the product to core scenes, how to form sell-through after distribution, and how to ensure continuous restocking by terminals... These are the marketing strategies. In the 0 to 1 marketing strategy for beverages, under the established brand positioning, it mainly includes two aspects: channel development and maintenance, and product sell-through and continuous repurchase. Channel development and maintenance, especially for new brands without offline experience, often leaves operators at a loss, not knowing where to start. To sell your product to target outlets, from the channel perspective, at least several elements are needed: retail price, gross margin, stability of channel gross margin, market operation strategy and thinking, and dealer customer fit. It is very complex to explain channel expansion clearly. Here, I will simply summarize the logic: in category competition, what are the differences in product strength between our product and competitors, whether the difference in retail price objectively reflects the difference in product strength, whether the gross margin for different levels of channel customers is advantageous compared to competitors, and whether the operator's channel layout ability can allow participants to obtain stable gross margin in the long term (customer confidence in operation). Behind these questions are the operator's strategic thinking and execution, which are the confidence of all customers in operating this product. Product sell-through and continuous repurchase are the key to whether the company can make money and whether cooperative customers can truly make money. It is not difficult to distribute products to terminal outlets; the difficulty is to form sell-through and continuous repurchase at the terminal. The tactic that Wanglaoji used, combining scenario-based deconstruction with ground actions, is very applicable to new products in deeply operated categories. YuanNeng is currently reusing this method and hopes to bear fruit in the near future. 05 Customer Focus Customer focus refers to selecting customers who have advantages in terminal outlets under these scenes and are willing to grow with new brands, based on our core scenes. In recent years, with the increase in consumer purchasing power, diversified consumption demands and purchase methods, and rising operating costs, the retail format has undergone profound changes, and various sub-channel dealers have emerged in the beverage industry. For YuanNeng, focusing on long-term good cooperation with these customers is the starting point and foundation for business development. The above is what YuanNeng has thought and done in the process from 0 to 1. We have just started, and there are still many things unclear and not done well. On the road of YuanNeng's continuous growth, we hope to have your support. In the cold winter, we encourage each other; in the heat, we strive forward. Thank you! Hu Hao, founder of YuanNeng Sports Drink. He served JDB and Alibaba for many years, proficient in deep distribution and category cognition building. -END-