---
title: "The Secrets Behind the Rise of Consumer Brands Lie in These Three Things"
description: "After three years of the pandemic, the common challenge for enterprises is how to lead quickly during economic recovery. The rise of Chinese brands presents both opportunities and challenges, and the key to success lies in innovation, communication, and focus, as demonstrated by brands like Junlebao, Jinmailang, and Luckin Coffee."
author: "节点财经"
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published: "2023-03-27"
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# The Secrets Behind the Rise of Consumer Brands Lie in These Three Things

> After three years of the pandemic, the common challenge for enterprises is how to lead quickly during economic recovery. The rise of Chinese brands presents both opportunities and challenges, and the key to success lies in innovation, communication, and focus, as demonstrated by brands like Junlebao, Jinmailang, and Luckin Coffee.

**Text** | Wuzhou **Published** | Node Business Group

After three years of the pandemic, a common challenge left to enterprises is: "How to achieve rapid leadership during the economic recovery phase?" At present, the starting gun for economic recovery has been fired. At this year's local two sessions, most provinces set their 2023 GDP growth targets between 5% and 6%, and made expanding domestic demand and stimulating consumption the primary means to achieve growth. "Roll up your sleeves and work harder" has once again become a slogan. Against this backdrop, how can rising domestic brands cope with the many challenges of the new environment and leverage the opportunities of economic recovery to achieve leapfrog growth is a question worth pondering.

**In the Wave of Domestic Brand Rise**
**Opportunities and Challenges Coexist** The rise of domestic brands has become an unstoppable trend of the times. According to the "China Consumer Expectation Index Report" released last year by the Chinese Academy of Macroeconomic Research's Institute of Industrial Economics and Technological Economics, Xinhua News Agency New Media Center, and Focus Media, more and more domestic brands are being sought after by consumers, and the guochao economy has become an important engine driving social and economic development and upgrading. During last year's "Double 11," among the 102 brands with transaction volumes exceeding 100 million yuan in Tmall's first round of promotions, domestic brands accounted for more than half. These brands include not only traditional guochao brands like Li-Ning and Bosideng, but also rapidly rising new domestic brands such as Winona, Genki Forest, Luckin Coffee, Xiaoguan Tea, and KONGCAO. In short, the substitution of domestic brands for imported brands is accelerating. Professor Zhong Hongjun from Shanghai University of Finance and Economics believes that the rise of domestic brands is a combined result of the overall improvement of domestic manufacturing innovation capabilities and the confidence of the post-90s and Gen Z in local cultural consumption. In this wave of domestic brand enthusiasm, opportunities and challenges coexist; more brands fail to handle continuous product innovation and brand breakthrough, ultimately becoming fleeting. CBNData statistics show: "70% of hit products in the Chinese consumer market have a survival cycle of less than 18 months." **The rapid birth and death of these hit products is related to the market environment shifting from an incremental market to a stock market.** Currently, the domestic market faces five major challenges: first, the demographic dividend has disappeared; last year, China's total population decreased by 850,000, and society has entered a transition period from demographic dividend to talent dividend; second, the traffic dividend has ended; as early as 2018, China entered the second half of the internet, and in 2022, the number of internet users was 1.051 billion, with an internet penetration rate of 74.4%, basically reaching the ceiling excluding the elderly and children; third, offline physical traffic has been halved; fourth, the dividend of traditional e-commerce is no longer; fifth, the traffic monetization capability of interest-based e-commerce has weakened. Under these five challenges, the internet-famous brands that relied purely on buying traffic suddenly found it difficult to sustain; they discovered that the ROI of performance advertising eventually became inverted. This phenomenon is understandable; just look at the increasing customer acquisition costs of internet platforms to know that the return on investment for buying traffic will only get lower. Data shows that in 2012, Weibo's customer acquisition cost was 11 yuan, and by 2020 it became 595 yuan; Kuaishou's customer acquisition cost in 2018 was 31 yuan, and by 2021 it became 139 yuan; Pinduoduo's customer acquisition cost in 2019 was 160 yuan, and by the first three quarters of 2021 it became 432 yuan... These customer acquisition costs, which often multiply several times, will undoubtedly be passed on to advertisers. Once your product's repurchase rate cannot keep up, buying traffic is like climbing a tree to catch fish. There is a vivid metaphor: "Buying traffic is like fishing; building a brand is like raising fish. If you don't raise fish, the fish will only get fewer and fewer, and fishing will become more and more tiring." So how to raise fish? Simply put, it is to build a brand, establish consumer trust, and reduce transaction costs. This is also a commonality we have found in many domestic brands that have grown up. In the past few years, those companies that have built strong brands have not only achieved counter-trend growth in performance, but their brands have further deepened their occupation of consumer mindshare. How did they do it?

**The Proven Brand-Building Combination** A study by Kantar found that during the three-year pandemic, the MSCI China Index fell by 32.3%, while the China Top 100 Brands grew resiliently by 1.6%. If the time frame is extended to the past twenty years, these two indicators were 20% and 170%, respectively, a gap of 8.5 times. This huge contrast indicates that "when the traffic dividend disappears, high-quality brands are the core guarantee for crossing cycles."

If macro data only gives a glimpse, then specific micro-level operations at the enterprise level are impressive. Junlebao, Jinmailang, Dongpeng Beverage, Luckin Coffee, Talanis, KONGCAO... **The leapfrog growth logic of these enterprises can be summarized in three words: "innovation, communication, and focus."** In terms of innovation, whether it is Junlebao's Jianchun yogurt, Jinmailang's boiled water, Talanis's "fashionable children's shoes," KONGCAO's pasta, or Daily Dark Chocolate's "oat milk dark chocolate," the common approach is to innovate a new category. For the consumer goods industry, often the technological barriers are not that strong; the real innovation is category innovation, which is the ultimate innovation and the easiest to succeed.

However, after completing the most important step of category innovation, domestic brands still face the challenge of achieving high-quality communication and occupying consumer mindshare. **Facing this confusion, these brands gave a "consistent answer": choosing "three-high media"—that is, media with "high coverage, high quality, and high influence."** Simply explained, high coverage means high consumer reach and long consumer contact time; high quality means high consumer attention and high consumer memory; high influence means high consumer purchase conversion intention. Kantar's "2021 China Urban Residents' Advertising Attention Study" conducted data statistics based on these three dimensions. The statistics found that internet, elevators, and television are the three core reach media, covering the mainstream urban population most widely, with internet reach at 95%, elevator reach at 79%, and television reach at 51%. In terms of advertising attention (high quality), consumers have higher attention to advertisements in limited living spaces, such as elevator ads and cinema ads, with active attention at 45% and 64%, respectively, and the least interference. Due to high-frequency exposure, consumers remember the most ads from elevator media, social media, and short videos, with 3.29, 2.48, and 2.14 ads, respectively. However, due to the "near-field effect," offline media such as elevators and cinema ads drive stronger purchase intention for brands. **Kantar, combined with the research that the optimal ratio of brand building and traffic harvesting is 5:5, concluded that "WeChat, Weibo, Douyin, and Focus Media are the most effective paradigm for brand building."** Among the aforementioned domestic brands, all without exception chose "WeChat, Weibo, Douyin, and Focus Media" as their media mix, especially long-term cooperation with Focus Media. According to Frost & Sullivan's research report, in terms of the number of building media points, Focus Media ranks first, and ranks first in both office buildings and residential buildings, with a market share far ahead of the sum of the 2nd to 5th competitors by 1.8 times; in terms of the number of elevators covered, Focus Media ranks first in both office buildings and residential buildings. As a representative of high-coverage, high-quality, and high-influence scenario media, Focus Media's sales-driving effects and consumer behavior change effects provide strong assistance for brand growth. After initially achieving brand breakthrough through "three-high media," the next key test for domestic brands is "how to achieve sustained growth under limited resources?" Lu Xiujuan, global expert partner at Bain, suggested that companies should return to brand value and achieve three focuses and three reductions—namely, "focus on core business, reduce long-tail products; focus on brand value, reduce traffic dependence; focus on consumer behavior change, reduce ineffective advertising."

First, focus on core products and reduce long-tail products. Bain's analysis of more than 30 leading companies in the consumer goods industry found that "core business typically contributes more than 90% of a company's profits." It is not hard to understand that Coca-Cola cut more than 200 brands in the past three years, and after reducing its total business lines by nearly 50%, its profits actually grew faster. Dongpeng Beverage believes that for more than a decade, the company has focused on the slogan "Tired and sleepy, drink Dongpeng Special Drink," and has achieved remarkable results. Financial report data shows that during the three years of the pandemic, Dongpeng Beverage's revenue increased from less than 5 billion yuan to over 7 billion yuan, and net profit doubled. Second, focus on brand value and reduce traffic dependence. Usually, traffic is the first step for a new brand to start, but when the brand reaches a certain scale, continuing to rely on traffic growth can easily fall into the situation of "the more you fish, the fewer fish there are." The hair removal brand Ulike encountered a similar problem. In 2020, Ulike achieved 1 billion yuan in revenue through early word-of-mouth and traffic buying, but then the ROI of traffic buying became inverted, and the company's revenue stagnated. At that time, Ulike switched to a brand-driven "fish farming" model, starting to heavily advertise brand ads on Focus Media. That year, the company firmly established itself as the leader in the hair removal industry. In 2021, revenue grew to 2.5 billion yuan, and in 2022 it exceeded 4.5 billion yuan. As of June 2022, Ulike had been ranked first in Douyin's hair removal market share for 14 consecutive months, with a market share exceeding the sum of the 2nd to 5th place combined. Finally, focus on behavior change and reduce ineffective advertising. The purpose of all communication activities is to change consumer behavior, but this task has become difficult in today's information-saturated communication environment; consumers find it hard to remember a brand's name, let alone its positioning. However, research has found that high-frequency exposure of more than 10 times can establish new cognitions and behaviors. This phenomenon also has solid theoretical support. In his book "Thinking, Fast and Slow," Daniel Kahneman mentioned that "a person's decisions are 90% fast thinking and only 10% slow thinking." Here, fast thinking refers to intuitive reactions, and slow thinking refers to systematic rational thinking. That is to say, most consumer choices are made subconsciously. This makes it essential for brands to choose media that provides high-frequency exposure and high-quality reach, using repetition to combat forgetting.

**Why Is Brand the Perpetual Motion Machine for Domestic Brands to Break Through?**

The above cases of domestic brand rise all share a commonality—building the brand. Junlebao Chairman Wei Lihua said, "Innovation is the sword for enterprises to break through competition, and brand is the moat for enterprise longevity." Jinmailang Chairman Fan Xianguo said, "The law of survival of the fittest for enterprises is the competition of two occupations: occupying the mind and occupying the market. Occupying the mind relies on innovative categories and brand building; occupying the market requires channel construction." In fact, it is through continuous investment in brand assets that they have become the number one in their respective categories and continue to achieve rapid performance growth. Why is the brand-driven "fish farming" model so effective? Node Finance believes there are at least two major reasons. First, **"brand brings its own traffic."** Kantar research data shows that 70% of enterprise sales are contributed by brand assets, and 30% by promotions and traffic buying.

This is deeply felt by Daily Dark Chocolate. When Daily Dark Chocolate was ignited through Focus Media to become the "number one dark chocolate," its Baidu search index increased by 926% year-on-year, all-channel sales increased by 300% quarter-on-quarter, and free traffic rapidly increased. Second, it forms **"intangible assets."** Once brand mindshare is established and consolidated, over time it forms intangible assets. Intangible assets in the consumer field are similar to protected patents and intellectual property in the technology field. Once established, they keep competitors at bay. **When Buffett bought Coca-Cola stock, he mentioned that due to the huge brand assets, Coca-Cola's stock price should include a certain "economic goodwill" above its tangible value.** That is to say, building a brand not only helps enterprises break through revenue bottlenecks but also enhances the valuation premium of enterprises in the capital market.

**Summary:** The rise of domestic brands is unstoppable. For entrepreneurs to ride the waves and achieve leapfrog growth, it is crucial to grasp the key contradictions and manage the causal relationships. In Node Finance's view, this key contradiction mainly refers to innovation, focus, and communication, all three of which are indispensable. The ultimate "result" is to create a unique brand mindshare in consumers' minds, which also requires entrepreneurs to be fully attentive to the cause of brand building. Because the brand is both the "root" and the "source"; without roots, a tree cannot grow into a towering one, and without a source, rivers and seas cannot form.


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