In recent years, a large number of excellent innovative brands have emerged in the consumer goods industry, such as Panda Brewing, Master Gao, Genki Forest, Zihaiguo, Hi Jiajia, Single Grain, Zhong Xuegao, and Egg Full. Unlike traditional brands, these innovative brands did not follow the traditional marketing model of advertising on TV and recruiting distributors offline; instead, they used entirely new marketing models to reach the market and quickly gained consumer awareness and recognition. This was rare in the past. Analyzing the reasons, the competitive barriers of traditional enterprises came from the construction of the three marketing forces (product force, brand force, and channel force), through which enterprises built an efficient, low-cost marketing system via mass production, mass communication, and mass distribution. This scale barrier was extremely difficult to build and break in the past, but judging from the development paths of these innovative brands today, it seems that these scale barriers are disappearing. The advantages of big brands are no longer what they used to be, the marketing skills of traditional marketers have become ineffective, and the underlying logic of marketing in the entire consumer goods industry has undergone structural changes. The structural changes in marketing come from three levels:
Marketing resources are oversupplied; product, communication, and channels are no longer scarce resources.
Changes in user cognition: trust endorsement shifts from the brand side to the channel side.
New technologies and infrastructure improvements drive an exponential increase in the efficiency of new marketing.
-01- Let's first discuss the first level: the oversupply of marketing resources. 1. Communication resources are oversupplied, and brand barriers disappear: In the past, the threshold for enterprises to place advertisements in the media was actually very high. For example, in 2005, if an enterprise wanted to place a 5-15 second advertisement during the prime time after the CCTV News, the starting bid for a single broadcast was about 200,000 to 230,000 yuan. For continuous broadcasting for one month, the investment was about 6 to 7 million yuan, and for a year, the cost was at least nearly 100 million yuan! Even so, it was hard to get a slot, and enterprises had to queue up for competitive bidding. In 1998, for the most influential newspaper in Shanghai, Xinmin Evening News, if you wanted to place a quarter-page advertisement, the single-time cost was 160,000 yuan, and the premise for placement was that the content of the advertisement met the requirements, and the effect was not guaranteed. Therefore, before the advent of the internet, enterprises without strength were not qualified to place large-scale advertisements on TV and in newspapers for a long time. Moreover, this kind of placement was essentially a gamble. If successful, the brand would become famous overnight; if unsuccessful, the enterprise might go bankrupt. Think of Prince Milk, Xurisheng, Qinchí, and Sanzhu Oral Liquid from those days. Of course, there were also many successful brands that basically became household names across the country through this path. Today, the threshold for enterprises to place advertisements has been greatly lowered. Even with just 100 yuan, you can place an advertisement on Toutiao, and you can choose who sees it, and you can even pay per click. Furthermore, you can even spend no money at all and simply post a message on your Moments to spread information. In the past, communication resources were concentrated and scarce; now they are fragmented and oversupplied. This means that what only large enterprises could do in terms of nationwide media communication can now be done by anyone. The oversupply and fragmentation of media resources have eliminated the barriers to communication. This has created opportunities for small brands to start businesses, especially in consumer goods, where media is the core of marketing. So when the threshold for communication is lowered and media resources are no longer scarce, small brands have the opportunity to leverage fragmented communication resources to promote their products.
2. Channel resources are no longer scarce, and barriers disappear: In the past, brand owners sold products to consumers nationwide by getting their products onto the shelves of millions of retail points across the country. However, the operating area of a single supermarket is limited, and shelf resources are scarce. To place your products on limited shelves, you had to face strong resistance from competitors. In the past, there was a very important term in marketing at the channel level: "channel is king," meaning that whoever can control the terminal shelves and lock in the terminal and whose products have better displays and more attractive packaging on the terminal shelves can decide what consumers buy. We saw the five major beer giants in the catering channel achieve the suppression of small and medium brands through large-scale store acquisitions, essentially monopolizing limited channel resources to gain competitive barriers and thus complete market consolidation. However, there are about 12 million catering and retail terminals in China, which means that consumer goods companies must build a very large distribution system. If you do not have a very strong terminal sales service team as support, you simply do not have the opportunity for large-scale display at the terminal. This requires very strong organizational management capabilities. This organizational management capability itself is also a management barrier for enterprises. Today, an entrepreneur who wants to launch a new product only needs a few people to open a store on Taobao, Tmall, or JD.com, and after completing the transaction, the product can be quickly delivered to consumers via express delivery. This means that new entrants do not need to build a large sales team or make huge investments in terminals to complete large-scale sales of products. The emergence of online e-commerce has made channel resources no longer scarce. The efficient system of e-commerce plus logistics can help small and medium enterprises instantly complete transactions and deliveries without having to compete with big brands for limited offline shelf space. So, the pain point for big brands today is that the competitive barriers they built on channel advantages are no longer advantages. In other words, the channel is no longer king.
3. Product barriers are lowering Not only communication and channels, but the threshold for product production is also significantly lowering. For example, before 2014, if a startup wanted to produce diapers, purchasing a production line would cost at least $20 million, so this industry was always a game for big companies. After 2015, the cost of a production line with the same capacity dropped to $2 million per line. New technologies made diaper production almost as easy as cooking at home. As a result, we saw a large number of entrepreneurs flood into the maternal and infant industry. Diaper brands blossomed everywhere after 2015 and quickly distributed through social e-commerce channels, forcing international giants to lower their noble stance and engage in price wars with these small brands. Not only diapers, but with technological progress, almost all consumer goods production equipment is moving towards miniaturization and intelligence, with prices dropping significantly, and increased production flexibility and customized flexibility, allowing entrepreneurs to produce quickly in small batches at low cost. This means that the large factories and equipment of big brands cannot flexibly and quickly meet consumers' changing and picky needs like small brands can. Innovative brands, through low-cost rapid production and iteration, gain a relative competitive advantage through their flexible posture. The barriers of large enterprises are built on the occupation of scarce resources. When these marketing resources are no longer scarce, or even oversupplied, large enterprises find it difficult to transform in a short time when facing structural changes in the industry, giving small brands the opportunity to overtake on the curve.
-02- Let's discuss the changes in consumer cognition: As mentioned earlier, in the past, marketing resources were scarce, and information between manufacturers and consumers was essentially asymmetric. For consumers, they could only choose to trust big brands. After obtaining information, because transactions needed to be delayed, consumers had to remember brand information. But people's mental resources are limited; in each field, they can only remember the first and second. So marketing at that time focused on how to influence consumer cognition and memory. Whether it was slogans or positioning theory, the goal was to improve advertising efficiency and make consumers remember with one sentence, like "Afraid of getting heaty? Drink Wanglaoji." When consumers go to the supermarket, they would prioritize buying brands they remember. But today, when consumers see information, they can place an order immediately without delay. Moreover, faced with massive amounts of information, people's memory becomes very short. If consumers cannot place an order immediately after seeing something, they will quickly forget it. E-commerce allows products to be displayed in excess. Consumers have become "smarter," paying more attention to quality and cost-effectiveness. However, online information retrieval is difficult, and consumers have to spend more time distinguishing and comparing products. To save time, consumers will first look at other users' purchase and usage reviews, KOLs, or word-of-mouth from friends. The reason why Li Jiaqi and Viya's live streams are so popular today is essentially because this recommendation model helps users save a lot of time and helps them "bring down" the price of good products, reducing users' cognitive costs. The underlying logic is that the endorsement of user trust has changed. Recommendations from friends, family, and KOLs are far more effective than advertising. Therefore, enterprises must provide consumers with better quality products, more convenient services, and better brand reputation to win consumer favor.
-03- Let's discuss the structural changes brought by new technologies and infrastructure improvements: China's mobile network is unrivaled globally. Advanced communication infrastructure greatly enhances the efficiency of connections between people, people and information, and people and products. Now you can sit at home, pick up your phone, and connect to anyone in the world, or buy any product on sale globally. Moreover, China's rural transportation infrastructure has further improved, and logistics efficiency between urban and rural areas has greatly increased. Even if you are in a remote rural area of China, it does not affect Li Ziqi becoming a world-class internet celebrity. In the past, when we did marketing, we liked to talk about first- to sixth-tier markets. In fact, today's market is already a binary, or even a unary market. So we see that when many big brands encounter growth difficulties, the first thing they think of is market sinking. There are no physical obstacles to sinking anymore. Therefore, in the future, the Chinese market will definitely be an integrated super market. However, the efficiency improvements in connections between people and information brought by the internet will inevitably lead to a fragmentation of Chinese consumer demand, which will also inevitably lead to brand diversity and unprecedented prosperity.
How should brand owners reorganize their marketing models to adapt to today's market changes? I believe that an enterprise's marketing barriers must be built on the effective occupation of scarce resources! Based on this, I believe that the traditional marketing force triangle must transition from the traditional product force, channel force, and brand force to product force, connection force, and operation force!
1. Product Force: The basic premise of marketing work Undoubtedly, you must make product quality the first element of word-of-mouth. In recent years, a large number of new products have emerged on e-commerce platforms. From a cost perspective, the cost structure has changed a lot. Take Genki Forest, which has been particularly popular in recent years, as an example. This product uses a sweetener called erythritol, which is extracted from corn stalks. It is a natural sweetener with zero calories and is very healthy. Its sweetness is 60%-70% of ordinary sucrose, but its price is 6 times that of sucrose. Coca-Cola Zero, for example, uses aspartame as a sweetener. Although its price is about 18 times that of ordinary sucrose, its sweetness is 200 times that of ordinary sucrose. This means that if white sugar sweetness is the standard, under the same volume and sweetness, the cost of aspartame is only one-tenth of sucrose, but the cost of erythritol is 9 times that of sucrose! However, many consumers do not look at the ingredient list when buying products. To make Coke affordable for more people, they have to lower the selling price by reducing raw material costs. But Genki Forest insists on using this raw material even if it means selling the product at a higher price. The tea polyphenols in Ran Tea are many times that of ordinary tea. To maintain this concentration, Ran Tea only soaks the tea leaves once during extraction. Tang Binsen once talked to me about his product philosophy: if the company's own employees don't drink a product, then don't make it. Not only Genki Forest, but also Lin Sheng, the boss of Zhong Xuegao, shared at the New Distribution conference that if a product cannot be given to your own children to eat, then don't make it. In the past, enterprises spent 80% of their energy and time on promotion, and the product was not the most important; now, you must spend 80% of your energy on the product itself, and promotion becomes less important because a sufficiently good product will naturally bring organic traffic through user word-of-mouth.
2. Connection Force: Marketing actions must shift from selling to recommending In the past, marketing was about selling; now, marketing is about recommending. Selling is a persuasive action towards consumers, while recommending is a satisfying action towards consumers. If a product can be recommended by KOLs, internet celebrities, and friends, then the premise for recommendation is that the product's quality, packaging, and service satisfy the user. The social fission effect brought by social networks, KOL+KOC, can exponentially expand the product's reputation and concept through social media. The ability of consumers to discover product power is far greater than your own promotional ability. When a good product and a bad product are launched at the same time, the results in this era will be fundamentally different. The underlying traffic logic has changed. In the past, traffic came from purchasing actions; now we need to lay the pipes and wait for traffic to come like tap water. So we need to go back to the basics and think: Why do consumers recommend your product to friends? Why do they like, comment, and share your product? Why do many KOLs and KOCs voluntarily promote you without pay?
3. Operation Force: From traffic to retention, build a continuous deep relationship with users In the past, in an incremental market with scarce resources, once you became the first in a category, big brands could earn more profits through scale. So the core of doing business for consumer goods companies at this stage was to grab: grab traffic, grab terminals, grab mindshare. But today, the market has become a stock market, and incremental growth has disappeared. If brand owners still focus on acquiring traffic as the core marketing work and neglect managing users, once consumers are dissatisfied with your product or service, they will immediately find alternatives. Today, technology makes it easy for enterprises to reach users, but retaining users is very difficult. The ability to build a continuous deep relationship with users will be the real core barrier for enterprises in the future. Let's go back to the basics again: What reasons can make users continuously consume our products? Where does user loyalty come from? If in the past consumer loyalty came from trust in the brand, then today consumer loyalty must come from something higher than brand trust. Is it continuously exceeding expectations? Or resonance with brand culture and values? In the future, consumer needs will change faster and faster, and it will be increasingly difficult to continuously meet their needs. As an enterprise, it is impossible to satisfy whatever consumers need; we must lead consumers' consumption habits, lifestyles, and values. This means that our products must be built on the basis of partial consensus of diverse cultures, and through efficient connection and continuous operation capabilities, we must build a continuous deep relationship with users. Tang Binsen believes that marketing solves the problem of new acquisition, and only truly good products can solve the problem of retention. I particularly agree with Tang Binsen's sentence: The product with the strongest new acquisition capability in China is Tiananmen; everyone wants to go once, but no one wants to go a second time; from a mathematical perspective, what truly solves long-term user growth is retention, not acquisition. So, when doing marketing, we must focus on retention, not acquisition. Li Jiaoshou once expressed a viewpoint: In this era, black swan events are more likely to attract people's attention, but what truly affects this era is often the gray rhino, which seems slow but has a huge and unstoppable impact. We must learn to find certain ways of doing things in uncertain times. We must build our capabilities on things that do not change, rather than doing group buying when group buying is hot, and doing live streaming when live streaming is hot. In fact, what enterprises should do most is to make truly good products that make users scream.
| Founder of New Distribution FMCG industry channel expert, author of over 400,000 words of FMCG industry research articles For communication, you can add WeChat by long-pressing. When adding, please indicate your company, position, and name. If a tip is adopted, a reward of 400-2000 yuan will be paid.