--- title: "There Is No Such Thing as a 'Traditional' Industry, Only Brands Needed in the Information Age" description: "Why are traditional brand giants like P&G declining, while brands in 'traditional' industries like Three Squirrels are rapidly rising? This article explains the survival logic of brands in the information age. The decline of traditional brand giants: P&G, a master of traditional branding, has seen sales remain dismal despite strategic transformations. In fiscal years 2015 and 2016, annual sales fell by 5% and 8% respectively, with all four quarters of fiscal 2016 declining year-over-year, and the first two quarters of fiscal 2017 only roughly flat." author: "漩涡" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2017-10-13" language: "en" canonical: "https://xinjignxiao.com/en/articles/there-is-no-such-thing-as-a-traditional-industry-only-brands-needed-in-t-7fc49af9/" markdown: "https://xinjignxiao.com/en/articles/there-is-no-such-thing-as-a-traditional-industry-only-brands-needed-in-t-7fc49af9.md" original_source: "https://mp.weixin.qq.com/s/aqBriTVoFUDmXE3UVwdDyg" translation: "https://xinjignxiao.com/zh/articles/%E6%B2%A1%E6%9C%89%E6%89%80%E8%B0%93-%E4%BC%A0%E7%BB%9F-%E7%9A%84%E8%A1%8C%E4%B8%9A-%E5%8F%AA%E6%9C%89%E4%BF%A1%E6%81%AF%E6%97%B6%E4%BB%A3%E9%9C%80%E8%A6%81%E7%9A%84%E5%93%81%E7%89%8C-7fc49af9.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/there-is-no-such-thing-as-a-traditional-industry-only-brands-needed-in-t-7fc49af9/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # There Is No Such Thing as a 'Traditional' Industry, Only Brands Needed in the Information Age > Why are traditional brand giants like P&G declining, while brands in 'traditional' industries like Three Squirrels are rapidly rising? This article explains the survival logic of brands in the information age. The decline of traditional brand giants: P&G, a master of traditional branding, has seen sales remain dismal despite strategic transformations. In fiscal years 2015 and 2016, annual sales fell by 5% and 8% respectively, with all four quarters of fiscal 2016 declining year-over-year, and the first two quarters of fiscal 2017 only roughly flat. Why are traditional brand giants like P&G declining, while brands in 'traditional' industries like Three Squirrels are rapidly rising? This article explains the survival logic of brands in the information age. **The Decline of Traditional Brand Giants** Today, let's focus on a brand giant—P&G. This master of traditional branding has adopted many measures for strategic transformation, yet sales performance remains dismal. In the past fiscal years 2015 and 2016, annual sales declined by 5% and 8% respectively. In fiscal 2016, all four quarters saw year-over-year declines, and the first two quarters of fiscal 2017 were only roughly flat year-over-year. What happened to the former king?! For FMCG companies like P&G, marketing is the most crucial element. It can be said that P&G is the company that places the most emphasis on branding worldwide. With the rapid development of the internet, we have also seen P&G's major moves and significant investments in marketing. For example: renaming the marketing department to the Brand Management Department, shifting from digital marketing to advocating experiential marketing, embracing new technologies like VR, and expanding into social networks, video sites, and mobile platforms where consumers spend more time. P&G's brand Gillette - "Chasing the Blade" VR game Is it a problem with P&G itself, or does branding simply not work on the internet? **The Rapid Rise of Emerging Internet Brands** In contrast, many internet brands have overtaken on curves and risen rapidly. **For example, the trendy milk tea shop—Heytea** Heytea offline stores, WeChat official account page Heytea, originating in second- and third-tier cities, was founded by 92-born founder Nie Yunchen, who turned it into a "internet sensation" in the tea drink industry within 5 years. Embracing new media to create demand, the iconic phenomenon of "lining up to buy Heytea," and innovative tea drink products continuously stimulate word-of-mouth and public discussion; focusing on user experience, from product development, packaging, to the creation of tea drinking spaces, with rapid iteration and innovation based on market feedback. Now, from South China to East China, single stores sell 4,000 cups daily, and those who have tasted it are full of praise... **The Trendy Yogurt Shop—Lepur** Lepur WeChat mall, mobile official site, Weibo Lepur's additive-free yogurt sells for 15-16 yuan, while competitors' similar products only sell for 3-4 yuan. As the main online channel, its WeChat official account has millions of followers, hundreds of thousands have placed orders, and tens of thousands maintain a frequency of consuming one box of Lepur yogurt every two days, with 90% of users being female. In less than 3 years, Lepur's daily production capacity has grown from an initial 100 boxes to the current 100,000 boxes, expected to reach 200,000 boxes in the second half of 2017; distribution will expand to convenience stores in all second- and third-tier cities nationwide; channels have expanded from the initial 35-square-meter store to include WeChat official account, Tmall, offline stores, supermarkets, convenience stores, and even five-star hotels and Western restaurants. **The No.1 Internet Snack Brand—Three Squirrels** Three Squirrels online theme page, offline store In 5 years, Three Squirrels quickly became the No.1 internet snack brand. With rapid business development, Three Squirrels' revenue in 2016 was 4.4 billion yuan, with net profit of 237 million yuan. A year earlier, these figures were 2.043 billion yuan and 89.73 million yuan respectively. This year, Three Squirrels just applied for an IPO and is about to go public. **What Happened, What Changed?** What supported giants like P&G in the past was the classic positioning and 4P theory, with all marketing strategies built on STP. According to STP theory, the market is a complex, multi-level, and diversified set of consumer demands. No enterprise can satisfy all demands. Companies should segment the market into consumer groups with similar needs, i.e., sub-markets, based on different needs, purchasing power, and other factors. This is market segmentation. Companies can select a sub-market that has a certain scale and development prospects, and aligns with the company's goals and capabilities, as their target market based on their strategy and product situation. Subsequently, companies need to position their products in a way that is preferred by target consumers and convey this positioning through a series of marketing activities to make them notice the brand and perceive it as what they need. Traditional brand giants are retreating, while emerging internet brands are thriving. Every so often, someone in the marketing world questions whether positioning theory has failed. Is that really the case? This is the only theory in marketing that has been used for decades and repeatedly proven to work well. STP refers to a company, based on certain market segmentation, determining its target market and finally positioning its product or service in that target market. It can be said that the fundamental essence of STP theory is to select and determine target consumers or customers, also known as market positioning theory. Is there a problem with positioning? No problem! But what has changed? We see that the most essential difference between traditional brand giants and emerging internet brands is not in positioning, but rather—**the difference between integration and separation of product and marketing, and the difference between rapid iteration, small steps fast running, and time-consuming big moves.** In fact, positioning theory hasn't failed; it's that iteration begins from product development and extends to the stage where the product goes to market, with continuous communication. At the product development level, iterate-adjust-iterate to reduce trial-and-error costs; at the marketing (Go to MKT) level, every touchpoint of the product is content, is communication, and has the potential to trigger dissemination. For example, in the era of content attracting attention, diverse forms of content—text, audio, video, interactive games, movies—are all organic traffic for user attention. Moreover, this communication is two-way, dynamic, and continuous. Content like science videos and UGC incentive activities are worth trying As mentioned earlier, the "Three Squirrels" and others, although in seemingly "traditional" industries, have a very different marketing path compared to traditional companies represented by P&G: * Build their own products and brands. * Put the product first; product is marketing. * Small steps, trial and error, continuous iteration. * Create demand—discover needs users don't know they want. * Focus on user experience—making it part of the product and brand. **Returning to the Essence of the Problem** The essence of the problem goes further: traditional marketing is a product of the industrial age, while digital marketing is a product of the information age. The most important guiding ideology of the industrial age was Newton's mechanical thinking. Newton used simple and elegant mathematical formulas to solve the mysteries of nature. Its core is **determinism**, in Newton's own words, "God does not play dice," and all laws of the universe should be certain. Any complex problem can be decomposed into several simple problems. After solving these simple problems, the original complex problem must have a solution. Through this method, humans not only solved one scientific problem after another but also manufactured one complex product after another. People began to shift from doing things themselves to spending most of their time making machines, then letting machines do the work, greatly increasing output. People invented various machines to replace manual labor. After using machines to replace humans in labor production, product standardization replaced personalization, and pursuing efficiency became almost the only means for industrial enterprises to improve competitiveness. In the era of mass industry, under Newton's mechanical thinking, Taylor's management theory shone brightly: **improving efficiency is the core of Taylor's management theory**. Optimizing processes and standardized management, assembly line production. Complex products can be decomposed into simple parts, and the result of a process can be predicted—put the corresponding parts at the start of the production line, and after going through the assembly line, you will definitely get the desired product; work originally done by humans can be replaced by machines. Under mechanical thinking, after discovering universal laws, applying them to specific scenarios would surely predict results. Similarly, people used 4P and positioning theory to guide marketing issues. American marketing scholar Professor McCarthy proposed the 4P marketing mix strategy—"Product, Price, Place, Promotion"—in the 1960s. In a nutshell, what traditional marketing does is: **after positioning is determined, maximize marketing return on investment (ROI) on the 4Ps.** In the era of mass industry, a company's strategy, from product development to market entry, was formulated and organized top-down. Generally, a few company leaders first have an idea, then it is implemented layer by layer, which is actually a predictive approach. When standardization replaced personalization, efficiency improved, but what was produced was uniform. In the internet age, especially the social network era, the needs and communication we face are personalized. Internet companies don't do things this way; instead, they rely on continuous response, just like a satellite constantly adjusting its trajectory during flight. The laws followed in the internet age are cybernetics, information theory, and systems theory. **The core of cybernetics**—real-time adjustment based on environmental changes. The accuracy of the Apollo spacecraft came from continuous adjustments during the process. **The core of information theory**—using information to eliminate uncertainty. Without information, no subjective assumptions can be made about the future; with some knowledge or information, judgments must first conform to this knowledge to achieve minimal risk and maximum return. **The core of systems theory**—local optimization does not equal global optimization. For a living system, its function is not equal to the sum of each local function. **The Survival Logic of Brands in the Information Age** In the past two years, everyone was hyping internet thinking, but it's not that mysterious: the scientific basis of internet thinking is actually "Shannon's Second Law"—**the transmission rate of any information cannot exceed the capacity of the communication channel, i.e., bandwidth.** Globally, transmitted information includes news media information, film and television cultural information, and also product advertising information. In the agricultural era, doing business relied on word of mouth, and brand creation and business transactions were very slow because the bandwidth for merchants to communicate with the outside was too narrow, and customers could only understand local business information, with most business done locally. Therefore, a global brand was impossible in the agricultural era. After the Second Industrial Revolution, mass media emerged, continuously increasing the bandwidth for companies to promote externally and communicate with customers, and various cultural information began to spread globally. However, throughout the industrial era, bandwidth costs were still quite expensive, making it almost impossible for a merchant to spread product information through modern media. Thus, intermediaries like agents or wholesalers appeared in the distribution chain. This was the golden age of 4P positioning theory. In the internet age, the internet rapidly widened the bandwidth between producers or service providers and consumers. Through search engines, e-commerce sites, or social networks, small merchants and individual workers for the first time had the opportunity to directly reach end users worldwide, and every company had its own self-media. Users could also like, share, and express themselves instantly. **The most successful companies in this era are essentially doing the same thing: increasing the bandwidth of communication between people.** Google and Baidu rely on delivering small advertisers' product information to end users, Amazon and Alibaba make various transactions easier, while Facebook and Tencent increase the bandwidth of direct communication between people. Due to continuously increasing bandwidth, various products and services can become more and more personalized, which was impossible before the internet because human communication networks couldn't transmit such a large amount of personalized information. **For example, internet advertising.** In the past, ads were transmitted via broadcasting because there wasn't enough bandwidth and computing power to deliver specific ads to each individual. Today, such personalized ads are everywhere on the internet. Various phenomena in information-age enterprises and businesses can be easily explained by cybernetics, information theory, and systems theory. In the information age, the most important thing is the acquisition, utilization, and dissemination of information, and its scientific foundation is information theory. This is just as the scientific basis of mechanical thinking in the industrial age came from Newtonian mechanics. **In short, it's from prediction to response, from parts to whole, from control to communication.** Positioning theory hasn't failed; it's that iteration begins from product development and extends to various stages of product delivery to market. This is a process of positioning-communication-iteration-repositioning-communication-iteration. Its foundation is cybernetics, information theory, and systems theory. We cannot set a brand positioning at the start and keep it unchanged. **Instead, we must make systematic adjustments based on environmental changes and feedback from the market and consumers to correct deviations in brand positioning and eliminate uncertainty.** Moreover, this process is dynamic, continuous, and repetitive. **The internet doesn't mean brands are unnecessary; rather, there is a survival logic for brands in the information age.** Ultimately, all marketing strategies must be built on STP—Segmentation, Targeting, and Positioning—and this has never changed. What are the specific manifestations? **(1)** Marketing and product are linked; product is marketing. Iterate, adjust, iterate. **(2)** From standardized products to personalized experiences (service is marketing) **(3)** Make good use of digital media—new digital channels, e-commerce, digital self-media, digital paid media management, user operations. Top left: Three Squirrels online activity page; top right: Lepur fully transparent production room; bottom left: Xiaohongshu express packaging; bottom right: Lepur yogurt unboxing experience In today's digital media environment, the Three Squirrels and others have found that online themed activity pages, offline experience stores, product packaging, unboxing experiences... every touchpoint of the product is content, is communication, and has the potential to trigger dissemination. Diverse forms of content—text, audio, video, interactive games, movies—are all organic traffic for attracting user attention. Moreover, this communication is two-way, dynamic, and continuous. There is no such thing as a "traditional" industry; there are only brands needed in the information age. **The 3rd (CFIC) China FMCG + Internet Conference** will be held in Chongqing in November 2017. The conference will closely focus on the theme "New Forces, New Ecosystem," inviting **1000+ distributors, 500+ brand owners, 200+ B2B platform founders, and 100+ investment and financing institutions** to jointly explore a new chapter of cross-border integration! Click the link below to review the highlights of the 1st and 2nd FMCG + Internet Conferences: [2016 "FMCG + Internet" Summit Forum]() -END- --- ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671