---
title: "Today's Consumers Aren't Afraid of High Prices, They're Afraid of Overpaying"
description: "Recently, the author visited several brand executives and distributors, discovering that many are anxious about shrinking volumes and have fallen into misconceptions. This article shares observations on consumers, channels, low prices, product innovation, and category cognition, offering insights for the current market downturn."
author: "赵波"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2024-07-29"
language: "en"
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---

# Today's Consumers Aren't Afraid of High Prices, They're Afraid of Overpaying

> Recently, the author visited several brand executives and distributors, discovering that many are anxious about shrinking volumes and have fallen into misconceptions. This article shares observations on consumers, channels, low prices, product innovation, and category cognition, offering insights for the current market downturn.

Recently, I have been visiting brand executives and distributors intensively, learning about their development this year. I found that many have fallen into anxiety caused by shrinking volumes, and even into misconceptions.
Based on this, I would like to share my recent observations and thoughts on the consumer market regarding consumers, channels, low prices, product innovation, and category cognition, hoping to bring some inspiration and reflection to everyone.
**About the downturn in consumer desire** Suzuki Toshifumi mentioned in his book "The Philosophy of Retail": **During economic downturns, innovation for rice balls is not about being cheaper, but about being more delicious and offering better value for money.** As the saying goes: "In an era of product surplus and consumption saturation, whether a product has new value is the key to purchase decisions, rather than the price level." Today's consumers are not afraid of high prices; they are afraid of overpaying. The three consumption patterns of the middle class turning into "middle tragedy":
  * Not consuming or consuming less
  * Consuming discounts on big brands
  * Consuming high-quality, affordable alternatives to big brands
**Conclusion: **Reduce quantity without reducing quality, upgrade without raising prices; this is not consumption downgrading, but an upgrade in consumer intelligence.** In this economic downturn: consumers are not unwilling to spend, but unwilling to spend recklessly; they want to spend on the essentials, which means **necessities become more necessary, and non-necessities become less necessary.**
**About channels not growing** When e-commerce growth stagnates, it means the era of channel-driven growth in China has officially ended. So do not try to achieve sales growth by expanding product categories within channels. Stuffing products into channels is a mistake that large enterprises are likely to make, believing they have channels, teams, brands, good products, and low prices, making them omnipotent. Essentially, channels are just carriers; the customer's job to be done is the core. **If the scenario is wrong, everything is in vain.** Products are surplus, channels are crowded, scenarios are unfamiliar, and purchase reasons are scarce. When large enterprises do not consider **scenarios, purchase reasons, task needs, and pain points**, even big brands may face failure. Do not look at how much the market capacity grows, because when you lack the ability to split things in two and solve the previous problems, most of the market growth has nothing to do with you. Today, growth in all channels is a redistribution of the existing market. The growth of snack store channels is a reconstruction of offline stock. E-commerce growth has stalled. The current state of most brand e-commerce departments: **the most expensive costs, selling the cheapest goods, hurting the most profitable channels.** The era of channel-driven growth has ended. Brand and product-driven growth is just beginning. In the next few years, there will be a round of upgrades for mainstream best-selling products. The growth of big brands at this stage is due to the exit of miscellaneous brands, and the share growth of most categories should continue for a while. One channel, one product; one customer, one product; flexible supply is a major strategy for future brand layout. **The future market will present a pattern of "(1+N)×n"**, where 1 is the new mainstream big product, N is various scenarios and segmented products, and n is the channel combination. The relationship between channels and sales: **direct sales push new products, short chains generate volume, and traditional channels improve efficiency.**
**About low prices** A few days ago, I bought a 9.9 yuan coconut water on Douyin, 10 bags of 100ml each. The seller was generous and gave me two 1L bottles. I looked carefully at the product: the packaging was badly worn, and the bottle label was covered with two layers. There was mud on the cap, likely water-soaked or returned from supermarket expiration. When I communicated with the seller, they refunded quickly. It made me doubt myself, wondering if I was making a fuss. The problem is, I am a professional user; how many consumers can discern the depth behind this product? Water-soaked beverages are strictly prohibited from circulating in the market because they can cause a large number of viruses to attach around the cap, with a high probability of contaminating the product and being ingested by mistake.
Although consumers are increasingly savvy, scammers are also evolving with the times, developing strong content production capabilities.
I wonder, what does the low-price strategy advocated by both Pinduoduo and Douyin actually bring to consumers? My simple understanding is that **low price is never a strategy; total cost leadership is.** But once platforms propose low-price strategies and traffic algorithms, merchants are forced to consider only cheapness, and the dimension of value creation is overly simplified. The result is bad money driving out good, merchants' involution, low-price, low-quality counterfeit goods, and a miserable industrial belt ecosystem.
**About product innovation** Scenario-based product innovation is a new topic for all enterprises. **For old tasks, there must be new product solutions; for old products, there must be new scenario exploration; for new products, they must better solve customers' old tasks; for new tasks, there must be better product solutions.** Let me give two examples: fermented bean curd and yellow wine. The biggest problem with these two categories is that they have not discovered new customer tasks, the scenarios for old tasks are gradually disappearing, and old functions are being replaced by better solutions. Upgrading is the main theme. Old products should upgrade with new functions; new products should tap into old needs in new scenarios. In the mainstream price band, products should upgrade without raising prices, increase quantity without raising prices, and reduce prices without reducing quality.
> **Three logics for product upgrade:** change scenarios, change functions, change emotional value;
>
> **Three methods:** new content, new scenarios, new tasks;
>
> **Three new values of products:** function, emotion, social;
>
> **Four directions for upgrade:** emotion, addiction, social, health.
Customers today have new jobs to be done. There are still many needs to explore from economic, lifestyle, technological, demographic, and cultural perspectives. From a fundamental level, most people spend most of their time without purpose; they need to find self-existence and the meaning of doing things. **Whoever can provide this will gain consumers' "votes" with their money.** When validating new product launches, you cannot only look at market size and logic; you must also consider the current competitive landscape, competitors' 4P+SWOT analysis. Then find users' jobs to be done and which pain points remain unresolved. Look for opportunities in new scenarios, channel gaps, and differentiate products around the previous issues, finding strong purchase reasons, strong memory associations, and strong channel strategies. Otherwise, no matter how much effort you put in, it will be useless. For example, Daliyuan's Heqizheng and Doudouben are originally catering products, but they insist on stuffing them into convenience stores; it cannot be done well.
**Consumer shopping behavior can be abstracted into four logics: buy, browse, follow, and stock up.** Scenarios and spaces may differ, but the underlying logic of shopping behavior is the same. For example, young people like to browse Xiaohongshu, elderly people like to browse wet markets, and children like to browse snack stores. Their motivations, behaviors, and pain points share the same underlying logic, all based on the "browse" logic. Lock onto the target group, find the scenario, discover the job to be done, find pain points and channel opportunities, provide scarce functions, design purchase reasons, and then design the product.
**Models to focus on for product innovation: **rigid demand scenarios + low customer acquisition cost + high repurchase rate + strong operational capability.** Return to the product, not to the channel. Channels are not scarce, products are not scarce, but high-quality products and scarce supply are the key to brand success today.
**Opportunities and cognitive deficiencies in several category tracks**
**1. Incorrect product logic:** Coconut water has four major bugs: insufficient cost-performance, low added value, difficult standardization, and unclear differentiation. Not only coconut, but all deep-processed agricultural products should be cautious; they share the same four problems as coconut water. How to do it? **Do not add other things to coconut water; add coconut water to other beverages.**
**2. Category demand upgrade:** Old products in the electrolyte track: Mizone, Scream, and Hai Zhi Yan, mainly focus on vitamins and electrolytes, **but consumers' cognition has shifted due to the pandemic, and the demand has become hydration.** Yuanqi Alien, Dongpeng Hydration, coconut water, etc., have exploded. Danone, Nongfu, and Uni-President got up early but arrived late.
**3. Category demand disappearance:** Fermented bean curd and yellow wine have the biggest problem: they have not discovered new customer tasks, the scenarios for old tasks are gradually disappearing, and old functions are being replaced by better solutions. The juice category will always exist, but in China it will never grow big: no scenario (not drunk at breakfast), full of bugs (high fructose), and habits not formed (eating fresh fruit). How to do it? **Find new scenarios, new tasks, and optimize old products with new technologies (low salt, reduced sugar, remove purines).**
**4. Mismatch of resources and capabilities:**
**Relying on resources:** The mistake Daliyuan made was to stuff products into wrong channels. Heqizheng did this once, and now Doudouben is doing it again, using great effort but doing the wrong thing.
**Relying on capabilities:** East Buy promotes mineral water, Aidi promotes liquor, Yili promotes ready-to-drink tea...
> When supply exceeds demand and there is not enough differentiation, do not enter crowded tracks.
>
> Past problems are no longer today's consumer problems; past channel capabilities are no longer today's advantages.
>
> Old products without the ability to iterate will eventually fall behind.
**From August 20-22, 2024, the "2024 6th China FMCG Conference" with the theme "Crossing the Era of Shrinking Volumes" will be grandly held in Shanghai.** **Concurrently, the "3rd China FMCG Distributor Conference" and the "3rd China FMCG Hard Discount Conference" will also be held.**
**At the conference, the "FMCG Industry Distributor B2b Platform Strategy Guidance Report", "2024 FMCG Distributor Operating Status Survey Report", "FMCG Industry O2O Regional Practical Implementation Guidance Report", and "2024 China Hard Discount Development - FMCG Industry Insight Report" will be released.**


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