Click for details I. The Logic of Traffic Is Changing Whether online or offline, all businesses depend on traffic. The success of offline businesses hinges on location; the better the location, the greater the foot traffic, and the better the business. For online businesses, traffic comes from paid search ads and various popular apps; the more frequently consumers appear, the more expensive the traffic. Essentially, online traffic and offline foot traffic are not much different. In the traditional marketing system, there was no concept of traffic, because in the traditional marketing context, traffic was split into two separate meanings: communication and sales, and also two different departments: marketing and sales. Before the internet, media was relatively centralized, making communication relatively easy. Companies only needed to place ads on strong media outlets. We saw many "bid champions" on CCTV in the past; these advertisers had a clear goal: no matter how expensive the ad, as long as the input-output ratio was positive, it was worth investing. At that time, the challenge for brand owners lay in sales. Due to product homogeneity and scattered, numerous channels, companies needed to build a large distribution team to handle market competition and distribution. So you often saw that in most companies, the marketing department had few people, while the sales department had many—sometimes hundreds of times more. With the advent of the internet, especially the proliferation of mobile internet, the Chinese consumer goods industry has been profoundly impacted. Previous articles have mentioned market changes from the consumer perspective:
Attention has shifted from TV and PC to mobile;
Consumers increasingly value personalized consumption;
Purchasing methods have become more convenient. The logic of traffic has begun to shift compared to traditional business models. Consumer purchasing behavior has evolved from seeing an ad, forming an impression and memory, then going to a supermarket to buy, to seeing an ad, directly searching and ordering, and sharing and discussing online with friends. This is a brand-new business logic. In this logic, communication and transaction have become an inseparable organic whole. The content and presentation of brand communication have a crucial impact on consumer decision-making. At the same time, if consumers "see" but cannot immediately "get" (place an order), your brand information will quickly be diluted by the vast amount of information. This new business logic leads to two problems: Brand owners find it difficult to efficiently convey information to consumers, and communication costs are rising rapidly; meanwhile, consumers have diverse channels for purchasing products; compared to traditional distribution, brand owners may only need a few people, leveraging e-commerce platforms, to sell products on a large scale. II. Communication Costs Are Rising, Efficiency Is Declining For companies, the cheapest traffic is that generated by building a brand. A brand reduces buyers' choice costs and improves the efficiency of connecting products with people. So when discussing traffic, brand building is indispensable, but today's core discussion is not brand itself, but communication. In the past, brand owners could convey their brand image and product selling points through highly condensed advertising slogans via centralized media efficiently. But when communication becomes fragmented and decentralized, it means the old methods are no longer effective. The opportunity for entrepreneurs to build brands through centralized media is shrinking and becoming more difficult. In recent years, we haven't heard of any brand that became famous by advertising on CCTV. Of course, this does not mean there is no opportunity to rebuild brands in the internet age. It's just that in this era, the way people communicate with each other, with information, and with products has changed dramatically. The forms of brand creation and communication must adapt accordingly. What are the changes? Social media gives everyone a voice; you can express your views online. If your views are distinctive enough, you can become a KOL in social networks and gain recognition from more people. If you have unique hobbies, you can find like-minded people online to form community networks. This is a whole new language system and communication method. For brand owners, they must adapt with new products, content, supply chains, and organizational forms to truly keep up with changing consumer demands. Here we must mention a key phrase: "from mass to segmented." In the internet age, the population has begun to stratify, and the social fragmentation effect is very obvious. At the end of 2018, two events had significant influence: one was Quanjian's health products, and the other was the speeches by Luo Zhenyu and Wu Xiaobo. While these two messages flooded social media, another article also went viral: "Young People's Belief in Paid Knowledge = Elderly People Buying Quanjian" The core argument of this article is: "Stimulating group panic to attract traffic, and satisfying security and prestige to facilitate transactions—the business model of paid knowledge is largely the same as Quanjian's health products." Perhaps due to pressure from Luo's fans, this article was deleted on its way to 100,000+ reads, but that doesn't mean such voices don't exist. On the contrary, in various WeChat groups, because Luo Zhenyu peddles anxiety, the pros and cons are fiercely debated. Such incidents are numerous. Not long ago, it was reported that after Trump took office, an American company issued an internal notice: those who voted for Trump should resign. The owner's reason for dismissal was: because of different values, they couldn't work together well. Internet connectivity has not brought people closer but has instead increased division. Society is returning to tribalism and stratification due to differing values. People with similar interests gather and quickly become a powerful force. If there is any evidence from 2018, it includes Kris Wu's fans clashing with Hupu, and fans crowdfunding to put TFBoys on the big screen in New York's Times Square—both typical cases. Of course, this is only from the perspective of values. The Chinese market is indeed experiencing stratification. China has 228 million post-80s, 174 million post-90s, and 147 million post-00s, each with significantly different consumption habits and methods. China's 1.4 billion population dividend has evolved from a quantity dividend to a structural dividend: 300 million new middle class, 378 million Generation Z, 500 million small-town youth, over 200 million silver-haired elderly, 300 million maternal and infant market, and 150 million pet market. These are accelerating the transformation of the world's factory into the world's market, and the manufacturing power into a consumption and service power. For brand owners, facing such a fragmented market, they must use different products to meet the needs of continuously segmented groups. There is a misconception here: brand owners always think that large-scale industrial production has the lowest cost; niche demands are a long tail, and production, communication, and distribution are uneconomical for brand owners. This is not the path for big brands. As mentioned earlier, communication has begun to decentralize, and consumers' implicit needs have emerged. You can no longer sell one hit product to all consumers nationwide to achieve a 10-billion scale; that era is over. Although the internet has brought fragmentation of communication and significantly increased communication costs, it has also brought two benefits: First, improved precision of communication; second, the ability to create communication intensity locally or for specific groups, bringing opportunities for distribution of personalized niche products. Moreover, with new technologies and e-commerce platforms, companies can achieve high-frequency, large-scale transactions with minimal labor costs through e-commerce platforms. So on the surface, backend industrial production costs have risen, but frontend transaction costs have decreased. That is, companies no longer need to maintain a huge distribution network with high labor costs. From another angle, although communication costs are rising, it has become possible for companies to produce small batches of products with high profit margins. Distribution costs are falling, and the cost structure is changing, so total costs may not increase much. III. New Marketing vs. New Retail On one hand, traditional business owners are at a loss due to declining sales, while new communication and traffic tactics such as KOL, communities, IP, and fission are constantly emerging. From the underlying logic of consumption, the consumer's delivered value has not changed much; it is still the total cost of purchase. What has changed is the way information is transmitted and obtained, as well as the scenarios of products and shopping—that is, the "reconstruction of people, goods, and scenes" proposed in Ma Yun's New Retail. These changes in traffic logic, communication logic, and people-goods-scenes require a significant adjustment for traditional marketing. But before adjusting, we must ask ourselves four questions:
Question 1: Who is the user, what needs do they have, and where are they?
Question 2: What products do we have that can solve their pain points? Why would they buy our products?
Question 3: How do we find them and tell them that our products are exactly what they need?
Question 4: Where do consumers buy our products? How do we deliver the product to them? The questions are still the same, but the content must change significantly. In summary, there are four transformations in dimensions: Product: From selling one product to 1 billion to selling ten products to 100 million → from mass demand to segmented demand;
Marketing: From centralized media communication to social media communication → from funnel model to ripple diffusion;
Channel: From deep distribution to precision distribution → from analog signals to digital signals;
Organization: From Taylor's pyramid management to platform-based decentralized organization → from management to empowerment; These transformations can be roughly divided into four stages: Stage 1: Perception (mass, niche, personalization, pain points, needs, scenarios)
Stage 2: Delight (low temperature, short shelf life, health, high appearance, high cost-performance, convenience, social, showing off, scarcity, brand, quality)
Stage 3: Reach (IP, content, KOL, community, fans, traffic, video, e-commerce)
Stage 4: Service (supply chain, ABCD (AI, blockchain, big data, cloud), routing, third-party, warehousing, logistics, infrastructure, middle platform, precision, online) In a nutshell: Find consumers, discover needs, match products according to scenarios, tell good stories, communicate well, and ignite the market. Then, through an efficient and shared supply chain, one-click routing and distribution, quickly deliver products to consumers. For us, we must deeply understand the meaning, logic, and gameplay behind various new terms such as IP, scenarios, KOL, communities, circles, and fission, and use various new technological tools flexibly to find users' pain points and rigid needs. Of course, achieving the above is not an overnight task; it is a challenge left to every marketer in this era. Undoubtedly, to excel in new marketing, relying solely on a few ideas is not enough; specific implementation paths and methods are needed. This opening marketing layout training course organized by New Distribution and Teacher Liu Chunxiong aims to use the most cutting-edge marketing cases, expert opinions, and ideas of this era to find the password to unlock marketing strategies. If you don't want to be left behind by this era, please join us in this practice of new marketing. As Teacher Liu Chunxiong said: As people age, their original assets (experience) become liabilities (fixed thinking patterns). Therefore, personal growth is a process of continuous self-innovation and breakthrough. Modern people must survive socially; your social circle is your boundary. The people around you may be your "obstacles" or your "helpers." Learn from those who do well, make friends, and for good cases, conduct deep reviews to form your own methodology and underlying thinking. Click here to register in one click