Introduction Kotler says the form of the terminal is irrelevant, so what matters most? Understanding the essence of the terminal means understanding the essence of 'New Retail'. Continuing from the previous issue, let's first use Kotler's concept as a banner: The form of the terminal is irrelevant!
The original text says: "It is irrelevant how these goods or services are sold (in person, by mail, by phone, or by vending machine), or where they are sold (in a store, on the street, or in the consumer's home)." So what matters most? The function of the terminal! The terminal has four major functions: logistics (including transactions), product display, information transmission, and consumer education. The form of the terminal can change in a thousand ways, and even the external form of the terminal can be eliminated, such as in direct sales, but these functions of the terminal must exist. Therefore, when brand owners or distributors operate terminals, they should not first look at the form—whether it's e-commerce, supermarkets, convenience stores, pharmacies, or restaurants, these are all superficial forms—but rather look at what is buried underneath, which is more essential: function. Which of the four functions is most important? The answer is: whichever is missing is the most important. In an era of material shortage, logistics and product display are certainly the most important; but in an era of information explosion, the ability to transmit information and educate consumers is most important; for high-attention, high-price products, what is missing is the infusion of information into consumers, so information transmission is important; for new category products, consumer education is important; for low-attention products, immediate stimulation through the product can trigger purchase, so product display is more important. Let's return to the topic that Lao Miao keeps harping on: marketing aims to change and influence consumer behavior. Where can you communicate deeply with customers, where is there a deeper consumption experience, where can you influence consumers to a greater extent, that is where the more valuable terminal is. Even some terminals that don't sell goods are actually the most valuable (such as hospitals for the four major milk powder brands). Recently, the concept of 'New Retail' has become popular again. What is 'New Retail'? Is it called New Retail just because you combine online and offline? Is it New Retail if you order online and pick up offline? Or is it New Retail if you experience offline and buy online? These are all forms, the forms that Mr. Ke considers 'irrelevant'. Let's put aside the gimmicks of the concept and analyze it from the origin of marketing: the most essential difference between 'New Retail' and 'traditional retail (including traditional e-commerce)' is the difference in functional focus. 'Traditional retail' emphasizes logistics, especially transactions, while 'New Retail' emphasizes the combination of information flow and logistics. Whether it's product display, information transmission, or consumer education, they can all be classified as information flow. New Retail strengthens the influence on the overall purchasing behavior. Traditional retail does sales, while New Retail does marketing. Using four parameters—customer communication, product exposure, profit, and sales volume—Lao Miao divides terminals into five categories: deep terminals, high-value terminals, sales terminals, ordinary terminals, and trap terminals. Below, we mainly introduce deep terminals to explain in detail the information flow function of terminals. Deep terminals are measured by the degree of contact between customers and the terminal. In the 'New Retail' concept, this is the commanding height of terminals. The four major foreign milk powder brands are invincible in the Chinese market because they occupy the deep terminal for milk powder—hospitals. Through medical recommendations, they make mothers believe deeply, and in the environment of trust crisis for domestic milk powder, they almost monopolize the domestic infant formula market. Similarly, for infant products, supermarkets cannot compete with mother-and-baby stores because mother-and-baby stores, as professional terminals, have a much deeper contact with consumers than supermarkets. In alcohol marketing, catering terminals have far greater strategic significance than supermarkets due to their deeper contact. In recent years, imported wine has also developed an even deeper terminal—wine tastings: through wine tasting, display, and exchange to achieve promotional purposes, using means such as seeing, listening, smelling, tasting, asking, and speaking to mobilize consumers' senses and emotions, making consumer contact reach a deeper level. In the cosmetics industry, the contact depth of beauty salon terminals is greater than that of department store counters, department store counters are greater than daily chemical stores, and daily chemical stores are greater than supermarket shelves. Health product companies represented by Zhen'ao Nucleic Acid, Tiannian, and Zhongmai have developed another type of deep terminal—meetings, known in the industry as meeting marketing: that is, gathering target consumers together, through expert lectures, on-site exchanges, product displays, patient self-testimonials, and other methods, to have deep contact with consumers, greatly guiding consumer purchases. Home parties of direct selling companies are another typical representative of deep terminals. Advertising and PR communication often have less direct impact on consumer behavior than direct terminal experience, so in terms of transmitting information to consumers, some terminals have unique advantages. In the early years, a concept was popular in the industry—'terminal media operation', whose essence is to operate the terminal like media. They defined the primary role of the terminal as transmitting information to consumers, transmitting real information that makes consumers feel empathetic. This is actually a method to enhance the depth of contact between the terminal and consumers. In today's market, brand owners are required to first choose terminals that can communicate deeply with consumers when selecting terminals. If there are none, they should develop or even create terminals that can deeply contact consumers. Yakult is an active lactic acid bacteria beverage that requires cold chain distribution and sales, so its terminal selection range is relatively narrow. But Yakult creatively developed a type of 'terminal'—face-to-face sales. In Japan, there are tens of thousands of 'Yakult mothers' who deliver Yakult directly to thousands of households, accounting for more than half of its sales. In China, Yakult's face-to-face marketing not only has its own direct sales team but also promotions, subscriptions, and sales in communities and office buildings, combined with building and community advertising, becoming their primary weapon to open the Chinese market. Different types of enterprises have different requirements for the depth of terminal communication. Well-known enterprises use their strong brand appeal to mobilize terminal and channel resources, and their functions of information transmission and consumer cultivation are more achieved through brand building, which leads well-known products to pay more attention to product display and logistics functions when choosing terminals. More product display means more sales opportunities. For most ordinary brands, information transmission and consumer cultivation are more important. In the absence of effective information transmission, more exposure may make the product die faster. Intensified competition also leads to changes in product attention, and you need to transmit more information to consumers, even 'brainwashing'. In the past, the standard for good buns was 'thin skin and big filling'. When everyone has thin skin and big filling, you can differentiate with 'soup dumplings'. Then you need various flavors, various ingredients, various refinements, and in the end, you may even need to tell stories. When buns have these differentiators, the bun shop owner needs to transmit this information, even educate consumers; if you are lucky enough to get a Qingfeng Bun shop chairman's set meal or find a 'Bun version of Little Dragon Girl' as a spokesperson, then the bun shop needs to take on more information transmission functions. E-commerce terminals have paid more attention to information transmission and consumer cultivation functions since their establishment, because e-commerce terminals have inherent disadvantages in consumer experience and physical perception compared to physical stores. But early practitioners of e-commerce racked their brains to make up for this disadvantage, from perceptible and even tempting detail pages, to the 'dear' Taobao style, to the application of consumer reviews. Marketers in the new era actually turned disadvantages into advantages. In many cases, customers' perception of products online is deeper than in ordinary offline terminals, and they receive more product and brand information. The power of e-commerce is not only because of itself, but also because it has a particularly awesome relative—the Internet. Lao Miao has previously argued that the essential impact of the Internet on marketing is that it has changed the root of marketing—purchasing behavior patterns, which is a real revolution. In the five-stage model of purchase decision, collecting information through the network has become one of the main bases for purchase decisions. (The five stages of purchase decision: problem recognition—information collection—evaluation of alternatives—purchase decision—post-purchase behavior) The previous 'random purchase + planned purchase' shopping model has become the current 'search on demand + shoot while searching + convenience supplement' online and offline composite shopping model. The Internet has unique advantages in providing information content. Tasks that were impossible offline can be accomplished online: for example, telling brand stories, conducting comprehensive comparisons of competing products, letting consumers watch a five-minute video, reading an article about consumer education, or conducting a large-scale word-of-mouth campaign. Consumer demand and purchasing behavior brought about by Internet promotion are more likely to flow to e-commerce, and this trend will further strengthen. Being able to enjoy the dividends of Internet development and promotion is also the reason for the huge power of e-commerce. Of course, as mentioned above, the natural defect of e-commerce is poor product experience. The methods Lao Miao mentioned in the article 'Terminal Maze', such as using spatial layout, smell, music, color, etc., to enhance consumers' product experience, are also difficult to apply in e-commerce. Fresh food, food, and other products that generate consumption through immediate stimulation have not performed well in e-commerce, which is largely related to this congenital defect of e-commerce. The so-called New Retail is by no means a simple combination of online and offline sales channels. That is still traditional thinking wrapped in a new concept, only emphasizing the logistics (including transaction) function of the terminal. If you don't understand the functional essence of the terminal, don't pay attention to the information flow function of the terminal, and do online and offline combinations based on appearances, you will never win: the previous O2O has died in a mess, FMCG companies that invested heavily in online have basically not made profits, and the previous Taobao brands such as Masamaso and Inman laid out offline and ended in failure. Behind them all lies the same truth: If it doesn't help marketing in information transmission and consumer education, just adding a sales channel, the cost of opening and operating a sales channel is far higher than the new profit it brings.
** **
The key to New Retail is not online + offline, but from logistics operation to compound operation of information flow and logistics. The most efficient combination of information flow and logistics terminals for a product is the New Retail thinking. Online + offline is just its most common form of expression. The second category: high-value terminals. Value terminals are measured by the input-output of the product. Those with high profitability have high value, and those with low profitability have low value. Deep terminals may be high-value terminals, or they may not be. For example, the medical terminal mentioned above is a deep terminal for infant formula but not a high-value terminal. For convenience of comparison, high-value terminals and sales terminals are analyzed together. The third category: sales terminals. Sales terminals are measured by product sales volume, referring to terminals with considerable sales but average profit performance. Many people believe that sales are the foundation of profit. Lao Miao's view, however, is that profit is the foundation of sales. In most cases, sales without profit are meaningless, even vampires. Many high-value terminals look very insignificant. Wrigley attaches great importance to store distribution in small shops, because for chewing gum, the value of a convenience store is not necessarily much less than that of a large supermarket. The lactic acid bacteria beverages that have been popular in recent years also have considerable sales in bakery and pastry shops. Jingpai can be seen everywhere in restaurants on streets and alleys, from airports and stations to highway rest areas, but it may not be found in some upscale star hotels and large supermarkets. It truly achieves 'do not fail to do it because the profit is small, and do not do it because the loss is small'. In the direct sales model, salespeople are both consumers, distributors, and terminals. For companies doing direct sales, they only make money and never lose money on each terminal (direct salesperson). The fourth category: ordinary terminals. These are terminals that perform averagely in terms of contact with consumers, product exposure, input-output, sales volume, and other indicators, but do not lose money and have a certain sales volume. For enterprises, such terminals should mainly rely on market radiation, with a small amount of maintenance and pulsed investment. The fifth category: trap terminals. These terminals either have excessive terminal costs, causing suppliers to lose money, or have too low sales volume, and the profit generated cannot maintain basic terminal maintenance costs. Many trap terminals are disguised as 'pie terminals' waiting for suppliers, especially platform providers (large supermarkets, catering, and large e-commerce platforms). The current terminal attrition war mostly happens here. Trap terminals that can generate sales but cause suppliers to lose money are like 'killing a thousand enemies and injuring two thousand of your own'. Many brands have lost troops and generals here, and after a few battles, they have been defeated. It is truly 'fighting the wrong war in the wrong place'. Trap terminals should be resolutely abandoned. Never covet those 'illusory' sales, and never be deceived by others. "As long as you continue to invest, costs will be amortized, and sales will continue to rise," "Invest at a loss for a few months, and then various indicators will improve, and the cost ratio will decline," and "My platform (store) has large sales, will have brand effects, and will radiate to surrounding terminals." These are all nonsense that eats people without spitting out bones. Among the many 'wronged souls' who have died over the years, many products were actually not bad, but they chose trap terminals and were doomed. The five types of terminals can be transformed. High-sales terminals can become high-value terminals as costs gradually decrease. Some high-value, high-sales, ordinary, or even trap terminals may become deep terminals through some brand promotion methods. Extended reading: -END- The best FMCG distributor learning platform in China Focusing on providing professional, practical, and applicable tutorials for enterprises and distributors Committed to helping Chinese FMCG distributors grow rapidly The most professional and practical knowledge base in the FMCG industry Reply with the red number below to get the corresponding content Reply with number 1 to view the complete knowledge base | 001 Excellent article selection | 002 Distributor market operation | 003 Terminal visit management | 004 Sales supervisor skills | 005 Sales improvement techniques | 006 Channel expansion | 007 Managing distributors | 008 Distributor development | 009 Distributor internal operation management | 010 Team management | 011 Efficient distribution techniques | 012 Sales manager's eighteen skills | 013 KA operation methods and strategies | 014 The first lesson for new salespeople | 015 Internet, brand | 016 Distributor B2B transformation | [Long press QR code to follow]