In very small categories, on one hand, it's hard to scale up; on the other hand, the scalability of audience and channels is extremely poor.
2. There is demand but no scenario
The second typical problem is that there is demand, but there is no scenario at all.
For example, low-alcohol sparkling wine has seen a surge of brands in recent years, claiming to target light drinking scenarios with high aesthetics and precise pain points, which can trigger impulse purchases but fail to drive repeat purchases. Why?
Because there is simply no scenario. This is crucial, and I will explain in detail later why without a scenario, a product cannot succeed.
3. Fake demands and fake concepts are rampant
I see many entrepreneurs describing their products by fabricating consumer needs.
Take sleep as an example: Do users have a need for sleep? Of course they do, but are you sure you can satisfy that need?
Insomnia is essentially a lifestyle issue, and people who stay up late may worry about their health but rarely take action. Those with genuine sleep disorders will take medication. Many sleep-focused products fail to truly address this need; they only alleviate anxiety. Hence, such products have extremely low repurchase rates.
4. IQ tax, treating consumers as fools
Enzymes, hyaluronic acid, NMN, free radicals, high-sugar inactivated lactic acid bacteria drinks—I won't elaborate. Anyone with basic discernment generally won't buy such products.
5. Overemphasizing certain features and functions
Many new products overly pursue aesthetic packaging design but neglect to clearly convey the brand's unique value proposition, which is the core.
8. Product concepts too novel and ahead of their time
Some products are too advanced in functionality, and consumers haven't even heard of them, leading to high communication costs and severely limiting the brand's business model.
How to analyze whether a product has the potential to succeed?
I believe analyzing a product's potential should be considered at three levels: product, scenario, and value point.
1. Product
This level includes the product's inherent characteristics: ingredients, packaging, flavor, functionality, selling points, capacity, concept, recognizability, ease of use, etc. These are what entrepreneurs value most. Many entrepreneurs focus their energy and attention on the product itself.
2. Scenario
I've found that the biggest problem with new consumer brands is that they only talk about demand without studying consumer scenarios. But a brand that only talks about demand is useless because a single dimension cannot build a consumption loop.
What is a consumption scenario?
A scenario must include five elements: time, place, demand, product, reason, and ability. To summarize: At what time, in what place, does the user have what need, what product do you have to solve my need, with so many products, why should I choose you? And can I afford it? Only when all these elements are present does the product's consumption logic begin to flow. But with the product in place and the scenario clear, the possibility of sell-through is only half done.
3. Value point
I was inspired by a viewpoint from a Douyin car blogger: To become an excellent brand, advertising alone is not enough; you must have sufficient value anchors.
What are anchors? Hermès always talks about its Birkin bags made of crocodile leather. Note that they always tout the crocodile leather, which serves as a rough value anchor, distinguishing them from ordinary brands because ordinary brands simply can't use crocodile leather.
In the automotive field, carmakers have spent over 100 years validating the value anchor of cars, and the most core one is the powertrain, especially for luxury brands. Why? Because the powertrain meets several conditions:
1. High barriers, generally difficult for ordinary companies to achieve; 2. Customer-perceivable: if your power is good, users will feel it's fast.
So, you see Bentley and Rolls-Royce are business cars, but their performance is also the strongest. This principle can be found in any enduring high-end brand. FMCG follows the same logic. The reason I keep citing Taishan Original Beer is that its high value is perceivable to users, and the barrier is very high.
Note that a product's value point must be refined around functionality, selling points, and values, so that consumers can quickly remember the information. Only when the value point aligns with consumers' core value perception of the category can it be remembered.
As I mentioned in my previous article, consumers believe that for baijiu, older is better, and for beer, fresh is better. Therefore, as a brand, you cannot deviate from this essence when talking about brand concepts.
In summary, only when the product highly matches the value perception of the target audience and the applicability of the scenario can the product have the potential for sell-through.
This might still be a bit abstract, so let me give an example. Recently, I've been following a brand called Dayao Jiabin, a soda brand from Inner Mongolia. They don't do online advertising, their packaging is ugly, but this Inner Mongolian company, without spending a penny on ads, without online presence, and without a single sales rep, has achieved revenue of over 3 billion yuan.
After careful analysis, their product logic is simple: it's a product specifically designed around the dining scenario.
The scenario is very clear: focusing on mass consumption, specializing in small restaurant formats.
Dayao Jiabin's landed price at the distributor level is 17.5 yuan per case, the distributor sells to secondary wholesalers at 21.5 yuan per case, and the terminal invoiced price is 30 yuan per case, with a promotion of 5 cases for the price of 4, effectively 25 yuan per case. Roughly calculated, the terminal retail price is 5-6 yuan per bottle, with a gross profit of 3-4 yuan per bottle, which is very attractive to small shop owners.
Not only do they provide ample gross profit, but they also offer distributors effective sell-through methods: focusing on in-store case stacking and table displays.
Many brands do table displays, so why highlight Dayao's table displays?
The reasoning is simple: the manufacturer identified that small restaurants have long suffered from Coke's dominance—selling Coke isn't profitable, but they have to sell it. So they devised this strategy.
Dayao invests in table displays in restaurants to intercept consumers who would otherwise buy Coke, prompting impulse purchases upon seeing the product. They don't hire sales reps, leaving all profits to the channel, which naturally motivates restaurants. They also exploit the fact that Beibingyang is too expensive; at the same price, their taste is similar, and the volume is twice as large.
So, are the product, scenario, and selling points aligned?
Taishan Beer, Jinmailang, Dongpeng Special Drink, etc.—you'll find that any product that succeeds follows the same logic of product + value point + scenario.
Because products don't exist in isolation, let's also look at this from Porter's three generic strategies.
First, overall cost leadership. This is often used by big brands, but note that cost leadership doesn't mean the lowest price; it means having the greatest cost advantage among products at the same price point.
When Tiger Sauce's Mr. Hu discussed entering the chili sauce market, he found that making a sauce of the same quality as Laoganma at a lower price would be unprofitable. This means Laoganma has sufficient scale advantages to crush new entrants. Giants like Coca-Cola, Master Kong, and Snow Beer have low production costs due to scale and brand premium. As long as they don't raise prices, new entrants have no chance to compete with them using an overall cost leadership strategy.
Next, differentiation. This is the most common tactic for new entrants, often discussed in marketing as positioning theory. But differentiation is not market segmentation—this must be clear. Differentiation means using all means to make users perceive our difference from competitors. However, differentiation does include market segmentation and division.
But how to achieve sufficient differentiation in a relative field? I found the answer in judo strategy—look at the success of Genki Forest. On the surface, it pioneered the sugar-free category, but from a competitive perspective, it redefined the competitive space.
Summary: In the end, let's revisit the title of this article: When we talk about product innovation, what are we really talking about? Is it just the product itself? Not enough. It's about developing a complete marketing logic of product + value point + scenario based on consumer insights, and ensuring our product has sufficient differentiation in the new competitive space when facing competition.
1. Product: How are packaging and concept different from others? What is the consumer-perceivable value anchor?
2. Scenario: Is the product's fit with the target audience and scenario sufficient?
3. Value point: What competitive advantages does my product have over competitors, distributors, and retailers?
So the process of product innovation is the process of nailing scenario marketing. Any brand, when going offline, must start with a single scenario and gradually expand to multiple scenarios. When users enter the scenario, the brand can use correct expression and communication to let users perceive the product with their five senses, remember it, and continue to consume it.
Over the years, I've noticed that the problem with big companies' innovation is that product people don't understand sales, and sales people don't understand products. Small companies, on the other hand, spend a lot of time solving product and communication issues, which is wrong. They should spend enough time on consumer insights and think through the marketing logic before acting; it's not too late.
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