Using internet thinking to guide and even iterate traditional FMCG product management has been a topic on my mind since entering the internet industry, and I always hope to do something to drive change in this area. Internet products, due to their virtual nature, efficient user reach, full-chain digitalization, and low iteration costs, update and iterate several times faster than physical products. Open the App Store on an iPhone and search for Taobao; the current version is 9.4.0. Click into version history, and you can clearly see the reason for each product version iteration. Looking at these reasons over a longer timeline, after summarizing and analyzing, you can get a general understanding of Taobao's overall operational strategy. Additionally, with weekly product iterations, each time only small functions are adjusted, updated, or added, and over several weeks, these accumulate into a relatively larger product change. For example, from Double 11 to Double 12, from Double 12 to the New Year's Goods Festival, in the few years since the mobile Taobao launched, the number of iteration versions theoretically reached 940 times! Behind these appearances is the adaptive product change based on digital capabilities and understanding of user needs. In contrast, let's look at the situation for physical consumer goods. Coca-Cola has a history of over 100 years, and its most classic product's content has never changed. In response to global obesity trends, it developed Diet Coke and Zero Coke, and in recent years, it has developed flavors like Sakura Coke and Coke Coffee. Additionally, the most classic contour bottle's outer packaging has not changed much (as shown in the figure). Image source: Coca-Cola official website Now look at domestic brands. The well-known Wahaha Eight Treasure Porridge, with a 30-year history, has hardly changed from the first generation to now, except for adding a few flavors. This is the apparent difference in development between internet virtual products and physical FMCG products. Whether such differences are reasonable or not, back to basics, the underlying logic of product change originates from capturing user needs. The digital management of virtual product chains allows product managers and operations teams to continuously optimize and adjust product internal structure, content, and even rules based on rational digitalization to meet user needs and improve NPS. In the past few decades, consumer goods have almost no digital loop for meeting user needs; only through long-term market operations can they judge from revenue results whether users have needs and are satisfied. With the rapid growth of the consumer market over more than 30 years of reform and opening up, such market operations were fine; supply and demand were in extreme imbalance, and as long as you were bold, you could make and sell freely. But now, many FMCG companies have hit growth bottlenecks. The current mainstream consumers' pursuit of products far exceeds the product shaping and management capabilities of these entrepreneurs and management. The precision and efficiency of internet product methodology have great reference value for the FMCG industry. The core of internet product thinking is product iteration capability and management based on digital user operations. What the FMCG industry should learn mainly includes "user operations" and "product iteration." User operations refers to operational methods for user segmentation based on digital chain premises. Insight into users and commercial sensitivity are the unchanging truths for capturing business opportunities. But digitalization is the foundation for efficiently understanding users, business opportunities, and even business laws. I won't elaborate much on digitalization here, but I'll share a viewpoint: Brand digital operation capability is the key capability for FMCG, especially new products, to win over post-95s and post-00s users in competition. -01- User operations are generally divided into micro and macro levels Micro user operations include building user profiles, user scenarios, and user mental models. These are familiar to FMCG practitioners, i.e., brand positioning and management, which is the main work of FMCG marketing or brand departments. Brand positioning and its scenarios have been systematically discussed in previous articles; interested readers can check the article specifically introducing JDB's methodology. Macro user operations are targeted operations after breaking down the digital user base. Due to different user attributes, there are different breakdown perspectives. For example, under the brand digital strategy, Bain and Alibaba divided the entire Tmall Taobao platform's FMCG consumers into eight strategic groups: New White-Collar, Established Middle Class, Refined Mothers, Small Town Youth, Gen Z, Urban Silver Hair, Small Town Middle-Aged and Elderly, and Urban Blue-Collar. Another example is the user funnel model mentioned in growth strategies, i.e., acquisition, activation, retention, and referral. In short, it's digital chain operations for specific groups, somewhat like the STP strategy in classic integrated marketing. For specific content and practical operations of user operations, I suggest referring to Sean Ellis's "Hacking Growth," Yang Fei's "Traffic Pool," and Zhang Mengxi's "Chief Growth Officer." These books have systematic framework practical suggestions and detailed cases, but for FMCG people, they are a bit obscure; only by reading multiple times and recording questions one by one can you exchange with industry experts for clarification. It's worth reminding that almost all current growth books introduce cases and methodologies from digital internet products or e-commerce platforms. Even the small blue cup (Luckin Coffee), which claims to be new retail, had a relatively small scale of online-offline integration during the author's creation period. The O2O model, with the promotion of Hema, Taoxianda, Meituan, etc., especially affected by this epidemic, will see significant growth in offline retail's off-store-to-home business model. This means the digitalization of offline business forms, so what are the user operation methods based on O2O ecosystem digitalization? This poses a new topic for all practitioners. -02- Now let's look at products Products are the carrier for meeting user needs. Theoretically, product changes originate from changes in user needs, but in a lot of practice, product iteration is the change in the product team's or operations team's understanding and judgment of user needs. I won't delve into the pros and cons of human intervention here, but mainly briefly introduce the MVP method commonly used in product iteration for reference. MVP, minimal viable product (not most valuable player), is the smallest visualizable product. MVP is an important concept and method in lean startup; the main purpose of implementing MVP is to validate actual user needs before large-scale resource investment in development and operations. When doing the smart retail project with He Shan and Liu Jie, we conducted multiple MVP tests to judge whether product needs are universal and commercializable. For example, for offline store openings, how to significantly shorten the time from opening to first in-store purchase for the physical area's radiated population, and the penetration rate of store visitors during that time, we did an MVP of crowd fission gameplay in the office scenario of convenience stores. The product was simple: after in-store users complete a purchase, they forward the rights information to the company group; colleagues claim it and complete an in-store purchase, and both parties get discount rights. Two years ago, Pinduoduo's various group-buying fission games were in full swing, but this test based on offline physical stores was a pioneer. The MVP test achieved good data results: in the office scenario, the information reach efficiency of company groups was high, and within one week of opening, over 60% of users came to the store to complete their first purchase. From this, we also judged that this method, besides opening needs, has significant commercial application value for retail category acquisition/repurchase, related category purchases, and especially for brands and new products' acquisition/repurchase. Unfortunately, the entire project soon pivoted, and the post-test application couldn't continue—what a pity! Smart Retail A Convenience LOGO The above case is a typical internet product development path: first use MVP to test real needs, then decide the next product development plan based on test data and user feedback. This approach is worth learning from for the FMCG industry. China's consumer market is huge, and the FMCG industry launches many new products each year, but most don't meet market needs and are eliminated within a year, causing massive resource waste. The application of MVP in the FMCG field will improve the survival probability of new products. Besides top brand companies, a large number of mid-tier and small/micro FMCG companies should learn to use MVP, placing need testing before refined R&D, large-scale raw material procurement, and even production line preparation, replacing arbitrary decisions and copying from abroad with scientific methods. But unlike internet products, MVP application in FMCG requires industry innovators to continuously try, summarize, and refine in practice. Here I'll sort out some of my understanding of certain FMCG categories, just as a starting point for discussion. -03- Application of MVP in FMCG new product development Similar to internet products, the process of turning a concept or idea into a product can use the minimal viable product method to test users' demand for the product's core value (willingness to use, willingness to pay). For example, a company plans to produce a mugwort soap, targeting small town middle-aged and elderly people and urban blue-collar workers (among the eight strategic groups). To test this group's demand and willingness to pay, there's no need to prepare everything like packaging for mass production, raw materials, OEM cooperation terms, and sales teams. Instead, purchase through relatively higher unit price but flexible ordering handmade manufacturing; for demand testing, you can form several small but refined MVP teams (diversified test samples) to conduct sales tests of version 1.0 through different regions/channels (including e-commerce, such as CPS content e-commerce). For offline sales terminals, use small group personnel for intercept sales. Besides collecting daily sales data, focus on user feedback on the product and willingness to pay. For example, what is the inherent impression of mugwort in users' minds? Why choose mugwort soap? How does it feel in hand and psychologically during use? Through weekly tests, data feedback, and user interviews, the success probability of product 2.0 will significantly improve. It should be noted that for different product categories, test regions, channels, and time should be planned and targeted. -04- Application of MVP in product micro-innovation/iteration With the previous example, it's easy to understand the application of MVP in product iteration, including taste, fragrance, function deepening or expansion, packaging, price, etc., all can use MVP for minimum-cost feasibility testing. Whether it's digital user operations or the application of MVP methods, the goal is to understand and meet user needs. As long as users change, FMCG brands and products must change accordingly. For a consumer goods company, the era of big single products is over. To meet the needs of more and more user groups with different hobbies and attributes, the strategy of brand/product matrix objectively requires the FMCG and retail industries to master and apply more efficient tools and methodologies, and continuously iterate in practice. Embracing change is the starting point for grasping the future; only by continuous learning and rapid response can we have the possibility to control change. Source: Walking Maker (ID: Geekinshenzhen)