Hello everyone, I am Yin Na, head of Wyeth Nutrition's new business. Thank you to New Distribution for the invitation, giving me the opportunity to share some of Wyeth Nutrition's explorations in digitalization in the lower-tier market. Wyeth Nutrition has always placed great importance on operations in the lower-tier market. The new business is an independent team that integrates strategy and execution, bringing together diverse marketing talents from both foreign and local brands, and collaborating with Wyeth Nutrition's excellent brand-building team to innovate and explore a more efficient brand + channel dual-driven model in the lower-tier market. We look forward to working with more partners to jointly address industry challenges, symbiosis, and growth. △Yin Na, Head of New Business at Wyeth Nutrition New business must inherit Wyeth's century-old heritage while also "staying young." The "youth" we want to emphasize is a state of being, a courage to always face the sun, and a determination to iterate boldly. As I often say to my team: What is entrepreneurial spirit? It is the spirit of taking responsibility for all possibilities of this matter. Challenges and Opportunities in the Maternal and Infant Market First, let's look at this survey: In 2020, the average monthly turnover of maternal and infant stores was between 170,000 and 240,000 yuan, a year-on-year decline of 17%. Due to the impact of the pandemic, only January 2020 saw positive growth, and the average monthly turnover of stores in 2020 was generally lower than in 2019. From the current trend, by Q4 2021, it still shows a downward trend, and the challenges continue to intensify. At the same time, we can also see that foot traffic to stores has decreased year-on-year. The average transaction volume has declined significantly for three consecutive years, with a notable decline in 2020, indicating that the impact of the pandemic is still ongoing. For brands, it is particularly important to capture transaction volume and maximize the value of each customer. The overall challenges in the maternal and infant industry are also challenges for the milk powder category. With the decline in birth rate, milk powder, as a necessity, bears the brunt of the pressure. Store operations are also in a difficult situation, with declining foot traffic and generally lower revenue. During the pandemic, consumers learned to shop online, further reducing foot traffic to traditional stores. As they say, "challenges and opportunities coexist." While seeing the challenges and pressures, we also see new opportunities in the maternal and infant industry. Although the demographic dividend is gone, household spending on childcare is increasing, with greater emphasis on quality childcare and strong demand for high-end parenting. In past research, we found an interesting phenomenon: among declining cities, stores in first-tier and fifth-tier cities seem to be less affected by the pandemic, with sales showing positive growth. It's not hard to understand why. First-tier cities have strong digital capabilities; they have been consuming on JD.com and Tmall, with same-day or next-day delivery. E-commerce convenience has little impact on the overall supply chain and marketing; on the other hand, fifth-tier cities lack digitalization and rely more on small-circle economies, choosing nearby options. On the store side, traditional stores have been accustomed to the "people looking for goods" model, with conservative thinking, complacency, and a lack of innovative thinking and motivation. Now, maternal and infant stores must learn the social retail model of "goods looking for people," using social touchpoints and data analysis to precisely match marketing to consumers, reducing costs and increasing efficiency. A couple of days ago, I was communicating with several store owners. They said that now they can't just post randomly on their Moments; for example, certain posts need to be sent to specific people. If they post too much without grouping, consumers will find it annoying and feel like they're being pushed information. Store owners are becoming more refined in their Moments posts, let alone brand owners. Going further, let's look at our users. We believe that the spending power of one core member equals that of 3 loyal members, 14 ordinary members, and 63 low-efficiency members. Therefore, deeply mining member value and achieving precise member marketing is crucial. In summary, the maternal and infant industry is not without opportunities. Although the overall dividend is declining, demand is changing. And every change in demand is actually a good turning point, often an opportunity for many business model iterations. Wyeth's Digital Marketing Exploration in Lower-Tier Markets For digitalization in lower-tier markets, our core focus is to serve distributors and stores in lower-tier markets well, clearly understanding their needs so that we can provide precise solutions. Distributors hope to better engage with terminals, improve internal efficiency, reduce costs and increase efficiency, and enhance the capabilities of their organizational talent; for stores, they care about new and old customers and their own brand reputation. Therefore, around their needs, we provide distributors and stores with rich operational tools to help them better serve users. We have also implemented channel interest binding and promotion mechanisms to help distributors and retailers achieve better customer acquisition, traffic generation, and repurchase. The new business has always emphasized the "Five Steps to Drive Sales" to help stores acquire new customers and retain them. This digital marketing combination is specifically divided into five steps: 1. Activity Warm-up: Moments Check-in 2. Display Showcase: Online PK Contest 3. Member Traffic Generation: Random Red Packet Lottery 4. New Customer Conversion: Store-Specific New Customer Activities 5. Large Order Retention: Timely Large Order Promotion To further illustrate the effectiveness of this combination in our business, I'd like to share some numbers. For example, 86%: we only get 14% of users through store traffic, and 86% come from sharing by these 14% of users. At this point, someone might ask: Why are these stores willing to hand over their private domain to us? Isn't it said that the lower-tier market is very "protective of food"? Actually, as a foreign brand's lower-tier team, we are more likely to encounter trust issues. We don't have enough personnel and trust foundation locally, and with previous attempts by foreign brands to go lower-tier being frustrated, the "trust crisis" we face is much greater than what most consumer goods companies encounter when going lower-tier. At that time, I only gave the team one direction: Go deep and solve problems for customers. That is our way to survive. We always remember that the store's need is to retain users, so from system design to interest binding, we consider how to make these users serve the store. While doing traffic, we also need to do retention. Let me share a recent case from August to help you clearly understand what we did in our specific exploration. Currently, the industry is seeing "involution" at many levels. Both large and small brands seem to be slashing prices to boost sales or pressuring inventory to meet targets. Coupled with the impact of the pandemic in some major provinces in the middle of the year, the challenge of achieving annual goals has intensified. In the initial development stage of new products and models, with scarce resources, diversified survival and differentiated competition are even more necessary. In our digital model attempted in August/September this year, there were three key steps: First, based on the store, do user positioning around the store, with the store as the center, and use red packets within a 5-kilometer radius for traffic generation. Second, operate flash groups based on the store. Third, use official live streaming to drive public domain traffic, helping with further brand education for the store. Through this combination, our first live stream after a year of launch broke through 30,000 viewers. From red packets to flash groups to live streaming, 65% of national distribution stores participated, and new customer growth was also very high. These are the soil for future business growth. Because consumers no longer enter stores, we directly conduct brand education in the groups, explaining quality clearly and avoiding price wars. In this way, many people in the flash groups made purchases. Flash groups are time-limited, so users pay close attention. Although our team is small, one person can leverage 300-400 stores, directly teaching stores how to operate flash groups, and also teaching distributors how to help stores operate flash groups. In this way, we not only help stores better serve customers but also make stores grateful to distributors for bringing such thoughtful help. I often say that new business should pamper our distributors and stores. We can provide not only quality products and services but also a lot of wisdom, and this wisdom can be monetized. So, I always say, we need to find partners who are willing to grow with us and can see the value. Currently, the industry's hated "cross-region selling" control is also a topic at every forum. In fact, besides the brand's own "self-discipline," in Wyeth's new business view, cross-region sales control can be combined with digital marketing. Take the "Zhenlang" brand in the case as an example. Since its launch a year and a half ago, various flow control mechanisms have been strictly enforced, which is inseparable from our digital full-chain transparent traceability system. At the same time, for Zhenlang's product internal and external codes, we have designed a series of marketing-related technological innovations to control goods, combined with our long-term determination, to fully ensure the interests of stores and distributors are protected. This is an era of both crisis and dividend. We must be keenly aware that the pandemic, formula registration system, birth rate, and many other factors are causing a series of changes in the upstream and downstream of the industry chain. In this change, how we can more effectively connect with more partners and consumers, thereby deriving a stronger value network, is a challenge for all industry players. We need to enable the three links of brand, distributor, and retailer to have the ability to dance with such a market environment, and the combined strength will be very powerful. The extent to which such multi-party collaboration can be achieved is the key to determining the sustained growth of a brand's business. Digitalization plays a very important role in this process, running through business strategy and execution. After talking so much about digitalization, I still want to emphasize the underlying logic behind digitalization. That is, advanced productivity requires matching production relations. This is why many large companies with bloated functions and outdated systems may spend a lot of money on digitalization without bringing growth to their business, while many small enterprises that truly achieve all-round transformation deeply benefit from the digitalization dividend, with dark horses emerging frequently. Here, we sincerely wish more dark horses in the FMCG industry to shine brightly in the era of digital symbiosis. The achievements of Wyeth's new business in lower-tier digitalization are first due to the strong support from Wyeth Nutrition's management and Nestlé Group over the past two years, giving us ample space and confidence to continuously innovate. We also thank Wyeth's new business distributor partners and retailer partners. It is you who continuously work with us in actual business to refine these tools and combinations, making them closer to actual business needs, more user-friendly, more beneficial to every link in the business, and conducive to long-term business development. The road is long and arduous; Wyeth's new business will search up and down! PS: Ms. Yin Na is the head of Wyeth Nutrition's new business. This article is from Ms. Yin Na's keynote speech at the 2021 (4th) China FMCG Conference, organized and published after her review and authorization. Are you "watching" me?