On January 22-23, at the 2019 New Year Marketing Course co-hosted by New Distribution and Teacher Liu's Forum, Zhao Bo, founder of New Distribution, delivered a keynote speech titled "New Marketing and Digital Transformation of Channels in the FMCG Industry." The editor has compiled the content on new marketing from Mr. Zhao's sharing for readers.

Core viewpoints:

  1. The world is gradually splitting apart; we must be brave in accepting different viewpoints and ideas, while establishing non-consensus concepts.
  2. The fragmentation of information dissemination inevitably leads to the fragmentation of retail scenarios and channels. Only by establishing a comprehensive marketing system through data can enterprises seize the dividends of this era.
  3. Products that consumers don't want to photograph and share on social media after the first purchase are not qualified good products.

1. Traffic vs. Dissemination

Let me start with a picture. This is an article that went viral on Weibo after Luo Pang's New Year's Eve speech at the end of last year. The title is quite catchy: "Young People's Superstition in Paid Knowledge = Old People Buying Quanjian." This title is quite harsh.

I know many people don't approve of Luo Pang. For example, the other day I chatted with a Google AI engineer who had just returned to China. He didn't approve of Luo Pang at all. He said that whenever Luo Pang talked about artificial intelligence, he felt it was mediocre. But this doesn't prevent many people from learning about global AI development through Luo Pang.

The world is like this; it is gradually splitting apart. Half or even more than half of what I say today may not be recognized. But it doesn't matter if you don't understand, don't know, or don't approve. I suggest everyone learn to establish non-consensus concepts, because the world has indeed changed, and it's hard to have a grand unified consensus theory anymore.

In traditional marketing theory, traffic refers to places with the largest flow of people, such as local hypermarkets or transportation hubs, which have the highest value and the most expensive rent. But now the rent in many such places has dropped significantly because a large portion of traffic has shifted from offline to online, and the essence of traffic has changed greatly. I believe traffic is consumers' attention. The essence of consumption hasn't changed, but the decision-making, path, and behavior of consumption have all changed.

Let's look at a case of People's Daily's Weibo dissemination. This is a dissemination map I randomly captured from People's Daily's Weibo about a certain topic. You can see that the dissemination levels are not like traditional TV ads, which decrease layer by layer. After information is disseminated, people don't just passively accept it; they engage in secondary or even multiple re-disseminations, causing chain reactions and triggering a second explosion of topic popularity. This image clearly shows that on the internet, the way and logic of information dissemination have changed!

For traditional marketers, the form of advertising has shifted from a single "I say, you listen" to consumers being not only the recipients of information but also the subjects of sharing and secondary dissemination. Whether consumers will actively share product-related information is the primary factor to consider in current dissemination.

The change in information dissemination inevitably brings about the reconstruction and fragmentation of retail scenarios and channels. We categorize channels into three networks: sky network, ground network, and human network.

Sky network: B2C, O2O, etc. Ground network: Distributors, KA channels, BC channels, circulation channels, special channels, etc. Human network: Content e-commerce, social e-commerce, community e-commerce, video e-commerce, crowdfunding e-commerce, etc.

Summary

  1. Society is tearing apart, the herd effect disappears, consumers no longer follow trends, and demand shifts from mass to segmented consumption.
  2. Non-mainstream businesses like new scenarios and new channels are becoming more numerous.

Just now I talked about various changes, showing big brands a completely new business logic system. Brand owners can no longer sell a single hit product to consumers nationwide to achieve a scale of 10 billion.

Think carefully: since Six Walnut and Wanglaoji, have there been any new 10-billion-level single products in China's FMCG industry? The answer is no. I've been thinking about a topic: will Six Walnut and JDB mark the end of the era of 10-billion-level single products in China? It might really be true. In the future, there may no longer be 10-billion-level single products.

Dissemination costs are rising rapidly, and brand owners find it difficult to efficiently convey information to consumers. Why do I say this? In the past, traditional marketing had three axes: CCTV advertising + distribution + deep distribution. In the past, for traditional marketers, as long as the whole country watched TV, the brand owner's input and output were proportional, and no matter how expensive CCTV ads were, they were worth it. But think about it: who dares to do what Li Tuchun of Prince Milk did back then, spending 88.88 million yuan on CCTV ads when the company's total assets were less than 30 million?

Dissemination and transaction have become an inseparable organic whole. In an era of massive information and fragmented channels, if consumers "see" but cannot immediately "get" (place an order), your brand information will quickly be diluted by the massive information. Moreover, you need to use different products, through different channels, to reach different consumers, only then can you meet consumers' ever-changing needs as much as possible.

2. New Distribution's Speculation on Marketing Trends

The internet has made dissemination more difficult, but it also brings three benefits:

1. Improved dissemination precision; 2. Ability to focus dissemination intensity locally; 3. Lower cost of scale transactions.

Three Squirrels sold 7 billion yuan online last year alone. The key is that they achieved such a large scale of transactions with very few people. The core reason is that they used modern information tools to achieve scale transactions, which was impossible in the past. The internet makes flexible production and small-batch, high-profit returns possible for enterprises, and the cost structure of enterprises can be continuously optimized.

When new technological tools and new efficiencies emerge, our marketing logic needs to reorganize resources and elements, which is what we call "New Marketing." But before doing new marketing, I suggest everyone ask themselves four questions:

  1. Who are the users, what needs do they have, and where are they?
  2. What problems can we solve for them, and why should they buy our products?
  3. How to find them and tell them that our products are exactly what they need?
  4. Where do consumers buy my products? How do we deliver the products to them?

If we interpret these four questions in the most concise language, I think it's just eight characters: Perception, Pleasure, Reach, Service.

But behind these eight characters are actually 40 key words behind the new marketing system, which can also be called 40 key elements:

Perception: Stratification (mass, niche, personalized), city tier (high/low tier, outside the fifth ring), pain points, needs, scenarios Pleasure: Convenience, social, showing off, scarcity, brand, quality (low temperature, short shelf life, health), high appearance, high cost-performance Reach: IP, content, KOL, community, fans, traffic, whole network Service: Supply chain, ABCD (AI, blockchain, big data, cloud computing), routing, sharing, warehousing and logistics, middle platform, precision, online

Based on these 40 key words, when applied back to the context of traditional marketers' thinking, they correspond to four words: Product, Marketing, Channel, Organization.

1. Product: The era of big single products is over

From selling one product for 1 billion to selling ten products for 100 million, the world has shifted from mass to segmented. At this point, it's impossible to sell one product for 10 billion; the era of big single products is over.

A good product should have the following three cores:

Good quality: High quality, high appearance, health, design aesthetics Has content: Storytelling, emotional expression, personification, values, ritual, topicality, cross-border interpretation Strong IP: Content should be designed like a product, and products should be interpreted like content

In one sentence: Products that consumers don't want to photograph and share on social media after the first purchase are not good products.

Everyone knows Tsingtao Beer. When you drink Tsingtao Beer, do you post it on your Moments? No. But when you see such a product, do you want to post it? Why do you want to post it? When Tsingtao Beer bottles are printed with Van Gogh's art, its dissemination value bursts out.

Marketing: Shift from centralized media to social media dissemination, from funnel to ripple

What is a funnel? An ad on CCTV is seen by 1.4 billion people, 140 million notice it, 14 million remember it, and 1.4 million go to the supermarket to buy it. That's a funnel. Traditional dissemination was funnel dissemination.

What is a ripple? Similar to the People's Daily case above. When you throw a small stone into a lake, it spreads like ripples. Now dissemination can no longer be done in the form of a funnel, but should spread like ripples, using social media to spread, finding key KOLs to help us disseminate.

The 3P principle was proposed by Coca-Cola. The new 3P principle is further evolved by New Distribution based on Coca-Cola's "ubiquitous, value for money, first choice in mind."

Ubiquitous: Online across the whole network and all time periods, all traffic, all entrances, visible on every screen, what you see is what you get. Value for money: Exceed user expectations, ultimate products, rarity is precious, but more importantly, fair pricing that touches people's hearts. If it's expensive, sell it cheap; if it's cheap, sell it expensive. First choice in mind: Brand culture and image can continuously win with target users, sustained hot content and diverse dissemination methods, active interaction with users, visible and precise promotional activities. Take Master Gao craft beer as an example. Master Gao's slogan is "Brewing Freedom." I always think Master Gao brews not beer but emotions, the pursuit of freedom and unruliness. When communicating with Master Gao, he said brewing is just a byproduct; they hope to express their views through beer. When users hear this story, they are easily moved and influenced, and become his fans. People never drink beer; they drink emotions and the spirit of pursuing freedom.

Channel: Shift from deep distribution to precise distribution, from analog to digital

Deep distribution sounds like a high-sounding term, but I think its efficiency is still very low because for brand owners, do you know who the distributor sold the products to? Do you know how many small stores? Do you know which consumers the small stores sold the products to? You don't know. You hire Nielsen or Bain for research, but is the research data accurate? Not necessarily. It might be analog, guessed!

In the past, we always talked about marketing. What is marketing? To put it bluntly, isn't it guessing? Based on this year's sales data and budget, guess next year's sales, guess who the consumers are, guess what needs they have. Everything is analog, not precise. When all data in this era has become digital, and there is already very precise data, why don't enterprises use it, and even still use traditional methods to guess and simulate?

In the supply chain, enterprises must shift from analog signals to digital signals. Where are digital signals? Everywhere. B2B full transaction data, small store profiles, channel inventory turnover, various consumer profiles on Alimama. You can use various means to filter out who your users are, where they are, what needs they have, what interests they have, and how they purchase.

I hope marketers will no longer guess, no longer use past analog methods, and must learn to speak with precise online data.

New Distribution believes that mass consumers are decreasing but haven't disappeared. The existing stock must be defended, but niche and personalized needs are emerging, and brand owners must address them. Different needs should be met with short, medium, and tail products, using short, medium, and long chains.

Long chain for mass needs: Whether using traditional channels or a deep distribution system, the premise is to learn to use modern digital tools; Medium chain for niche needs: Some medium and tail products may have increased SKUs, so use KA and B2B for small-batch distribution; Short chain for personalized needs: Continuously launch limited editions and personalized products, create topics, create social currency, and do various dissemination.

Organization: Shift from Taylor's pyramid management to platform-based decentralized organization, from management to empowerment

We believe the organization is a trinity: the marketing department, sales department, and supply chain should become a new team. This is a large middle platform that operates users around online, offline, and social, doing three-network integration. This is called "three departments in one, three networks in one, small teams." A US special forces team of 4 people is supported by how many people? 280 people. That's its military middle platform. For enterprises, they need to provide various empowerment to small teams. Without this empowerment, small teams cannot operate.

For enterprise transformation, New Distribution believes that large organized units are hard to transform successfully; it's often small units that break through. You can disagree; this is just a concept in my mind, not necessarily proven in practice, but it can provide some food for thought.

In summary: Find consumers, discover needs, match products according to scenarios, tell good stories, do good dissemination, ignite the market, and then through efficient shared supply chains, one-click routing and distribution, deliver products to consumers. That's my view on the changes in new marketing and new channels. Let me emphasize again: I don't think everything I say is right, but this is indeed based on our current industry observation and research, and also an extension of Teacher Liu's new marketing theory system. These are some viewpoints we've come up with. I hope everyone can also follow the New Distribution official account, where there will be many discussions on new marketing, new retail, and supply chain digital transformation trends.

Regarding these topics, New Distribution will hold in-depth discussions at the 5th FMCG + Internet Conference in Chengdu in March 2019. Interested friends can continue to follow the New Distribution official account. We will officially announce it soon.

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