Content Source: On October 12, 2019, at the 2019 Kotler Future Marketing Summit hosted by Kotler Consulting Group, Zong Qinghou, founder and chairman of Wahaha Group, delivered a keynote speech titled "In the Internet Age, 'Who Buys' and 'Who Sells'?" Notesman, as a partner, published this with authorization from the organizer and the speaker.
Before reading, consider:
- How to empower marketing in the new era?
- What factors affecting marketing have changed in the internet age?
- How to understand the essence of "who buys" and "who sells"?
Hello everyone! It is a great honor to participate in this "2019 Kotler Future Marketing Summit," to personally listen to Mr. Kotler and various experts and scholars, to further improve marketing work and promote the continued development of the enterprise. I also express my high respect to Mr. Kotler, thanking him for his lifelong research on marketing theory, guiding marketers to practice and achieve fruitful results.
In recent years, with the intervention of new technologies represented by the internet, big data, and artificial intelligence, the marketing environment of the FMCG industry has undergone tremendous changes, and the original marketing methods have been impacted.
At the same time, new retail has also rushed in, but no dawn of replacing the original marketing model has been seen, and the Chinese marketing community is indeed very confused.
Taking this opportunity, I would like to report to you the transformation journey of Wahaha, and ask everyone to help analyze the methods and approaches for marketing transformation in the internet age.
-01-**** The Essence of Marketing: Solving the "Who Buys" and "Who Sells" Problem
Technological revolutions have always been a powerful engine for economic growth. Every technological revolution in human history has triggered tremendous social changes.
Driven by technology, various fields of the commercial society have undergone great disruption and innovation, and the FMCG field is no exception. Traditional marketing strategies have failed, and market patterns have been constantly broken and reshaped.
I believe that the essence of marketing is to solve the problems of "who buys" and "who sells."
"Who buys" means understanding the true needs of consumers; "who sells" means how to quickly push products through sales channels to consumers after development, and how to do publicity and promotion in the process.
In the internet age, focusing on solving these two problems, empowering with new technologies, and avoiding disruption are key to the survival and sustainable development of enterprises.
1. Who Buys?
For 32 years, we have solved the "who buys" problem through continuous product innovation. We have always taken the development of products that "meet consumer needs" as our mission, insisting on innovation and the concept of "always leading others by half a step."
At the very beginning, our children's nutritional liquid was a great success in the market and loved by consumers because the product was effective and hit the consumer demand point.
At that time, I had a lot of contact with schools and saw that children were sallow and thin. At that time, the problem of eating had already been solved, so why did this phenomenon still occur?
After some investigation, we learned that because only children were favored and picky about food, leading to malnutrition, and there were no targeted products on the market, we seized this business opportunity and filled the market gap.
Later, we insisted on starting from consumer needs and continuously enriched product varieties. So far, we have become the production enterprise with the most complete product categories in the beverage industry, covering:
Protein drinks, drinking water, carbonated drinks, tea drinks, fruit and vegetable juice drinks, coffee drinks, plant drinks, special purpose drinks, canned food, dairy products, medical and health foods, and more than 200 varieties in over ten categories.
We have built "the most comprehensive product line in China's beverage industry," with new products and new growth points every year, forming a complete industrial chain of categories, able to create value for consumers in an all-round and lasting way. On this basis, we have ensured Wahaha's rapid growth and created huge economic benefits.
2. Who Sells?
For 32 years, we have also solved the "who sells" problem through a huge marketing network and a marketing model with "Wahaha characteristics."
For the FMCG industry, the stronger the control over channels, the greater the market voice. We have established a joint sales system with more than 6,000 distributors by reasonably distributing the interest relationship between manufacturers and distributors, forming a union between manufacturers and distributors.
Our company requires distributors to pay full deposits according to the sales plan, gives them interest higher than bank loans, and requires distributors to carry out market operations according to our requirements. After making profits at the end of the year, we share a portion of the profits with them.
Through this method, we have established a close cooperative relationship with distributors, changing "one enterprise competing in the market" into "thousands of enterprises working together to compete."
At the same time, by helping distributors develop a second-level joint sales system, we have extended the market network to rural areas, enabling products to be distributed to more than 3 million retail terminals nationwide within just one week, quickly delivering them to consumers, greatly improving market competitiveness.
The joint sales model has formed a solid marketing front between Wahaha and distributors and provided us with more abundant cash flow.
"Integrity" and "win-win" are the basic principles of cooperation between Wahaha and distributors. We adhere to the concept of "if you want to make money, first let others make money," regard distributors as key strategic partners, and maintain long-term good cooperative relationships.
Many distributors have grown and developed together with Wahaha, and some have even become leading enterprises in the industry. The best-selling of our big products such as AD calcium milk, Nutrition Express, and purified water is inseparable from our full cooperation with joint sales partners.
In addition, Wahaha's "sales and production in the same place" strategy has opened the road to national expansion. So far, we have established more than 80 production bases and 180 branches in 29 provinces, municipalities, and autonomous regions across the country:
Whether on the Qinghai-Tibet Plateau in Lhasa, or in Aksu, Xinjiang; whether in urban chain stores or rural mom-and-pop shops, people can buy Wahaha products.
In addition to allowing consumers to directly purchase our products through pervasive channels, Wahaha also deepens consumers' impression and awareness of products through strong advertising.
In the early 1990s, Wahaha's children's nutritional oral liquid became popular nationwide with the advertisement "Drink Wahaha, eat with a good appetite." At that time, most enterprises did not yet have the concept of advertising.
We advertised wherever we developed markets. And I think it was easy to develop markets at that time: make a 30-second ad on provincial and municipal TV stations, and place four half-page text ads in provincial and municipal newspapers, and the market would open up in a week.
We also took the lead in advertising on CCTV, with even better results, because at that time only CCTV could cover urban and rural areas nationwide and was the most authoritative media. Therefore, our business was very good, and sales increased significantly. Wahaha was the first Chinese enterprise to choose famous singers as product endorsers, and also pioneered advertising forms such as name-contest ads, expert ads, and testimonial ads to promote our products.
Good quality plus good publicity, our products have occupied a huge market share and gained long-term trust and love from consumers.
-02-**** In the Internet Age, Enterprises Face 3 New Challenges
Over the past 40 years of reform and opening up, China's economy has developed rapidly, the country's appearance has undergone earth-shaking changes, the income level of the general public has been greatly improved, and consumer demand has continued to rise.
We are now ushering in a comprehensive consumption upgrade, including consumption upgrades from first-tier cities to towns and rural areas at the geographical level, health and safety demand upgrades at the product quality level, and product connotation demand upgrades at the consumer concept level.
On the other hand, our country's economy is now shifting from a stage of rapid growth to a stage of high-quality development, and the food and beverage industry has also entered a "new normal" stage of declining growth.
Previously, the growth rate of the entire industry remained above double digits, but since 2015, it has dropped to single digits. In recent years, the growth rate has remained at 5%-6%, and the intensity of competition in the entire industry is still increasing.
The intervention of the internet and digital technology has brought comprehensive and in-depth changes to all levels of society. As far as the food and beverage industry is concerned, the current marketing environment has undergone tremendous changes, and new problems have been encountered in the process of solving "who buys" and "who sells."
First, due to the emergence of the internet, understanding consumers and accurately grasping their true needs has become a challenge for enterprises.
Mobile internet has turned consumers from a homogeneous whole into a personalized segmented group. The internet has lowered the threshold for information acquisition, and consumers can easily learn more information about enterprises and products.
Today's consumers can be said to be well-informed. The more choices they face, the less homogeneous products can meet their needs, and the stronger their personalized needs become.
In the past, we could understand consumer needs through market research. Now, without the help of big data and other technical means, it is difficult to accurately locate consumer needs.
Second, traditional beverage sales channels are being impacted by online and offline multi-channel sales models.
Our previous extensive management needs to change. In the past, our beverage sales were mainly based on wholesale markets. Since the rural population was several times larger than the urban population at that time, the urban market was relatively weaker and we didn't feel much.
But now urbanization has occurred, and the rural population has gathered in cities, and the main consumer groups have gathered in cities. Therefore, we need to focus on developing special channels such as convenience stores, catering, campus markets, entertainment venues, as well as the currently hot e-commerce.
Finally, in the internet age, various new media emerge endlessly, and consumer attention has become a scarce resource.
In the past, we relied on strong advertising to let consumers know our products and attract them to buy. But now the media has increased, and the internet is flooded with information. Short videos, self-media, internet celebrities bringing goods, advertising can be done anywhere, and advertising forms are constantly innovating.
Now advertising also requires "what you see is what you get," requiring conversion rates and the unity of brand and effect, so that consumers can place orders immediately after seeing it.
These make it more difficult for advertising to accurately reach consumers. Although we have done all these methods, the results are minimal.
Therefore, under the new situation, making full use of the internet and big data to do marketing well and creating new marketing models has become an urgent need and inevitable choice for our beverage enterprises.
-03-**** Connecting with Consumers, Creating Greater Brand Marketing Value
I believe that to meet the challenges, we must grasp the following aspects:
1. Consumer-centric product positioning
In the era of consumer sovereignty, we must be consumer-centric, use big data to accurately locate consumers, grasp consumption trends and potential market needs, and truly "cater to their preferences."
We must conduct research in advance to determine which consumer groups our R&D, production, and sales products are intended for, what needs they should meet, and what value they should create.
Then, according to the preferences of this group, design packaging, configure taste, and design concepts, so that the targeted consumer group likes it, and only then can the product be accepted by consumers.
To ensure that Wahaha's new product development can meet the diverse and personalized needs of consumers, in addition to conducting solid field research, we have also built the "Haba Amusement Park" platform to interact with consumers, collect feedback and data, and establish our own beverage consumption information database.
With the support of big data, consumer groups have formed precise portraits. According to our data, consumer demand for food safety, environmentally friendly materials, and health care continues to rise.
At the same time, in response to the national "Healthy China" strategy, we have used traditional Chinese medicine food therapy theory and modern bioengineering technology to push beverage products from "safe" to "healthy" development direction.
At present, we have developed food and beverages with health functions that can alleviate sub-health conditions of modern people; developed innovative fashion drinks for young consumers; and developed high-quality, unique, and effective health food product groups for the refined needs of different targets such as the elderly, children, women, and sports people.
2. Building a "online + offline" multi-channel sales model
Because beverage industry products have low value and heavy weight, consumers still pay attention to the convenience and experience of offline channels. Therefore, we focus on offline channels while developing new online channels to create online and offline pathways.
Since 2017, we have implemented a channel flattening strategy, continuing to develop and consolidate the original joint sales network, increasing price differences, and mobilizing the enthusiasm of distributors.
At the same time, we are also trying a new model of social retail. Due to the application of big data, channel management can be extended to every consumer, and every consumer is a powerful communicator and sharer.
Social retail makes consumers our "information feedback providers" and "product value transmitters." In social networks known for strong user stickiness, purchasing behavior becomes sustainable.
We have also built our own two e-commerce platforms - "Fuhuibao" and "Haba Amusement Park" - hoping that through this approach, consumers can buy our products at preferential prices.
And we also deliver to home, bringing real benefits to consumers. In this way, the real economy will not be disturbed, and we can have our own channels and sales.
3. Using the logic of "attention economy" for product promotion
I think the key to promotion is to find ways to let consumers taste our products; if consumers feel good, they will become our consumers, and the promotion will be successful.
Products, enterprises, and brands, in order to accurately capture consumer attention in the massive information, attract consumers, and arouse their purchase desire, must integrate rich media resources such as social, video, and information; combine user insight data and our own brand image to connect with consumers and create greater brand marketing value.
First, plan well. Today's young people create many internet languages and have many new ideas, ways to play, and ways to eat. Their consumption motives and channels mostly come from social interaction because they like interaction.
Second, invest well. Including time and media, this requires us to plan advertisements according to the preferences of the product's target consumer group; and place advertisements according to the media watched by the target consumer group to improve advertising effectiveness.
For example, for young people, we attach great importance to building a new media matrix mainly based on "WeChat, Weibo, and Douyin" to provide product information and interact with consumers.
-04-**** Building a "Private Cloud": In the Intelligent Era, Further Empowering Marketing
From the perspective of the future combination of artificial intelligence and the beverage industry, enterprises should fully attach importance to empowering marketing with intelligent technology and the in-depth application of intelligent technology in the physical field; formulate product strategies centered on consumers, inject huge innovation vitality into enterprise development, and bring more practical growth.
Wahaha will explore the following aspects:
1. Building Wahaha's "private cloud," that is, establishing our own data middle platform
In the long-term operation process, Wahaha has accumulated a large amount of relevant market and consumption data information, but the application of data in the industry is very limited.
Data can be obtained through technology, but information needs to be transformed to truly become insight, thereby better realizing the value of big data and playing an important role in marketing.
Now with the expansion and segmentation of data volume, big data is evolving towards artificial intelligence, and the entire marketing process will be reshaped.
We must fully use big data to empower product promotion and marketing. This requires using artificial intelligence to develop the potential of data, making data analysis faster, more accurate, and more efficient.
2. Intelligent marketing methods
The product itself should have intelligent attributes and be able to meet personalized needs. In the future beverage industry, the focus will be on product personalization to meet the personalized needs of consumers.
Equipment and products with artificial intelligence attributes can actively interact with consumers, respecting consumers as the "subject"; consumers participate more in the creation of marketing value and can also obtain the best consumption experience.
For example, when consumers buy beverages, we can provide drinking suggestions based on their health data, consumption preferences, and other information;
On beverage packaging, with image recognition technology, we can verify purchase behavior and achieve information interaction with consumers; with commercial robots, we can achieve customized ingredient functions and create exclusive products for each consumer.
In today's world, technology is developing rapidly, and innovation and change are unstoppable. As an enterprise, we must embrace an open, positive, and urgent attitude to grasp the changes of the times.
Based on consumer insight, use more contemporary ways to achieve growth and use new technologies to empower the industry.
At the same time, in the internet age, we must also formulate marketing rules and implement them together; otherwise, the market will become increasingly chaotic, consumer rights will inevitably be harmed, and enterprises will decline. Thank you.
Source: Notesman (ID: Notesman)
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