This article is from WeChat public account: seek wisdom set (ID: roadtowisdom) , author: seeking intellectual set, drawing from the title: vision China

It is another year 11.11.

All brands are collectively carnival under the leadership of e-commerce companies, overdrafting all the media traffic that can be found, and suppressing the consumer’s 20-day shopping impulse to perfect release on 11.11.

Boom! It is also a record high.

At this moment of the carnival, I want to share some of the recent “cold thinking.”

become bigger

Every year, the double eleven, “bigger” seems to be the topic of most concern to everyone.

The sales of xx brand broke 100 million, and the sales of Tmall broke 10 billion in a few minutes…

Can’t help meThink of the sentence quoted when writing the Amazon and Jeff Bezos articles for the first time:

Grow big fast.

This sentence is undoubtedly the best footnote for the Chinese mobile Internet wave in the past five years.

A group of companies, with the support of VC and PE funds, quickly expanded through burning, subsidies, etc., and grew into a unicorn with a valuation of more than one billion dollars.

In 2018, the mobile Internet dividends subsided, and the VCs who made money on the mobile Internet began to look for the next slogan.

From the Internet to artificial intelligence, from B2B to consumer goods.

Grow big fast. Sales are getting bigger, the company is expanding in size, recruiting more people, getting involved in more fields, and higher valuations…

No scale, how to surpass competitors to become the head project in the track?

Can’t be a head project, how to melt the next round and make the snowball bigger?

It’s really exciting to see a group of new consumer brands with the help of media and channel bonuses and the rise of VCs.

I am very honored to be able to personally participate in this wave, managing and trading a head brand.

But I also have a lot of less exciting reflections.

Every time, there will always be a brand that grows bigger and enters people’s horizons. But then?

The following is the top 10 list of Twenty-one Beauty Makeup Brands for 2013-2019.

Data source: Tmall double 11 public news materials in 2013-2019

The brand on the Tmall Double 11 Beauty Makeup list in 2013, how many still in the top 10 after 6 years?

Only L’Oreal, Olay and Baique Ling. The other seven brands are mostly out of the crowd.

Just a few weeks ago, the top brand Royal Mufang parent company Yujiahui released the third quarter earnings. According to the financial report, in the third quarter, Yujiahui achieved an operating income of 604 million yuan, a year-on-year decrease of 3.48%. The net profit attributable to shareholders of listed companies was 1,547,200 yuan, a year-on-year decrease of 96.57%.

The old Tmall beauty boss, now only has more than 1 million profits in a quarter.

But you can’t blame this on the team is not good enough.

The team of Yumifang was killed from the blood of the Tmall. The founder of today’s industry-level brand-perfect brand diary has been the COO of Yumifang for many years before 2017.

Big but not strong, big and soon

Each brand that grows bigger quickly has its own highlight moment.

The brand always starts from a blank, starting from a certain form of supply and demand mismatch.

Either the gap in the market, the gap caused by the change of media flow, or the blank of goods brought about by the emergence of new channels, the brand’s customer acquisition cost is greatly reduced in a certain limited time, so that it can take advantage of the trend. Start.

But over time, any blanks will be filled, any form of dividend will disappear, the cost of getting different channels will be the same, and everything will return.

At this time, the brand will encounter some “general rules” in the Chinese consumer market:

  • Consumer demand ratioMore subdivided, each brand has its own positioning. It’s hard to get a head-to-head, or more than 50% market share.

  • China’s 1.4 billion people, 1st-tier cities to 3rd-line cities and below, and then to townships and rural areas in terms of income levels, brand awareness and accessibility, purchase channels, etc. are very different. It is difficult for a brand to be the darling of a 1st-line city, and it is also a good heart for the people of the county.

  • The changes in Chinese society have been overwhelming in the past 30 years. Chinese consumers have a huge difference in culture and consumption concepts every generation for 5-10 years. Many brands worry about “no longer young” every five years.

Then, another new brand emerged with the help of a new “blank” or bonus, but this time, the new brand in the previous round became the “challenged”.

This way, some categories have experienced three big cycles in the past 10 years.

We have only a handful of brands that have crossed a full five-year cycle and become a truly “famous brand” in China.

In this minority, there are very few, truly spanning the barriers of culture and growing into global brands that can prosper long-term in different countries and regions.

In April of this year, Euromonitor (Euromonitor) released the “top 100 megabrands” white paper for global fast-moving consumer goods.

In the world’s largest consumer brands, only three brands in China were selected: Mengniu, Yili and Master Kong (Taiwan).

China has the worldThe largest population and a unique single civilized society.

China is a factory in the world, and almost all of the above categories have already been manufactured locally.

Why don’t we have the strongest brand yet? Why is it difficult for our brand to cross the cycle? How should brands achieve long-term sustainable growth?

Do the “parts” of the brand

I think the first reason is that we over-emphasize cost and short-term returns, while ignoring investment in long-term product innovation and finding product differentiation.

I always think that continuous investment in product innovation and meaningful product differentiation is the “right” of the brand.

This is determined by the game between the brand and the channel.

If a category of products does not continue to iterate and there are better, more differentiated products that meet consumer needs, then the brand is meaningless in the long run.

Because if the product is highly homogenized, the channel provider has a natural mission to provide consumers with more cost-effective products through their own brands. From Costco, to NetEase’s strict selection / Xiaomi’s excellent products, and then to a lot of “factory goods”, there are values ​​of its existence.

And a brand must continue to invest in product innovation, it must have a good profit support. Profit is the safety margin of brand trial and error, and it is the most important fuel for long-term growth of brand investment.

This leads to a second reason why many brands struggle to cross the cycle: We often over-emphasize scale and ignore profits.

Everyone with business knowledge knows that profit is important, but the real situation is not.

As a member of the consumer goods business circle, I have the privilege of meeting the founders of many other brands. The situation that is often encountered is this:

I got to know the founder of a skin care brand and asked them how big their business was.

Ask, 20 billion was made in 2018.

I said that’s good. What is the net profit?

Answer said: Don’t make money.

If a brand doesn’t make money, use the money to buy traffic, do marketing, where does the R&D expenditure come from? After 1 year, is the new product copied by others? Where does the product’s differentiation and superiority come from?

Consumer brands are not Internet companies, and no consumer brands can be “one big family”. Did not burn money for 1 year, end the battle, lying behind to make money. Not to mention the fact that as long as there are users, it will not be realized.

If there is any “growth flywheel” in the consumer brand, I can only think of one.

Don’t create more “placeholders”

The third reason many brands can’t cross the cycle is that often over-emphasizing media delivery and traffic operations, while ignoring the uniqueness of the investment brand.

In general, we can draw a lower coordinate axis according to the degree of differentiation of the product and the uniqueness of the brand in the mind of the consumer.

The left side represents no difference, the product is homogenized, the brand is not too bigthe difference.

The one to the right is called “Placeholder brand”(placeholder brand). A placeholder brand means that although the brand is highly aware in the industry, it cannot be distinguished from other brands of the same kind in the mind of the consumer because it is not given special differentiation or meaning. These brands just occupy a position in this industry.

Then there is a truly differentiated brand. This type of brand has a clear mindset and differentiation.

The last is a brand that has achieved some form of mental monopoly.

I think the homogenized brand on the left and the second placeholder are very vulnerable.

For example, in the category of toothpaste, Colgate is a typical placeholder brand.

It has a high reputation, but consumers have become increasingly blurred about what kind of difference “Colgate” represents.

In the era of limited shelf resources, because of the large volume of business and high profits, such brands can gain a living space by monopolizing part of the shelves and continuing advertising.

But in today’s business environment, placeholders are the most vulnerable, and once they fall, they create an irreversible downturn and a vicious circle.

Before 4 years ago, it was the top 3 Colgate in the market. In the past double 11, the sales of Tmall only accounted for 13.2% of Yunnan Baiyao.

What is different from other brands? This is the number one question that every brand has to answer.

The sense of the media and channel dividends has made many brands take advantage of the trend, but it also makes the brand unable to extricate itself in the high conversion caused by media placement and traffic operations.

Important short-term ROI returns, while ignoring the brand’s mental exclusivity and mental differentiation, it is like building a building block that is unstable, and there is always a day when the entire building is overwhelmed and collapsed.