Mixue Ice City = Xiangpiaopiao plus+

In today's increasingly fierce competition in the milk tea industry, Mixue Ice City has occupied a place in the market with its unique business model and cost leadership strategy. This article will explore in depth how Mixue Ice City has established its competitive advantage through its low-price vacancy strategy, and analyze the business logic and market performance behind this strategy.

In the milk tea market, Mixue Bingcheng has achieved economies of scale by finding low-price vacancies, and has then established its own unique business model - the cost leadership strategy.

The market pricing of an industry can be simply divided into three levels: high, medium and low. The same is true for the milk tea brand market: new tea drinks represented by Heytea and Nayuki are priced at more than 25 yuan per cup; CoCo and Guming are priced at 10-20 yuan; Mixue Ice City is priced below 10 yuan. Heytea and Nayuki occupy high prices and target the core business districts of first- and second-tier cities; CoCo and Guming are positioned in the mid-range, while Mixue Ice City adheres to the low price + "surrounding the city from the countryside" strategy.

2020 is a key year for the development of Mixue Ice City. This year, Mixue Ice City has developed from the accumulation of quantitative changes to qualitative changes. The number of stores opened by Mixue Ice City in 2020 is equal to the sum of the past N years.

2020 scale ranking: Mixue Ice City, with 12,003 stores, ranks first in the milk tea and coffee beverage category and first in net growth. This has established an absolute advantage for Mixue Ice City, and in the next few years (21-23), Mixue Ice City will run wild.

History will not repeat events, but it will repeat patterns. In 2020, Mixue's more than 10,000 stores echoed and complemented Meituan's data. Mixue Ice City's more than 10,000 stores cover 344 cities, harvesting the sinking market that was ignored by the first and second echelons of milk tea.

These 334 cities are basically third- and fourth-tier cities, including third-tier cities (2,898), fourth-tier cities (3,001) and fifth-tier cities (1,853). There are 2,860 county-level administrative regions in my country, which means that there are basically 2-3 Mixue Bingcheng stores in each county.

Based on the different factor endowments of the organization, each brand has chosen its own path - the question is whether you can build a complete set of operational features around the competitive niche so that consumers will feel that your products (brands) are cool (HEYTEA, NAYUKU), valuable (MIXUE), and not mediocre.

The market for milk tea never needs one more cup of milk tea, and never needs one less cup of milk tea. The question is: how to make consumers choose you, how to make consumers choose you first, and how to make consumers choose you all the time.
The reason why low-priced vacancies exist is due to the consumer demand in the sinking market.

Young people in small towns have gone from drinking bottled water and concentrated beverages to drinking a cup of milk tea. The so-called sinking market, in a real consumption motivation, may not mean "sinking" but rather "upgrading" of consumption - what really brings value to business is demand and customer choice.

In fact, the higher the price goes, the more valuable it is not necessarily.

A business that looks sexy and one that is actually profitable are two different things. Do you want to run a profitable business or a sexy business?

For 90% of business owners, they may not have thought it through.

According to the financial report: Naixue's revenue in three years was 5.7 billion yuan and its loss was 138 million yuan. In 2020, Naixue's net profit was 4.484 million yuan, and the overall net profit margin was only 0.2%.

Another thing to remind you is that simply low prices are not a strategy, but the low cost behind them is a strategy. The low price advantage brought by total cost leadership can enable your organization to form a strategic advantage (total cost leadership, differentiation, and focus: from Porter's competitive strategy).

Different from new tea drinks such as Heytea and Nayuki’s Tea that focus on fresh fruit and fresh milk, Mixue Ice City’s products are mainly prepared with ingredients such as jam and milk tea powder. This also greatly reduces the cost of materials required for the cold chain. With the supply chain construction and self-built logistics, Mixue Ice City has achieved the ultimate cost-effectiveness and has become Xiangpiaopiao Plus+.

According to Meituan data, the number of tea shops in first-tier cities and new first-tier cities has grown much less than that in third- and fourth-tier cities in the past two years. The number of shops opened in Beijing and Shanghai has even shown negative growth. Among the top ten cities with the highest growth in milk tea sales in 2018, seven are from second- and third-tier cities.

Mixue Bingcheng has also launched high-priced brands, with the price range raised to around 20 yuan. New tea drinks such as Heytea and Nayuki seem to be thinking about lowering prices. For example, Heytea launched "Heytea Xiaocha", with the main product price range between 11 yuan and 16 yuan, which is about 10 yuan different from Heytea's product lines, and has extended to third- and fourth-tier cities.

Mixue is on the top and Heytea is on the bottom. Everyone is trying desperately to be like the other, but doesn’t want to be themselves.

Organizations will make mistakes in the process of development, but some mistakes are digested into success, while some mistakes lead to failure. In the process of an industry brand striving to "move upward", Mixue's exploration of "moving downward" has found its own "narrow door".

In the process of development from quantitative change to qualitative change, Mixue Bingcheng has always been accumulating organizational resources and operating arrangements around low-priced spaces, thus establishing a set of industry-leading low-cost strategies that belong to Mixue Bingcheng. The more stores it has, the more successful its low-cost leadership strategy is, and the more successful its low-cost leadership strategy is, the more stores it has. When Mixue Bingcheng was the first in the industry to break through 10,000 stores, its top-notch skills of fighting with its left and right hands were also successfully cultivated, and from then on it became a school of its own, the Mixue Bingcheng school.

For Mixue Bingcheng, 2020 is a memorable year.

The success of Mixue Ice City has also brought a large number of imitators and followers, which will not affect Mixue Ice City, but will strengthen the market's recognition of the Mixue Ice City model. You have to choose a narrow door, small enough, so that the big ones are not worth entering. Low-cost strategy - low-price vacancies - scale advantage - occupy cognitive advantage, so that the later ones will always form a follower impression at the cognitive level.

Business is dynamic, and brand development needs to change in response to industry trends. Mixue Ice City will face greater challenges, but this challenge does not come from competition from other brands, but from Mixue Ice City's own running speed.

On the road to becoming the first, you can only run. Once you become the first, all you have left is to run.