Falling from the altar, what happened to Zhong Xuegao?

After the collective withdrawal of capital and the end of the era of new consumer brands, Zhong Xue Gao has repeatedly cut its prices. At this point when everyone wants to break through the difficulties with "low prices", why is Zhong Xue Gao, which is getting cheaper and cheaper, still not selling well?

Zhong Xuegao, which has a natural tendency to be a hot topic, has recently been on the hot search again——

From "the price of Zhong Xuegao dropped from 60 yuan to 2.5 yuan" and "the R&D area of ​​Zhong Xuegao headquarters was empty", to "some employees of Zhong Xuegao said they had not received wages for several months" and "Zhong Xuegao's subsidiaries have been executed for a total of more than 10 million yuan", this new "Internet celebrity" who experienced a dream start seems to have really fallen from the altar.

Zhong Xue Gao has an impressive resume. Its Chinese-style tile shape became an instant hit, its revenue exceeded 100 million yuan in 16 months, its price was raised to as high as 368 yuan by scalpers, and it sold 3 million units in an hour. It created many firsts in revenue, average order value, and repurchase rate for similar products on the entire network... When it was at its peak, almost every marketer would sort out and study its growth path, and everyone wanted to learn from the "Hermes of ice cream."

However, the good times did not last long. Many topics such as "Zhong Xuegao is an ice cream assassin", "It does not melt after being left at 31°C for an hour", "Zhong Xuegao ice cream does not melt", and "Zhong Xuegao's actual cost is very low" have also caused the brand to fall into doubts from users. After the collective withdrawal of capital and the end of the era of the crazy rush of new consumer brands, Zhong Xuegao has repeatedly cut prices . The brand launched a low-priced ice cream product "Sasaa" in April last year, but because the taste was too ordinary, it had no competitiveness among ice creams of the same price. The lowest price of ordinary ice cream that was about to expire was 2.5 yuan per stick. The extremely high price gap further reduced consumers' favorability and desire to buy.

At this point when everyone wants to break through the difficulties with "low prices", why is Zhong Xue Gao, which is getting cheaper and cheaper, still not selling well? Let's talk about it in detail today.

1. Mass consumption returns to rationality, and the demand for mid- to high-end ice cream shrinks year by year

Looking back at the consumption logic a few years ago, we can see why these Internet celebrity brands have emerged. Once upon a time, middle-class families and young consumer groups in first- and second-tier cities believed in the consumption concept of "not seeking the best, but the most expensive". They bought skin care products and new digital products worth thousands of yuan without blinking an eye, and new tea drinks of thirty or forty cups were commonplace.

However, the basis of this consumption concept is stable cash flow, good future expectations, and ever-increasing family assets. Once the foundation begins to shake, people will choose to be selective and rational in their consumption. Just as the consumption characteristics of the "M-shaped society" proposed by Japanese scholar Kenichi Ohmae, the two vertical lines of the letter M represent the expansion of the "extremely wealthy" and the "poor class", while the V-shaped line in the middle represents the decline of the middle class.

At the beginning, Zhong Xue Gao mainly met the needs of the middle class, and the core keywords in its positioning were "three highs", namely high pricing, high formula, and high appearance. In Zhong Xue Gao's publicity, their product raw materials are scarce and high-quality, such as fresh milk from Hulunbuir, Inner Mongolia, red grapes from Turpan, Xinjiang, matcha from Yabukita, Japan, cocoa from Ghana, Africa, etc. For example, the Ecuadorian Pink Diamond Ice Cream, which became a hit during the Double Eleven Shopping Festival in 2018, also claimed that the lemon pomelo took 20 years to bear fruit, and there were only 3 tons of natural powder cocoa in the country, so it was sold at a price of 66 yuan for 20,000 pieces.

In terms of product connotation, Zhong Xue Gao is also very good at capturing the hearts of consumers. For example, it uses China's unique tiles as the design inspiration for the product, and uses environmentally friendly sticks made of straw as raw materials. Many small details are really thoughtful. However, the decline of the middle class is equivalent to the shrinkage of the mainstream customer base. Even if Zhong Xue Gao does not have so many negative hot searches, it is difficult to replicate the previous development path because the overall environment is different.

2. The price is not sincere enough and no longer fits the consumption concept of young people

From the perspective of consumers, the biggest weakness of Zhong Xue Gao is that it lacks "sincerity". There are frequent problems with the ingredients of high-end ice cream, and there is no advantage in taste when it comes to the popular route. For increasingly rational consumers, Zhong Xue Gao is no longer a wise choice.

The public said that the "high price" of Zhong Xue Gao is not worth it. In the summer of 2021, a widely circulated video showed that Lin Sheng said: "Zhong Xue Gao has a slightly high gross profit margin. When the most expensive one was sold for 66 yuan, the product cost was about 40 yuan. It is that price. You can take it or not." Although the full version of the video was released later to refute the rumor, saying that "you can take it or not" is the price of the raw materials. But this incident has caused a thousand waves, and more people have begun to pay attention to the ingredients of Zhong Xue Gao. Is it really as good as advertised?

After the "snow that won't melt" incident fermented, the official blog replied bluntly that a small amount of carrageenan was added. Although it is within the national food safety range, it is indeed unscientific to test it with fire. However, it is difficult for fans to accept it emotionally, thinking that a new domestic product that claims to be the best ice cream in China cannot have glue in it. In addition, a research institute later disassembled it and found that the total cost of a 14-yuan light milk ice cream was only about 4 yuan, and Zhong Xue Gao's 18-yuan "Velvet Cocoa" tasted almost the same as the 5-yuan "Sinong Sheng Qiao" sold by the OEM factory, and seeing the cost of Zhong Xue Gao's marketing. More and more people began to think that Zhong Xue Gao was "not worth it" and should not be bought so expensively.

There are too many competitors for the “affordable” Zhong Xue Gao. Recently, there have been many news reports online about Zhong Xue Gao dropping to 2.5 yuan. In fact, if you look closely at the content, you will find that this price is the price of “near-expiry food”. Many big brands will also offer ultra-low discounts on the near-expiry counters, which is not official behavior.

But in a freezer full of cheap ice cream and discounted big-name ice cream, Zhong Xue Gao really has no competitiveness. After all, "delicious" is the most important criterion for ice cream. If the brand, price, and ingredient list are still aside, almost everyone has their own purchasing criteria. Moreover, ice cream is not a one-time deal. Many people will stock up a lot in the summer. Cost-effectiveness and taste are their first choice. And those Internet celebrity brands that have been built into social currency may only be bought when they are trying new things.

3. The consumption truth behind the “price reduction trap”: how can price reduction solve the problem?

Moreover, those low-priced Zhong Xue Gao lying in the freezer nearing their expiration date also let us see a consumption truth - affordable business looks good, but it is not a panacea that can solve problems.

After the wave of capital recedes, many new consumer brands will choose to cut prices. However, not all brands are able to guarantee quality after price cuts, and not all brands can continue to occupy the market while maintaining quality and quantity. This is very much like a trap set by an "M-shaped society" for brands: since the middle class has fallen, brands should take the initiative to cut prices and actively match their consumption expectations.

If price cuts can solve the problem, then Zhong Xue Gao, which used to cost 60 yuan, should be invincible in the 2-3 yuan price range and sold out in seconds. However, this is not the case. After all, the ultimate goal of price cuts is not to be cheaper than all competing products, but to make consumers feel "super value". As we said at the beginning, if Zhong Xue Gao had quality that matched the price and could meet the needs of the middle class or even the wealthy class, there wouldn't be so many negative reviews. If it could be the most delicious in the pool of ordinary ice cream, it wouldn't be pulled out for criticism again.

Consumers pursue "low prices" due to external factors such as the social wealth structure and internal factors such as increasing rationality. In fact, they know that they are more reluctant to choose ice cream that is expensive but of inferior quality than those with high prices. Consumer stickiness is ultimately determined by the product itself.

Author: Mr. Bingfa WeChat public account: Marketing Bingfa