2024, learn to be a big fish in a small market!

In the current market environment, how can you become a big fish in a small pond and stand firm in the market environment? This article takes Kobayashi Pharmaceutical as an example to analyze its marketing strategy. Let's take a look.

In the current economic environment, I believe that many people have given up the dream of becoming a unicorn. They want to make enough profit to gain a foothold in a small market. This time, we study a topic: How to become a big fish in a small pond?

We mainly studied a Japanese company, Kobayashi Pharmaceutical. I think the experience of Kobayashi Pharmaceutical is more inspiring and instructive for many entrepreneurs today.

1. The secret of the big fish in a small pond strategy: Become a niche player, not a leader

First of all, I want to introduce the company Kobayashi Pharmaceutical. You may not be familiar with it, but you will know it if I mention a few of their products. For example, if you go to 711 or Convenience Bee, you can buy such a product.

For example, if you have a child who has a fever in the middle of the night, you might give him a Bingbao patch. It is produced by Kobayashi Pharmaceutical.

Take Boluqing for example. If we put a blue solid in the toilet bowl, the water that comes out is blue water, which can clean, disinfect and sterilize. This is Boluqing. These three products that are familiar to Chinese consumers are all produced by Kobayashi Pharmaceutical.

Kobayashi Pharmaceutical was founded in 1886. It is a company with a very long history. It mainly produces sanitary products. In 2020, Kobayashi Pharmaceutical's performance reached 150.5 billion yen, which is about 7.2 billion yuan in RMB, which is a very good figure.

It is quite amazing that this company has had a net profit growth for 23 consecutive quarters. Most companies are already doing well if their gross profit grows, but it is very difficult for it to grow its net profit. Moreover, it has increased its dividends for 22 consecutive quarters since its listing, which means that its profits are getting better and better, and the returns to investors are getting higher and higher. Why can it achieve such results? Kobayashi Kazuya summed it up in one sentence. He said:

"This comes from our company's positioning. Kobayashi Pharmaceutical's positioning is not a leader, a challenger, or a follower. We position ourselves as a 'niche player.' "

What is a "niche player"? This concept comes from Philip Kotler's book "Marketing Management". In this book, he mentioned the concept of niche market.

A niche market usually refers to an area where demand has not been met by large companies. Small companies can focus their efforts on creating unique products and services in this small market segment to gain a foothold in this small market.

Let me give you another simple analogy. What is a niche market like? It is a bit like the significance of Yan'an and Shaanxi-Gansu-Ningxia to China during the civil war.

How do we gain a foothold in a small market?

I think many people have a misunderstanding: as long as you find a small enough and niche market that others don't care about, you can occupy it. In fact, this is a wrong judgment. If this thing is so simple, many people will do it.

Kobayashi Kazumasa told us: "The real strategy of catching big fish in a small pond is to be the first fisherman in a small pond. You have to create consumption where there is no consumption and open up a new market, so that you can enter the real uncontested zone."

Let’s take two examples to see how Kobayashi Pharmaceutical became a big fish in a small pond?

1. Do business that others don’t want to do

The first example is a product of theirs called Shuanghualei. Shuanghualei is a toilet air freshener. Many people should have used this product. It is a jelly-like thing that can emit a fragrance to cover up some unclean smells in the bathroom.

When Kazumasa Kobayashi went to the United States to study in 1975, he saw similar products. He thought that if Japan launched such products, they would be popular. First of all, this was because Japan and even the whole of Asia would follow the consumption rhythm of Europe and the United States at that time.

The second reason is that Japanese people are very fond of cleanliness, so products like toilet air fresheners should have a market in Japan.

But if we want to introduce this product to the Japanese market, we can't do it directly because the entire consumer environment in Japan is different from that in Europe and the United States. The biggest difference is the bathroom environment. At that time, Japan still had dry toilets, while the United States had already entered the stage of flush toilets.

What is a dry toilet? If you go to an old alley in Beijing and enter a public toilet, you may encounter a dry toilet, which is a squat toilet without water to flush it.

What is the biggest difference between a dry toilet and a flush toilet? The dry toilet will have a stronger smell because the feces cannot be flushed away in time, and the unclean smell of the toilet will be stronger. Therefore, when Shuanghualei was introduced to the Japanese market, many innovations were made.

The first innovation was that they made the smell stronger, because they wanted to cover up the smell of Japanese dry toilets.

Second, they wanted the product to last longer. Because the consumption level in Japan was not as high as that in the United States at that time, people still pursued cost-effectiveness. Therefore, they made the fragrance of Shuanghualei stronger and more durable, so that it can be used for several months in the bathroom.

At that time, Japan had a similar product for deodorization, a spherical deodorant. Now, in many shopping malls in China, urinals in men's toilets often have this kind of spherical deodorant, which has a strong smell and a bad smell.

The smell of toilet fragrances like Shuanghualei is very fresh and elegant, which meets the Japanese people's requirements for cleanliness. Therefore, after localization and innovation, this product sold 700,000 units in Japan within three months of its launch. They originally planned to sell 300,000 units a year, which greatly exceeded their expectations. You see, why is Shuanghualei a successful product?

First, I entered a so-called niche market, a market that others did not want to enter. At that time, many large Japanese companies believed that toilets were unclean places and were unwilling to get involved in this business, which left enough market space for small companies like Kobayashi Pharmaceutical.

Second, you must make localized innovations and make some product improvements.

Third, you must be the first to enter. You cannot say that there are already many players in this market segment, and although the competition is not fierce, you still rush in to grab this small piece of cake. You will not be able to succeed in this way. You must meet several conditions to become a big fish in a small pond.

2. Doing business that does not have a big market yet

Kobayashi Pharmaceutical's second product is called Boluqing. This product was introduced to the Japanese market in 1969, 6 years earlier than Shuanghualei, but its fate is completely different from Shuanghualei. Shuanghualei was a hot seller as soon as it was launched, while Boluqing slowly became popular after several years of dormancy. This is related to the fact that flush toilets were not fully popular in Japan at that time. Boluqing is put into the water tank of the flush toilet, allowing blue water to flow out of the water tank to clean the toilet. At that time, the penetration rate of flush toilets in Japan was only 20%, so this product has been tepid since its launch.

However, after a period of development, when the penetration rate of flush toilets in Japan was about to reach 100%, this product became a national product. Now it is also one of the most popular products of Kobayashi Pharmaceutical.

The key to the small pond big fish business model is to discover new markets, become a pioneer in a new market, and then cultivate this new small market into a large market through one or more products, and then catch big fish in a small market. Having said so much, there is still a key question that has not been mentioned, that is, what are the benefits of the small pond big fish strategy?

The obvious benefit is that we enter a small market with less competition. Are there other benefits? Yes.

I would like to ask you a question: There are two markets in front of you. One market is a 10 billion market, and you can occupy 5% of this market share. The other market is a 10 billion market, and you can occupy 50% of this market share.

If you were an entrepreneur, which market would you choose to enter? If you do the math, 5% of the market share multiplied by 10 billion, and 50% of the market share multiplied by 1 billion, the result is 500 million in sales.

It seems that the results are the same, but they are actually very different.

If you only have 5% of a 10 billion market, you will be caught in a price war with big manufacturers, invest too much marketing money, and put too much energy into it. Your final gross profit margin will definitely be very low, and your net profit will definitely be very low. You may seem to have won 500 million in sales, but in fact you didn't make much money.

If you can occupy 50% of the market share in a 1 billion market, it means you are almost monopolizing the market. You have complete pricing power in this market. Moreover, you are the leader in this market, you can lead the development of this market, you have enough gross profit margin, and you can make enough profit.

The visible benefit of the "big fish in a small pond" strategy is that the competitive pressure is small, and the invisible benefit is that you can not only increase revenue, but more importantly, increase profits. The latter is the core secret of this strategy.

2. Marketing strategy: Pursue simplicity and understandability

Under the strategy of "big fish in a small pond", how can I formulate a marketing strategy that matches my business model? Kobayashi Pharmaceutical formulated its own marketing strategy and used four words to convey it: "simple and easy to understand".

This concept comes from Kazumasa Kobayashi. When he was 26, he went to the United States to study marketing. He summarized what he learned into one sentence: convey product information to customers in a simple and easy-to-understand way. This was his biggest experience in studying advertising and marketing in the United States.

I think this concept is particularly correct. Many domestic companies have a misunderstanding about brands, and the more they actually do, the further they are from the true brand.

For example, some brands will come up with slogans, such as "True taste, true love, endless joy". You may seem very cultured, but in fact, consumers don’t understand what you are talking about at all, and the communication distance between you and consumers is getting farther and farther.

How to understand this strategy that is simple and easy to understand?

Kobayashi Kazumasa said that Kobayashi Pharmaceutical takes "delivering information to customers in a simple and understandable way" as its primary consideration in any link of product development, including concept, naming, packaging, publicity, etc. Although you want to pursue simplicity and understanding, there is nothing more complicated than simplicity and understanding.

Let’s take some of their practical examples to see how they make things simpler and more efficient.

1. Actively narrow the target population

They have a product called Anmeilu, which has the effects of reducing inflammation and promoting blood circulation. It can relieve muscle soreness and back pain. There are many similar products in Japan and China, and Anmeilu has no difference in efficacy. However, when it was making marketing strategies, it actively narrowed the scope of the target population. It does not say that it can treat this or that, but only treats frozen shoulder.

Why do this?

Kobayashi Kazuya said, "I hope that Amilu is equal to frozen shoulder, so that people with frozen shoulder pain will think of Amilu first. This is a fundamental reason why Amilu actively narrows the scope of the target population. According to our brand theory, it means that the brand is equal to a category."

This is also a simple and easy to understand strategy. When our functions are numerous and complex, the more we say, the less we say.

There is a Chinese medicine with the same characteristics, that medicine is called Huoxiang Zhengqi Shui.

In fact, Huoxiang Zhengqi Water can treat many diseases, such as air-conditioning disease, summer colds and diarrhea, etc. But because this water is so magical and can cure everything, no brand can make this water well and let the brand represent the category of Huoxiang Zhengqi Water.

If Kobayashi Pharmaceutical were to produce the drug Huoxiang Zhengqi Water, they would definitely take the initiative to narrow the scope and target a specific function to enter this market.

Not only that, when the product was upgraded, Ameilu also gave it a unique name. Because Ameilu is used to treat frozen shoulder, it is used by taking the bottle to the shoulder and applying it on the back.

However, it is inconvenient for people to apply something to their shoulders, so they designed a long curved container for people to use on their backs. After making innovative product designs, he named the product the Anmeilu Curved Bottle. The curved bottle is very vivid and people remember it immediately.

Being simple and easy to understand is important. Often, when we name a product, we often use the professional terminology of your company, which makes it difficult for consumers to remember your product, or to remember it firmly. The most typical example is that Steve Jobs often complained about Nokia's mobile phones at the time, saying that you have so many models, it's a mess, and even your product manager doesn't know how many models you have. Therefore, the mobile phones in Steve Jobs' era are very distinctive, namely iPhone 1, iPhone 2, iPhone 3, iPhone 4.

After Jobs passed away, the matter became a little more complicated. iPhone Pro and Max were released. If Jobs were still alive, I believe he might not agree with this and he might still call it iPhone 12345678. Many Chinese companies refer to Jobs's marketing ideas.

Take Ideal Auto for example. Look at how it names and features its cars. The cars are called Ideal Pro and Ideal Max. It completely refers to the terminology of mobile phones to stratify car models. I think this is very good. Because when you say Pro and Max, consumers will immediately understand what you mean. You don't have to explain that Max is the flagship version with more functions, and Pro is the lightweight version with more minimal functions.

Being simple and easy to understand can save you a lot of talk and advertising costs.

2. Derive product concepts from the customer’s daily language

Kobayashi Kazuya has his own principles and persistence in many things. These principles and persistence come from his desire to make things "simple and easy to understand". They have a product called Sarasaty, which is a sanitary pad for female leucorrhea. This product saw a decline in market share a few years after it was launched. About five years after it was launched, this product barely maintained 1/3 of the market share. In Kobayashi Pharmaceutical's view, this product has lost its position. Why did it lose its position?

Because we have said that the reason why a big fish in a small pond is called a big fish is that you must occupy enough market share in a small pond.

Kobayashi Kazumasa believes that a product of mine should occupy 60-70% of the market share in this small market to be a good market share. If it is lower than this market share, it proves that my strategy of "big fish in a small pond" has failed in this market.

When Sarasaty's market share dropped below 1/3, Kobayashi Kazuya felt that this product must be improved and innovated to increase its market share. How to improve it? They thought that this product should be made thinner and lighter, or more skin-friendly. They wanted to use some soft cotton materials to improve the quality, refuse to compete with the low-price competitors, and go for the high-end route.

Of course, this is a very vague strategy. Under this vague strategy, Kobayashi asked the team to come up with a name for the product and to express its efficacy. At first, the team came up with a name called Sarasaty Excellent. Excellent means outstanding or excellent.

When Xiaolin Yiya saw the name, he laughed angrily. He asked the person in charge of the project: "Why is it called Excellent?"

The person in charge said: "Because this product feels good on the skin. From my research results, this product has received high praise in terms of absorbency, anti-slip and anti-wrinkle, so it is excellent and better than its competitors."

Xiaolin Yiya asked again: "You explained for a long time, do customers really know why you are good?" The project manager continued to resist him, saying: "Other products, such as instant coffee, are often called President Coffee or better coffee."

Kobayashi Iya then said: "I don't care what others say. I just want to ask you if you are a customer? Because cotton products feel good on the skin, customers will be willing to pay for them. Is this causal relationship established?" The project manager became more and more silent under Kobayashi Iya's constant questioning. He realized that something was wrong.

The biggest advantage of this product at that time was that I used cotton products to make this pad. What are the benefits of using pure cotton products as pads?

The Xiaolin Pharmaceutical team also conducted a lot of user research, and some user feedback gave them a lot of inspiration. The user said: "Since I put on your sanitary pad, I don't get rashes anymore." This gave Xiaolin Yiya an idea, and he said that the real value of pure cotton to users is that it does not cause rashes.

Later, he revised the name of the product, calling it Sarasaty 100% Cotton, and wrote "Anti-rash" in large letters on the packaging. After two years of such adjustments, the product regained its market share.

This incident was a great inspiration to Kobayashi Pharmaceutical. Kobayashi Kazumasa said: "After this incident, my product development team finally realized that it is a very important marketing principle to draw product concepts from the customer's daily language."

I repeat this sentence: " It is a very important marketing principle to derive product concepts from the customer's daily language. "

Whether naming a product or creating a slogan, most people may use professional terms, and the better ones may use advertising terms, but few people use the user's language to express the product. But in fact, using the user's language to express the product is the most efficient. Let me give you a few typical examples. How do you see Kobayashi Pharmaceutical name its products?

For example, why is Bluelet called Bluelet? This is a translation of the English name.

Blue is the English word for blue, and let is the last three letters of the word toilet, so blue plus toilet together is Bo Le Qing. When this product was first developed, it was meant to express the blue water flow that cleans the toilet, which is very vivid and appropriate.

The Bingbao patch is even simpler to understand. It has a cool feel and can reduce baby's fever when applied to the baby.

Kobayashi Pharmaceutical not only pursues simplicity and ease of understanding in product naming or expression of efficacy, but also pays special attention to simplicity and ease of understanding in advertising expression. They have a product called "Heel Moisturizing Stick". When shooting an advertisement for this product, Kobayashi Yiya reminded the team that the heel must be exposed, because our product is to moisturize the heel. However, the team deleted the heel scene during the revision.

Kobayashi Kazuya realized at the time that this was not right. You cannot violate this principle. No matter how you shoot the product, you must let users see the heel in the commercial. This principle must be simple and easy to understand.

This reminds me of many TVCs in China. They all look beautiful, but you can't tell whether the star or the product is the protagonist of this TVC. The star appears longer than the product. If you want users to understand the TVC easily, your protagonist must be your product, not the star. The entire marketing strategy of Kobayashi Pharmaceutical is to pursue simplicity and understanding. How do you understand simplicity and understanding? It means that you should take simplicity and understanding as your core business purpose in any link of product concept, product naming, product packaging, advertising, promotional activities, and even in the company's daily cultural exchanges.

Why does Kobayashi Pharmaceutical care so much about marketing being easy to understand? What is the causal relationship between this and the strategy of "big fish in a small pond"? I will reveal the secret in the General Liang Intensive Reading Community.

Final Words

It is not only large-scale businesses that can make money, and it is not only big ponds that have big fish. In 2024, instead of competing with others for a big piece of cake, it is better to be brave enough to open up new markets and make a small piece of cake that belongs to you.

Author: Liang Jiangjun, public account: Liang Jiangjun (ID-liangjiangjunisme)