Differentiation is a cover, price increase is the real effort

With so many brands today, many brands are troubled by how to highlight brand differentiation, increase product prices, and make their brands stand out. In this article, the author proposes a reasonable and feasible strategy for brand differentiation operations, and recommends it to people who are interested in brand operations.

In 1980, Michael Porter proposed three effective competitive strategies in his book "Competitive Strategy": overall cost leadership strategy, differentiation strategy and specialization strategy, also known as focus strategy.

The essence of strategy is a matter of choosing a route. The so-called strategy involves trade-offs, that is, if you take this path, you cannot take that path. Whether it is a narrow door or a wide door, the doors represent different paths. Different paths require, accumulate, and precipitate different organizational resources. In turn, in the entire industry, different companies have formed their own industry niches.

You cannot step into the same river twice, nor can you step into different rivers once. It is like the choice of the revolutionary path, which seems to be a coincidence, but in fact has its own destiny. This destiny is the difference brought about by the choice of the initial strategy. A slight difference can lead to a huge mistake.

1. Boss: Scale is a competitive barrier

Creating new categories and occupying new tracks is the best strategy. A clean mind is often more important than shelf competition. The logic of new categories is to differentiate old categories. Consumers' criticism of old categories is the market for new categories. Behind the brand is a big tree of categories. It either revolutionizes old categories in terms of function or convenience, such as Santonban's breakthrough in instant function and Zihaiguo's revolution in eating convenience.

The boss’s problem is how to exploit the scale advantage and then gain the cost advantage of launching the entire product line.

Michael Porter, total cost leadership emphasizes: when other companies have lost profits in the competition, this company can still make profits. Without scale, there is no basis for quantity.

Scale is a competitive barrier and the main infrastructure of the moat.

The scale advantage can mobilize the entire industry chain. Your competitors charge 1 yuan for raw materials, but you charge 80 cents. Your competitors pay cash on delivery, but you can have a credit period. The quantitative change in scale leads to a qualitative change in costs, which is reflected in the market price competition: the same product, lower cost; the same price, greater profit.

Simply low prices are not a strategy; the low cost behind them is the strategy. Only the low-price advantage brought about by total cost leadership can enable your organization to form a strategic advantage.

Back in June 2020, the official Weibo account of Mixue Ice City announced that the number of its stores worldwide had exceeded 10,000, making it the first tea beverage brand to have more than 10,000 stores. The resulting supply chain and upstream and downstream premium capabilities have reversely enhanced the low price of the products. Ice cream and lemonade can be copied, but the prices of Mixue Ice City are difficult to imitate.

3 yuan for an ice cream, 4 yuan for a cup of lemonade, and rarely milk tea costs more than 10 yuan. You can call it low price, but when the store scale reaches a certain level, qualitative change will occur. In fact, the value of this business is not low at all. (From the perspective of valuation: Mixue Ice City is about 20 billion, Heytea is 16 billion, and Nayuki is 6 billion) Between scale and price, Mixue chose a completely different strategy from other brands. Becoming the first is not a goal, but a means.

A business that looks sexy and one that really makes money 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, and it lost 138 million. In 2020, Naixue's net profit was 4.484 million yuan, and the overall net profit margin was only 0.2%.

2. The second child: different

The big brother has already achieved economies of scale in terms of cost, so if he wants to be the second, he has to be a little different.

Consumers will not remember you because you are the same as the boss, but they will choose you because you are different from the boss. Don't be the next Jordan, it will always be right, be the first James, you can see that the language of the masses is simple and profound.

• When Wanglaoji was the leader, wasn't Heqizheng doing well? You are a small tin can, I am a big bottle, Heqizheng bottled is more enjoyable, and what we sell is affordable.
• Red Bull is in the front, and Dongpeng Special is divided into two parts, first bottling and then canning. When you are sleepy or tired, drink Dongpeng Special Drink, isn't it fun?
• Going further back: You are the boss, the red can represents the authentic cola (Coca-Cola), and I will be the second in command, making a green can representing the cola for young people (Pepsi), so shouldn’t I get a piece of the pie too?

The essence of differentiated competition is to form differentiated cognition on the consumer side, guide facts through cognition, and strengthen cognition with the help of facts. On the one hand, it is the factual differentiation support at the product level, and on the other hand, it is the differentiated cognitive segmentation of consumers. Therefore, the construction of differentiation is not just about products, but also includes consumer cognitive guidance and cognitive insight, and even cognitive compliance.

For example, all milk producers will show you: the vast expanse of land, the wind blowing the grass and the cows and sheep, the cows eating the fresh natural grass on the green grassland. But the truth is, cows eat hay to make good milk. But can you talk about this with consumers? Obviously not. If you really want to take a photo, try it, and you will be the first to die.

Second child, don't get involved in the education market, that is the first child's duty and responsibility. Because he has this duty and responsibility, he is the first child. If you are the second child, you should develop differentiated strategies for consumers and products in the market developed by the first child. If you can be the last one to start and win, you are really awesome.

For example, the product Nutri-Express was not invented by Wahaha, but copied by Wahaha. However, this did not affect Wahaha's ability to make Nutri-Express a big single product. This is the second-in-command doing the work of the first-in-command, and the first-in-command got a big bargain. Because the scale is larger than yours, the cost is lower than yours, and the voice is louder than yours. Once you copy the product and paste it into the channel, you are done.

The second-in-command should do the second-in-command's work to be worthy of the second-in-command's role . If the second-in-command wants to be promoted, he must take advantage of the opportunity, launch a flank attack, or engage in a blitzkrieg. Instead of a frontal attack, a protracted war is a battle of scale and cost, and you will lose as soon as you start.

There is only one boss, but there can be many runners-up. The essence of differentiation is to solve the problem of brand premium. Differentiation is a cover, and premium is the work.

There is not necessarily only one second one, because there can be many product differentiations, and the core lies in the consumer's understanding of the product's functions, benefits, and characteristics. For example: toothpaste can whiten, prevent tooth decay, remove tooth stains, prevent gum bleeding, strengthen teeth, is suitable for children, and can also freshen breath.

Whitening, anti-caries, tooth stain removal, gum bleeding prevention, tooth health, children's toothpaste, fresh breath, these words all represent a group of consumers who have special preferences for products. The satisfaction of special preferences is on the one hand the insight into consumers, and on the other hand the differentiated support of products in terms of functions, benefits and characteristics.

The core of differentiation is to focus on category characteristics, which are the concentrated embodiment of consumer interests. Another example: the boss differentiates through strong suction, and other competitors cannot go in the same direction. When you stand at the back of the team, you must find an opportunity to start a new team, so that you can become the leader.

• Strong suction vs. silent, that’s the difference
• How big the suction can be, how quiet it can be
• Yang is within Yin, not opposite to Yin

3. The third and fourth: Focus + Base

If you are the third or fourth, the most important thing is to lock in your base in advance and find a regional market that you can retreat to. You can achieve the goal of focusing your forces by intensively cultivating and deepening your efforts in the regional market.

In the battle for Shu-Han, Liu Bang occupied Hanzhong (occupied an advantageous position). Xiang Yu wanted to attack but could not break in, but Liu Bang could attack at any time, achieving the strategic effect of being able to conquer the world directly if he advanced or to stay in a corner if he retreated (occupied an advantageous position). Liu Bang could fail many times in specific battles because Hanzhong, as an advantageous position, could preserve his strength.

Zeng Guofan's core strategic form was to build strongholds and fight stupid battles. In essence, it was to find an advantageous position and focus organizational resources to firmly occupy that advantageous position. For example, he dug deep trenches outside the Taiping Army's city to cut off its communication with the outside world. When the defenders in the city could no longer hold on, they would charge at the Hunan Army and turn from offense to defense.

The allocation of troops and resources required for attack and defense is different. At this time, the effect of waiting for the enemy to tire out is achieved. The reason is that a favorable position is occupied by building a strong camp, and when the enemy can no longer endure it, the result of a stupid battle is achieved.

This is even more true in business competition: the first element of business is to identify and occupy an advantageous position.

For example, Cha Yan Yue Se in Changsha. Cha Yan Yue Se has 2.2 times more stores in Changsha than CoCo and 1DianDian, and 2.7 times more than Shuyi Shaoxiancao and Mixue Bingcheng. The total number of stores in the three administrative districts of Tianxin, Yuelu and Furong is 142, and the number of stores in Tianxin District has reached 63, making it the administrative district with the largest number of stores.

In a business war, the advantage often belongs to the defending party. Without an absolute advantage in military strength, it is difficult for the attacking party to gain an advantage over the defender. To win, at least three times as many troops as the opponent must be deployed at the attacking location - "Business War".

4. Flanking Battle

Flanking warfare: In a market where your opponent has deployed a large number of troops, if you launch an offensive, you must have three or five times the troops (resources) to be able to tie. The resources of any organization are relative. Strength and weakness are two sides of the same coin. The stronger, the weaker. The yin is within the yang, not opposite to the yang. The key to breaking through the flank warfare is to avoid the real and attack the fake.

The flanking war can be summarized in one sentence: surround the city with the countryside. The "countryside" is the opponent's weakness and emptiness, and the "city" is the opponent's strength and reality. If a strong opponent deploys heavy troops in the first and second tier cities, I will go to the third and fourth tier cities. If a strong opponent is trying to blockade offline, I will break through online. If a strong opponent is in supermarkets, I will find another way to go to convenience stores.

Faced with the technologically powerful foreign mobile phone manufacturers, Huawei adopted the strategy of "surrounding the cities from the countryside" and entered the rural areas where foreign manufacturers were weak. If it had gone head-to-head with foreign manufacturers in first- and second-tier cities, it might not have been able to achieve what it has today.

The core logic is: if you want to fight , fight at your home court. If you don’t have a military advantage, never fight away from home.

Winona entered the market of health products by flanking the market and entered from the market segment, forming a misaligned competition with the existing cosmetic giants. Positioning efficacy and single-point focus: focusing on efficacy-grade cosmetics, positioning itself as the first brand of efficacy-grade cosmetics, making cosmetics with the standards of medicine, with medical support and authoritative endorsement, going 1km deep from 1cm, going deep and penetrating; one selling point, gathering advantageous resources, promoting and distributing online, laying out channels offline, starting with the narrow and then the wide, from point to surface, breaking the game at the beginning, and playing a good hand.

V. Conclusion

After the fifth place, the best way to face the national brand leader, differentiated brands and regional brands is guerrilla warfare. Find a niche market, survive by price, and accumulate strength in the gaps between strong brands.

Breaking through the situation must be coordinated with the general direction, points, lines, surfaces and bodies, and establish a big picture of the single product leading system. Former Apple CEO Sculley proposed a term called (zoom in) abstraction and (zoom out) focus, looking at the direction and trend of the entire industry from a high level, which is the direction of the battle, and the latter is to focus on a single point to break the battle situation.

He can see the battle situation and sink into the game, start the game, and break the game. There are few people in the world who can perfectly combine these two. Fortunately, we are an organization, and the chairman's talent and the general manager's strategy can complement each other.

"Success or failure is nothing, the green mountains remain, the sunsets are red..."

Author: Houshan Keju, Source: WeChat public account "Lao Gao Business and Brand"