Corporate Strategy VS Brand Strategy

This article shows how Xiangpiaopiao seized the market opportunity, broke through with its innovative cup milk tea, and adopted a high-profile brand marketing strategy to become a category leader in the industry. At the same time, Xizhilang's brand extension error also became a sharp contrast. These details depict the strategic operation of brand competition. It can give readers a clearer grasp of the rules of success and failure of enterprises.

One day in 2004, Jiang Jianqi was attracted by a crowd of people queuing in front of a milk tea shop on the street. Since milk tea can attract long queues of consumers, there must be an imbalance between supply and demand in the market, and there is a possibility of innovation.

In 2005, Jiang Jianqi replaced the "pearls" in milk tea with coconut nut bags and launched the solid instant milk tea, Xiangpiaopiao.

In December 2010, sales exceeded 1 billion cups, and Xiangpiaopiao's circling the earth increased from 1 to 3 times.

In 2015, when you are a little hungry or sleepy, you can drink some Xiangpiaopiao. 1.2 billion people drink this every year.

In 2021, Xiangpiaopiao was replaced by various milk tea and fruit tea brand stores.

01Original crowd, market focus

When the product was first launched in 2004, Xiangpiaopiao did not produce and sell it on a large scale. It only selected four cities, namely Wenzhou, Fuzhou, Wuxi and Suzhou. In each city, it only selected one university, one middle school, one supermarket and one store to test the prototype product. It also sent people to track daily sales and draw charts.

After half a year of testing, the sales volume was satisfactory, which gave Xiangpiaopiao the confidence to expand the market and expand nationwide.

At the beginning of the product launch, we can understand the real consumers and gradually understand how consumers buy, why they buy, where they buy, and how they use it, and then gradually improve and establish a clear initial market cognition. Once this initial cognition is established, the subsequent original channels will gradually become clear. Even vice versa, the product publicity, media, promotion, pictures and texts, and KOL placement will also be targeted.

• Everything in business revolves around real consumers
• In the process from 0 to 1, we must come from consumers and go to consumers.
• Then we can achieve the goal of eliminating the coarse and retaining the fine, eliminating the false and retaining the true, making progress step by step, and integrating knowledge and action.

High-profile, channel penetration

The results of a one-year trial sale in 2004 confirmed the market potential of cup milk tea.

19 years ago in 2004, it was still an era of centralized media; Sina Weibo has maintained explosive growth since its launch in August 2009. At the end of October 2010, the number of registered users of Sina Weibo exceeded 50 million; WeChat was not launched until January 2011.

In 2005, Jiang Jianqi decided to enter the national market. As the pioneer of cup milk tea, he spent 20 million yuan a year on advertising on Hunan Satellite TV. This move quickly released the product (a new category of cup milk tea) signal to the market, and then cooperated with the National Food and Drinks Fair to attract investment. The national market responded enthusiastically, Xiangpiaopiao was in short supply, and orders and funds continued to flow into the company.

In the past, we placed advertisements on TV stations and built channels across the country; now we place advertisements on Douyin and Video Accounts and build channels across the country. The underlying logic of the business has not changed: advertising builds awareness, and channels solve the problem of reach.

Xiangpiaopiao, through large-scale advertising + National Food and Drinks Fair investment promotion, Xiangpiaopiao has completed the transition from the original market to the national market. Only when a business reaches scale can it be a large-scale business.

• Marketing should create a sense of familiarity
• Business needs to have a sense of scale

02The key to creating customers is to occupy an advantageous position in cognition

Xiangpiaopiao is a typical category pioneer + first-mover advantage. Advertising not only brought in distributors across the country, but also brought in competitors - Xizhilang.

Xizhilang soon discovered the growth potential of the new category of cup milk tea and launched a similar product, "Xizhilang CC Milk Tea", in an attempt to seize the growth dividend of the new category (cup milk tea) through the high popularity of the Xizhilang brand. In fact, in the past 40 years of commercial competition, the results of most brand extensions have not been very good.

At this very moment, Xizhilang was facing a dispute with Boli over seaweed.

By launching the new brand Good Times (seaweed), Xizhilang won the seaweed competition with Boli. Xizhilang was very smart in Boli seaweed, occupying a new category through a new brand. But Xizhilang made a basic common sense mistake in milk tea.

• When a strong brand extends its product category, if the extended category is a weak category with no competitive brands, continuing to use the old brand can bring cognitive advantages. If the extended category is a strong category and there are brand-type competitors, a new brand must be activated. At this time, the enterprise becomes the resource background and the new brand becomes the front-end gripper.
• To distinguish the boundary between corporate strategy and brand strategy, you cannot have both. First, look at competition, second, look at product categories, and third, look at cognitive advantages. Xizhilang quickly realized the mistake he had made.

Focus on the main business and clarify the positioning

In 2007, Xiangpiaopiao launched a grand development plan: first, to invest RMB 30 million to launch a new project of instant rice cakes; second, to open a chain of milk tea stores and enter the catering industry; and third, to enter the real estate market.

In the second half of 2007, Xizhilang renamed the original "Xizhilang CC Milk Tea" to Youlemei and invited Jay Chou as the spokesperson. The advertisement appealed that you are my Youlemei and will fight Xiangpiaopiao again. The loss of focus of Xiangpiaopiao's business was in sharp contrast to Xizhilang's use of the new brand (Youlemei) to make the market. By the second half of 2008, Youlemei's sales continued to rise, and in the first half of 2009 it even approached Xiangpiaopiao.

• It's not what the opponent did right.
• What did we do wrong?

After learning from its painful experience, Xiangpiaopiao closed its rice cake project and sold its equipment two years later in 2009. The two milk tea shops were also sold. After the real estate project was completed normally, it no longer got involved and refocused on milk tea, thus avoiding danger.

Through advertising, the key information that Xiangpiaopiao is the pioneer and leader of cup milk tea (who am I) and the largest cup milk tea brand in China (hot selling) is clearly and clearly conveyed to consumers. It started running around the world (dramatic expression).

• The creator of Xiangpiaopiao milk tea in cups (Who am I)
• More than 300 million cups sold a year (hot sale)
• Can circle the earth
• Leading the nation in sales for seven consecutive years (dramatic expression)

On the other hand, Yolemei uses emotion + image advertising. The slogan "You are my Yolemei" does not clearly convey to the target consumers: what I am, how am I different, and why I know. In the battle for mental cognition, the difference is obvious. Xiangpiaopiao's sales increased from more than 300 million cups to more than 700 million cups, and in 2010 it jumped to more than 1 billion cups. Yolemei lost the opportunity, and Xiangpiaopiao became the real pioneer and leader of cup milk tea.

1. The core of product competition: the battlefield is in the market, products represent enterprises in the battle, and the focus of enterprise work revolves around products
2. The core of channel competition: the battlefield is on the shelf, market penetration rate, penetration rate, and the focus of enterprises is on the terminal shelf
3. The core of the advertising battle: the battlefield is in the mind, communication is better than no communication, high potential is better than low potential, and a big voice covers a small voice
4. The core of brand competition: the battlefield is in the mind, positioning is better than no positioning, and the focus of corporate work revolves around the mind

03Repositioning, a little hungry and a little sleepy

Milk tea has a big problem - hot drinks. This has caused Xiangpiaopiao to have obvious off-season and peak season. After becoming the leader in the category, the two biggest problems Xiangpiaopiao faces are: one is how to balance the off-season and peak season. Xiangpiaopiao faces the same problem as Chengde Lulu. The other is how to break through the category boundaries, from competition within the category to competition in expanding the category.

In terms of the peak and off-peak seasons of products, neither Chengde Lulu nor Xiangpiaopiao thinks as deeply as Six Walnuts. Use your brain frequently, regardless of whether it is hot or cold. Drink more Six Walnuts when you use your brain frequently.
So there is a new demand for drinking some Xiangpiaopiao when you are a little hungry or sleepy:

1. Repositioning new categories and scenarios

Second, expand product categories and convert potential customers of coffee and beverages

3. Deliver clear reasons to buy

After Xiangpiaopiao's revenue reached a peak of 3.978 billion yuan in 2019, its performance began to decline year by year.

In 2022, Xiangpiaopiao launched new flavors of Meco cup juice tea "Lychee Passion" and "Mango Guava", bottled juice tea "Plum and Duck", Xiangpiaopiao bottled milk tea, Lan Fangyuan bottled iced lemon tea, co-branded oatmeal milk tea, etc. However, Xiangpiaopiao has never been able to break away from the original business logic and business inertia thinking.

Public information shows that in 2020, 2021 and 2022, the operating income of Xiangpiaopiao's ready-to-drink business was 657 million yuan, 643 million yuan and 638 million yuan, respectively, a year-on-year decline of 34.62%, 2.13% and 0.69%.

——The revenue and gross profit margin of this business have declined

In the 1980s, Professor Michael Porter of Harvard University proposed the five forces analysis model, which includes: the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, the threat of substitutes, and competition among existing companies.

The threat of substitutes refers to other products that can meet the same or similar needs. Product substitution is a common competition phenomenon. The reason why competing companies in an industry form a competitive relationship is that their products are substitutes for each other.

Five elements of substitution: switching cost, price, experience, and convenience.

Nie Yunchen founded Heytea in Jiangmen, Guangdong in 2012, Nayuki was established in 2015, and in June 2020, Mixue Bingcheng’s official Weibo announced that the number of stores worldwide has exceeded 10,000 - what kills you has nothing to do with you.

• When the times abandon you, it's too late to say goodbye
• In terms of the form and content of demand, consumers want faster and more convenient things. They don’t seem to care whether it is a faster horse or a car.

In most cases, consumers prefer freshly brewed milk tea from milk tea shops. Milk tea shops not only offer a variety of products, but also allow customers to customize drinks according to their preferences, such as choosing their own condiments, high or low sugar content, and room temperature or ice.

Instant drinks like Piaopiao are too boring and standardized. They are essentially the same as instant noodles. The reason why instant noodles are not selling well is not because of competition within the instant noodles category, but because of substitution outside the category.

04Xiangpiaopiao won the battlefield but lost the war

Xiangpiaopiao is a bit like Nokia. Xiangpiaopiao did nothing wrong in its original business, but it still lost. Xiangpiaopiao did not lose to its products or business, but to the change of consumers.

If time could go back, Xiangpiaopiao, as a pioneer and leader in cup milk tea, could have leveraged its brand recognition to open offline stores, solving convenience issues, improving experience, and crossing the boundaries of hot drinks in cups. Wouldn't that be great? But Xiangpiaopiao didn't do that.

In fact, in 2007, Xiangpiaopiao really wanted to open a store, and even opened two milk tea shops to test the waters. However, 2007 was too early for the trend, and it was five years later that Heytea opened its first store in Jiangmen, Guangdong.

05Corporate strategy vs market strategy vs brand strategy

• Corporate strategy is the way to rule
• Market strategy is the way to be a general
• Brand strategy is the way to fight

Distinguishing the boundaries between corporate strategy, market strategy, and brand strategy is the basis for decision-making by managers. The product life cycle is parasitic on the category life cycle, but companies can cross the product and category life cycles through the selection, adjustment, and layout of corporate strategies - there are thousands of rivers with water and thousands of moons, and there are thousands of miles of cloudless sky. The brand is the image of the company in the market, and the company is the real body.

strategy:

Corporate strategy: the process of discovering market opportunities and mobilizing internal and external resources to seize opportunities. Enterprises are social organizations, and behind market opportunities are social problems and social pain points. The bigger the problem and the more common the pain points, the greater the opportunity. The first thing is not how to do, but why to do. For this reason, the corporate mission comes from outside the company, and the corporate value comes from outside the company. It is not self-generated, but long-lasting.

Market strategy: the plan of what kind of business, product portfolio and products an organization uses to seize opportunities. It includes a series of implicit knowledge such as business portfolio, product line, product, channel, model, etc. The explicit knowledge of market strategy is manifested in brand strategy, which is the process of occupying the dominant cognition in the form of brand.

Corporate Strategy > Market Strategy > Brand Strategy

1. All strategies involve choices. Without choices, there is no distinction between real and fake.

2. First there is strategic choice, strategic abandonment, and then strategic investment.

3. Without organizational support, all strategies will be zero.

4. The system is the tactics, and the tactics are the system

5. Any strategy that is not implemented in terms of business, products, and systems is a pseudo-strategy

Top-level design: Top-level design is not about designing the top level, but about forming top to bottom: going all the way to the bottom, going all the way to the bottom, and going all the way to the bottom. That is: corporate strategy - market strategy - brand strategy. Corporate strategy determines market strategy, and market strategy determines brand strategy.

Corporate strategy determines what to do and what not to do. Corporate resources are limited, and the strategy at the corporate (organization) level first determines what not to do and what to do. Choose what industry (track), target what market, do what business segment, and plan what product line. That is: industry-market-business-product line

Market strategy: You can think of market strategy as drawing a "battle map". The enterprise strategy has already planned the industry, market, business, and product line, just like the food and soldiers are ready. How to fight this battle, which soldiers (products) to send out first, which hilltop (origin market) to occupy first, which soldiers to send out later, how to go from a point to a line, and then to a surface, and what kind of situation to form.

Brand strategy: Products occupy shelves, while brands occupy minds. The best strategy is to attack the enemy's strategy. It means what kind of flag you should raise to command the world and conquer the world. How important is this flag? It is related to investment and can determine life and death. It comes down to: brand naming, product serial packaging, and differentiated reasons for purchase.

• Without corporate strategy, there is no market strategy; without market strategy, there is no brand strategy.
• Corporate strategy is the way to be a king, market strategy is the way to be a general, and brand strategy is the way to fight.

Essentially, there is nothing wrong with Xiangpiaopiao's brand strategy, but the mistake is in the thinking of the corporate strategy. By binding the enterprise to the business, it cannot break away from the original business logic and cannot see the changes in market demand. This reminds us of Drucker's classic three questions: what is your business, what will your business be, and what should your business be.

I wonder if Xiangpiaopiao can still recall the day in 2004 when she saw a crowd of people queuing in front of a milk tea shop on the street...

1. In the first phase, Xiangpiaopiao created a new category of cup milk tea through product innovation.
2. In the second stage, we will focus resources, make big moves, and seize the position of category leader.
3. The third stage: repositioning, expanding category competition, and converting out-of-category customers
4. The fourth stage: trapped in the category and lost in the corporate strategy, the measures were from cup milk tea to the second growth curve of milk tea

06 Summary

If you can conquer the heart, the rebellion will disappear. From ancient times, we know that soldiers are not for war.

If you don't judge the situation, then both leniency and severity will be wrong. You need to think carefully when governing Shu in the future.

As a brand, Xiangpiaopiao cup milk tea is successful, but as a company, Xiangpiaopiao has failed. Fuji is also facing the decline of the film category, but it knows that at the corporate strategy level, it doesn't matter if this brand opportunity is lost, and it can look for other opportunities. After analyzing the resource capabilities formed by the company in the past, it discovered what the company's past capabilities for producing film were - fine chemicals, nano-synthesis, and collagen processing.

Finally, they found the development of medical uses, especially the processing of collagen, and even produced an anti-aging skin care product called Esti, which sold very well. This is the result of separating corporate strategy from brand strategy.

Equating brand strategy with corporate strategy, and even relying entirely on a brand to present corporate strategy, Xiangpiaopiao eventually died in the category change and was replaced by a new milk tea brand.

Success or failure is all in vain

The mountains remain

A few sunsets

…

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