If you want to open a small shop in your hometown, let me first take a look at the business experience I learned in the sinking market.

Introduction: Brand marketing methods in the sinking market seem to be unfamiliar. The author uses "M" to map every reader who wants to make achievements in the sinking market and gives practical suggestions. In the post-epidemic era, does brand marketing still need to maintain the familiar "playing style"? What is the significance of the sinking market to everyone? This article will answer your questions.

In early April, I went on a business trip to Leting, Tangshan, and discussed cooperation with a friend (hereinafter referred to as M). M entered the catering industry after reading my book "Starting from Opening a Restaurant: How to Think with Strategic Logic?" three years ago. After his own in-depth exploration and the baptism of the three-year epidemic, he has become very mature and has become a well-known local word-of-mouth store.

M has been paying attention to the strategies of first-tier catering brands and has also studied growth and brand marketing, but he has never been able to "learn the basics" properly, so we talked about cooperation. While explaining the marketing ideas of first-tier brands to the other party, I also learned the real and down-to-earth business experience of sinking markets, which I would like to share with you.

1. Opening a store in the third and fourth tier cities is more profitable than opening a store in the first and second tier cities. Because the rent, staff and raw material costs are low, the profit margin of a single store is higher than that of first-tier cities. For example, the rent is one-fourth of that in Beijing, and the turnover is half of that in Beijing, so there is naturally a higher profit margin. Such a small store can make an average annual net profit of more than 200,000 yuan.

2. Product innovation is the first. Braised food is a lightly processed food with little product difference. M consulted many chefs and found many secret recipes. He then improved the production process and developed a unique flavor, which made his braised pig head soft, tasty, fat but not greasy, and can be eaten with a spoon, which became a feature. He also regarded it as his main product, established a significant difference from other delicatessens, and made himself well-known.

3. M is not a chef by profession and rarely cooks at home. He studied design at a 211 university in the north. After graduation, he returned to his hometown, Leting, and engaged in decoration design. By restructuring the value chain and integrating local decoration resources, he has become a small-scale decoration contractor. Later, he discovered opportunities in the catering industry and started a catering business alone. Now he has opened a delicatessen, a braised hot pot restaurant, and a barbecue restaurant, and lives a very affluent life.

In his own words, as long as you are willing to put in the effort and work hard, you can live a good life with innovative ideas even in counties or small cities.

4. He is a loyal fan of Teacher Hua Shan. He has read "Hua Shan's Explanation of the Art of War" no less than three times. He highly agrees with the viewpoints such as the Five Factors and Seven Strategies and "Decisive Battle" in the book. He is also familiar with Teacher Hua Shan's other books.

It can be seen that H&H has provided in-depth market education to entrepreneurs in the sinking market through publishing books. Publishing books is also an effective way for H&H to advertise and attract customers.

5. M told me that one of the great characteristics of H&H is that restaurant owners can understand what he is saying.

Restaurant owners generally have low education and are resistant to exclusive concepts such as brand assets, Boston Matrix, Five Forces Model, and Total Customer Value. However, when they see H&H's super symbols, reasons for purchase, and continuous improvement, they can understand what it is talking about. The restaurant cases shared by H&H are also very easy to understand and down-to-earth.

Following the example in the article, M renovated the store step by step. Now the store’s visit rate and repurchase rate are higher than other stores.

The ability to transform professional concepts of brand marketing into methods that ordinary people can understand and follow is the reason why H&H is recognized by many entrepreneurs and is also the characteristic of H&H.

6. Earlier media reported that first-tier catering brands encountered Waterloo in the sinking market, and analyzed the reasons such as cost and price, market maturity, etc. Here at M, I heard another voice.

There were also first-tier and big-name cooked food brands settled in his street, such as Shuanghui Cooked Food and the already listed Ziyan Baiwei Chicken, but they all failed to survive and were driven away. There are several reasons for this:

First, many big brands want to set up direct-sale stores as models, but working store managers cannot compete with small business owners or couples who start their own businesses. Simply put, such direct-sale stores lack human touch and have few repeat customers.

The second important point is xenophobia, especially in familiar markets. Locals and businesses don’t want foreign brands to take away their market and make their money. As long as they hear that you don’t speak the local dialect, customers will gradually stop coming, and it’s also easy to run into trouble with locals.

The third is that if you open a franchise store, the product structure, supply method, etc. are not flexible enough to keep up with market changes and you cannot respond flexibly to market competition.

In first-tier cities, these big brands may be able to sweep the streets, but in small cities, the saying "a strong dragon cannot defeat a local snake" is not just talk.

7. The sinking market is mainly price sensitive, and cheapness is a rigid demand. Whether it is street snacks or seafood hot pot, people still pay attention to price and will choose relatively cheap products.

The high prices that first-tier brands charge with high costs are hard to work here. For example, they spend too much money on store decoration, too much money on better raw materials, and use more complex processes to maintain product quality.

Consumers in the sinking market have a relatively weak perception of brand and quality. If big brands want to maintain their quality, it is difficult to lower their prices because they cannot cover the costs of raw materials and supply chains, making it difficult to make money.

8. The sinking market is a market of favors, which mainly includes three aspects:

The first thing is to win over the customers. There are few outsiders in small cities, and they are all familiar people. As long as the products are good and the boss is good at doing things, the reputation will spread slowly, and repeat customers and old customers will recognize this store.

The second is to deal with your peers. Stores need to make money, but don’t act too profitable, otherwise it will easily make others jealous, and your peers will find ways to punish you. For example, if someone comes into the store and says they have a stomachache, they demand ten times the compensation, or they will make you unable to open the store today, or they will call the Industrial and Commercial Bureau, what will you do?

The third is to get the business administration right. The situation in "Kuang Bi" where Tang Xiaolong and Tang Xiaohu bullied the small business owners in the vegetable market still exists today. If you don't know how to build relationships, people from the Urban Management Bureau, Environmental Protection Bureau, and Industrial and Commercial Bureau will come every few days and say that you are not qualified and need to suspend business for rectification, and you will not be able to continue your business.

In M's words, local GW workers only make three to four thousand yuan a month. Do you think they live on this salary?

9. Therefore, foreign brands cannot open direct-sale stores on the street, but they can open them in shopping malls. The shopping malls will handle a series of trivial matters for you, such as fire protection, sewage disposal, food hygiene, etc. Of course, if you enter the shopping mall, generally no one will come to cause trouble.

10. M told me a real case in which he personally managed to squeeze out a competing store.

A delicatessen was built not far from his house, with similar storefront decoration and product types, obviously plagiarizing, but he didn’t even say hello.

The new store opened and, through a series of publicity and promotions, it took away a lot of business from here. On the first day, the store's turnover dropped by 3,000. The clerk was very anxious, worried that he could not compete.

However, M was able to keep his composure. After three or four days of research, he discovered two phenomena: first, the store performance was steadily recovering, indicating that his basic foundation was still there; second, the store opposite was receiving more and more goods every day because its turnover was increasing every day.

So, he used a strategy: for six consecutive days, he let the store opposite him promote the product in a big way, while he kept silent. On the seventh day, he braised a large batch of goods and promoted the best-selling items such as braised pork and roast chicken at half price, and promoted them heavily through loudspeakers, leaflets, and door-to-door sales.

As a result, the sales of the store opposite the store on that day took a sharp turn for the worse. Because the sales were getting better day by day, they had stockpiled a lot of cooked food on the seventh day, but now they couldn't sell them all. The shelf life of cooked food is only two days, and the taste will immediately deteriorate after two days. The store owner was left with nothing.

According to M, conservatively speaking, the other party suffered a loss of at least tens of thousands of yuan. The store opposite knew it could not compete and closed down. M said this is the principle of "The Art of War": Don't indulge in small fights to build an advantage, just fight once and win it once.

11. The braised food produced by M has a heavy taste, high in oil and salt, which would definitely be considered unhealthy in first-tier cities, but locals particularly like it. This also reflects that if first-tier brands want to enter the sinking market, it is not enough to have first-tier product experience, and they need to develop products based on local actual conditions.

There are also sugar-free drinks such as Yuanqi Forest, which are obviously not as popular as the sugary drinks of Master Kong and Uni-President in the local market. In the first-, second- and third-tier markets, the differences in consumer knowledge and consumption habits may be discontinuous.

12. M feels that the profit margin of a delicatessen is limited, so he is planning to open a braised food hotpot restaurant, which will open soon. He also intends to focus on the hotpot restaurant in the future.

One sentence from me made M change his mind: If he wants to franchise, delicatessens are more standardized, have low replication and investment costs, and have a large market capacity, so it is very likely that they will become a brand with thousands or tens of thousands of stores; hot pot restaurants are complicated to operate, and the investment cost per store is high. The largest brand, Haidilao, has only more than a thousand stores, so the market capacity is limited.

M woke up as if from a dream and decided to focus on building a single-store model for the delicatessen in preparation for subsequent chain franchising.

13. After talking with M about the help I can provide in brand marketing, although it can increase sales, I deeply realized a truth: business logic and implementation are 1, and brand, marketing, design, product structure planning, etc. are all 0s behind it.

Author: Su Laoshi

Source: WeChat public account "Su Lao Shi"