From category innovation to long-term brand success, new consumption still needs 4 steps

In recent years, new consumption has continued to rise and develop, but few brands can continue to be popular. In brand marketing, we need to pay attention to many things, and the biggest taboo is "don't challenge consumers' basic cognition." So, from category innovation to brand long-term success, what else do we need to pay attention to?

01

What is the biggest taboo in brand marketing? "Don't challenge consumers' basic cognition."

The most typical example is milk marketing. When you see milk cartons or milk ads, the most common image is a cow grazing on green grass outdoors.

But in fact, the opposite is true. Cows must be kept in a fence like the one on the left and eat some hay to produce higher quality milk, because eating grass affects their whey protein, and walking more outdoors will also affect the quality of milk.

It’s just that in our traditional understanding, if cows exercise more and are in better health, they will produce better quality milk, so no one would print pictures of cows in a fence on packaging for advertising.

This means not to challenge consumers' basic cognition.

02

The milk industry has more marketing tricks based on consumers’ basic cognition, such as “adopt a cow”.

In the online promotion, "Adopt a Cow" mentioned that all cows do not use hormones to stimulate milk production. They are regularly given music, baths, massages, and sleep on soft straw mats. They can also take a three-month vacation every year to keep the cows in a good mood at all times. Only when they are in a good mood can they produce good milk.

Although this is common knowledge in the industry, consumers don’t actually know it. The effect of such publicity is actually the vote of users’ RMB.

Data shows that in the dairy industry where online channels account for less than 10%, "Adopt a Cow" currently accounts for 70% of the company's channel revenue. From 2019 to January-June 2022, the operating income of "Adopt a Cow" was 865 million yuan, 1.65 billion yuan, 2.566 billion yuan and 1.597 billion yuan respectively.

Don’t think this is a scam. This is not an isolated case in the field of brand marketing.

What is well known to the public is the marketing of Heineken beer:

That year, Heineken, which was experiencing declining performance, approached the famous advertising guru Hopkins. After a tour of the beer factory, Hopkins was pleasantly surprised to find that every glass bottle here had been sterilized four times at high temperatures.

He asked Heineken executives, “Why don’t you tell consumers about this?”

The executive replied: "Because every brewery goes through four high-temperature sterilizations, this is nothing special."

“It doesn’t matter if every brewery does it, it’s not important that consumers don’t know about it,” Hopkins said.

Therefore, Hopkins successfully made Heineken jump from the fifth place in the market to the first place by "sterilizing each bottle of wine four times at high temperature".

They all have a problem: although they challenge industry common sense, they do not conflict with consumers' basic cognition. The vast majority of consumers only have common sense, but no cognition and knowledge.

This reflects a famous brand theory: USP positioning, that is, telling consumers a "unique selling proposition".

This is the routine of transitioning from "product competition" to "sales competition". That is, many companies do not have sufficient sales awareness and experience, and only know that improving product quality can get more orders; later, when overcapacity intensified, they gradually realized that sales is also a necessary core skill for enterprises.

So, it was true in the Heineken era.

03

However, the current consumer era seems to have changed:

In the 1980s and 1990s, scale could actually become a barrier for consumer goods. When the supply side was in a relatively advantageous position, selling more could gain a place in the minds of consumers.

But in essence, this is just selling goods. They found a blank market in a niche area, selected products, and then strongly exported them through USP marketing, achieving explosive sales.

As early as before 2014, this strategy was feasible. For example, a group of emerging consumer brands such as Three Squirrels and Jiang Xiaobai mostly reaped the benefits of this.

However, in 2014, my country's three major demands, final consumption expenditure, gross capital formation and net exports of goods and services, contributed 50.2%, 48.5% and 1.3% to the growth of gross domestic product (GDP) respectively. The three major demands boosted GDP growth by 3.7 percentage points, 3.6 percentage points and 0.1 percentage points respectively.

Consumption contributes more than 50% to GDP growth, and capital has begun to flow in.

Especially in the past two years, VCs have been too enthusiastic about consumer brands. Two articles on 36Kr explain all this, the first of which is "Seizing Consumer Brands: The Last Hot Battlefield for VCs in China" in 2020:

"In the past, venture capitalists believed that only Internet platforms could achieve explosive growth and potentially bring a hundredfold return. Traditional consumer brands were lucky to achieve 100 million yuan in revenue within three to five years, which was completely inconsistent with VC thinking... But starting last year, VCs suddenly began to look at brands."

Then there is 2021's "Consumer Products Brake, Investors Chase the Tail":

“The new consumer brands that were once highly anticipated and known as the last hot battlefield in the venture capital industry are now facing a large-scale collapse.”

"The fundamental driving force behind this round of growth is traffic. The pursuit of traffic is the eternal theme of consumer goods, but traffic will not always be in love with you."

The arrival of sufficient capital indicates that the industry is beginning to change. Scale could have been used to form a barrier, but that is no longer the case in the face of capital. Large capital institutions can easily bring in more than 1 billion yuan, and coupled with the lack of new media and new channels, a new brand can complete the scale expansion of the previous 10 years in just two or three years.

The barriers of consumer goods have returned to their essence, and brand awareness has once again come to the fore. In other words, the basis of market competition is changing from "sales competition" to "marketing competition." Whoever can more efficiently meet consumer needs will win the competition.

Therefore, the key here is no longer product quality or sales skills, but to meet needs more effectively, whether physiological or psychological needs.

Not only about selling goods, "building a good brand" has become the focus of everyone's discussion.

04

How to build a brand? Back to this stupid question.

No matter how profound the methods and underlying logic are, they cannot be copied to the growth of a brand. As a result, many marketing bigwigs are currently expressing their opinions, but they do not seem to have completely affected the birth of a valuable brand.

At present, most new consumer companies start with product categories when building their brands.

The book "Positioning" mentioned such a point:

"In order to occupy a category in the minds of consumers with limited capacity, the best way for a brand to differentiate is to become the first, to be a category leader or pioneer, to be far ahead in sales, and then to differentiate the category, to be the only one in the sub-category, that is, to be the first in the sub-category."

The success of almost every "brand" is first and foremost the success of its category. Companies should prioritize categories over brands.

This has also been verified in the market.

The author Fei Yang talked about several small cases. In early 2019, he started to serve Huaxizi. When communicating with Huaxizi's founder Hua Mantian, he asked: "What do you think will be Huaxizi's biggest shortcoming in the future?"

Hua Mantian said: "I think the question is how to build a brand. Our team does not have the brand gene. I have consulted many industry leaders, and they do not agree or think it is a good idea. But I think it is possible. We have to take a different path."

What is this different path? Category No. 1. During the 618 shopping event in 2021, the Huaxizi brand became the No. 1 cosmetics brand on Tmall, JD.com, Douyin, and Kuaishou.

The same is true for the underwear brand Ubras. In the innovative category of size-free underwear, Ubras has firmly occupied the category mindset in the minds of consumers through saturation investment. Once the track of category innovation is formed in the mindset, users rarely remember who is the second place.

In this world, no one remembers the second highest peak. What is the name of the second highest peak in the world after Mount Everest?

Who is the runner-up who is slightly slower than world sprint champion Bolt?

How many people know the second largest pickled mustard brand in China, behind Fuling Pickles?

Huawei Consumer Business CEO Richard Yu once said: "There is no second in my dictionary." If Huawei's smartphones had originally set their goal to be ranked third, it would definitely not be ranked among the top three in the world today.

As the saying goes, positioning determines status.

But how to quickly become the first in a category? How to seize the category mindset of users? In the increasingly involuted market competition, this has become the question that every brand thinks about the most every day.

To build a category leader from 0 to 1, I think we should start from four aspects.

-Understand the brand audience-Access the "big and small high-tech" field-Create the first mindset of the category-Gradually expand the category quadrant

05

Two years ago, I studied a Chinese brand called Onecup, which makes capsule machines. This is a product that has been polished for a long time. It was developed in 2007, the first generation of the "capsule soymilk machine" was launched in 2014, and the improved multi-category beverage capsule machine was officially launched in 2017.

The following year, our team interviewed Onecup CEO Wang Yihan, who provided data showing that during the 2017 "Double 11" and "Double 12" shopping festivals, a total of 7,000 units of this product were sold without discounts.

In May 2018, Xu Xin, the queen of limelight who had invested in NetEase, JD.com, and Meituan, invested 50 million in Onecup. At the press conference, Xu Xin said,

"We keep our eyes open every day to find the first in the category. When I saw Onecup, I was very excited!"

How could it not be? During the 6.18 shopping festival, Onecup ranked fifth in the coffee machine category and second in the capsule coffee machine category on Tmall, becoming the fastest growing brand.

Unfortunately, we now find that the brand's popularity seems to be getting smaller and smaller. Onecup's growth pace to become the category champion and the reason for its current decline can actually give us some inspiration.

Let’s take a look at the details: The first step is to identify the brand’s target audience and capture the post-80s-95s generation to cater to the younger generation.

Onecup was developed by Wang Xuning, who developed the world's first soymilk machine at the age of 25 and later founded Joyoung, a benchmark company in China's small home appliance market.

In 2007, Joyoung soybean milk machine category occupied 80% of the market share. However, the consumer group in this market is relatively limited, mostly middle-aged and elderly people born between 1950 and 1970.

With the development of coffee and milk tea in the Chinese market, soy milk is probably facing the same crisis of discontinuity as liquor.

To make matters worse, the consumption power of those born in the 1950s and 1970s is gradually being replaced by those born in the 1980s and 1990s. According to data from consulting firms such as Nielsen and Accenture, there are 210 million consumers born in the 1980s in China, and the size of the group born in the 1990s is close to 250 million.

In early 2019, Nielsen released a report stating that the post-90s generation has become the main force in China's consumer market. In terms of consumption willingness, the post-90s generation's consumption willingness is 63 points, higher than the post-80s generation (60 points), post-70s generation (54 points), and post-60s generation (54 points).

What are the consumption characteristics of this group of people?

They first require convenience and speed, and they prefer to spend their free time on entertainment.

Meituan Dianping’s big data shows that in the entertainment and leisure industry covered by the post-80s and post-90s generations, the post-90s generations are the main force in entertainment, contributing 70% of entertainment and leisure, while the contribution of the post-80s generations accounts for only 30%.

But making soy milk is more troublesome. In the past, you had to grind the beans and boil them to drink a cup of soy milk; now it takes about an hour to prepare, make and clean a soy milk machine.

How can this be faster than making a cup of instant coffee?

The second is the personalization of consumer preferences and the pursuit of novelty.

Boston calls people born between 1983 and 2000 the Millennial Generation, a group of about 400 million people. According to research, they are the group that actively seeks consumption upgrades and advocates personalized consumption, and they have a consumption consciousness that is avant-garde, trendy, and pursues novelty.

Obviously, consumption scenarios such as fried dough sticks with soy milk, steamed buns with soy milk, and almost no branding in the market operation are making the soy milk category lose its freshness.

If Wang Xuning and Joyoung want to capture this group of people, they should take some actions, such as developing a new product or launching a new brand. The second step is to layout categories with emphasis on "big, small, high and new" to establish differentiation.

If you want to launch a new brand, where is the entry point for the company?

This question is not just for Onecup. It is a necessary question for all emerging brands before they are established - whether they are startup brands or internally incubated brands.

The fashionable liquor brand Jiang Xiaobai is a good example.

When talking about the entry point for emerging brand entrepreneurship, Jiang Xiaobai’s founder Tao Shiquan once proposed the four-character theory of “big, small, high and new”.

Big means large market capacity.

Only by starting a business in a large industry can you avoid hitting a ceiling. Jiang Xiaobai chose the liquor industry, which is an industry with a market size of 600 billion yuan. Even after 10 or 20 years, it will not easily reach its ceiling.

Onecup's hot beverage market is larger in scale.

36kr has reported that China's hot beverage market is currently growing wildly, with a market size of hundreds of billions of yuan. Categories include juice, soy milk, milk tea, coffee, etc., among which the market size of soy milk and coffee both exceed 500 billion yuan.

Small means a small entry point.

Brands need to find very small market gaps. Jiang Xiaobai’s flagship product, the “Expression Bottle”, caters to the consumption scenarios of small gatherings, small drinks and small moments.

Compared with the banquet and gift scenarios of mainstream liquor, the market gap is very small, but it is enough to support several small and medium-sized companies.

Onecup started with office use and gradually expanded to household consumption. However, for the entire hot beverage market, shopping and buying a cup of hot beverage is the mainstream consumption scenario.

High means high efficiency.

Tao Shiquan said that they are studying how to create higher efficiency, or find relatively higher efficiency breakthrough points, in terms of production supply chain, product development, brand communication and channels.

The actual feedback is that Jiang Xiaobai’s efficient brand communication and product development have also received a response from the market.

The original intention of Onecup's development was efficiency.

It takes 90 seconds to brew a cup of 92℃ American coffee, 100 seconds to brew a cup of 92℃ Hong Kong-style milk tea, and 30 seconds to brew a cup of 70℃ sugar-free soy milk... Onecup scales the production of hot drinks to a radius of 1 minute.

New means new products and new technologies.

Jiang Xiaobai's light-bottle liquor, low-alcohol liquor, fruit-flavored liquor and other products are rare in the traditional liquor market. These new products have also attracted many young people.

The same is true for capsule machines represented by Onecup. This is a capsule beverage originated from Europe and the United States. The overseas brand is represented by Espresso, with annual sales of about US$4.5 billion.

But in the domestic market, Onecup is the first batch of explorers of capsule machine category. The third step is to achieve growth and build the first mindset of the category.

As one of the first explorers of the capsule machine category, we will certainly get the category bonus.

When we were researching the self-heating hot pot brand Mo Xiaoxian, we talked about:

In the early days, Mo Xiaoxian grew mainly with the help of Taobao traffic, entered many Taobao stores to sell, and also gained exposure from Juhuasuan and Taobao Tuangou.

This approach allows Mo Xiaoxian to take advantage of the self-heating hot pot category bonus. Consumers can see more Mo Xiaoxian products by searching for keywords.

As it grows like this, Mo Xiaoxian will slowly form the impression of "the number one self-heating hotpot" in the minds of users.

Xu Xin said that the world has changed, and consumption trends are also constantly upgrading and changing.

People born in the 1980s and 1990s have become the main consumers. The value of users’ time has increased significantly, and their attention spans have become shorter and shorter. Startups must occupy the minds of consumers and become the first in their minds.

Among marketing cases of capturing the mind of a category, Lululemon is a classic.

Lululemon initially focused on being a yoga clothing brand. When Chip Wilson founded Lululemon in 1998, yoga was just beginning to gain popularity and widespread acceptance in the United States.

It is said that Chip Wilson was the only man in the yoga class at that time. Seeing that the number of people in the class was increasing, he sold the company he had run for more than 10 years and founded Lululemon.

As for Onecup, it is at a similar stage of development as Lululemon.

Although capsule machines occupy nearly half of the small appliance shelves in European and American supermarkets, it is still a blank market in China.

CBNData released "2019 Online Coffee Industry Trend Insights", which shows that capsule coffee machine sales account for a large proportion of the TOP5 brands.

At present, no authoritative organization has announced the ranking of Chinese capsule coffee machine brands.

However, judging from the public rankings in knowledge communities such as Zhihu, Onecup, as the fastest growing brand in the capsule coffee machine category, has already become the No. 1 domestic brand.

But we also talked about "How can there be so many category firsts?", which actually shows that the so-called category first hit product is basically useless. We prefer to make your category first a big single product of the brand.

The fourth step is to expand the category quadrant and find the second growth curve.

Once brand awareness is established in a niche category, expanding into other categories becomes much easier.

Mo Xiaoxian expanded from self-heating hot pot to self-heating rice and hot and sour noodle categories; Jiang Xiaobai expanded from fragrant liquor to fruit wine and rice wine; Lululemon is no longer just a yoga brand, but is covering the entire sports field.

The same is true for Onecup.

It started to penetrate into the soy milk capsule machine category in 2014, and in 2017 it launched a new model that integrates soy milk, milk tea, coffee and other products; consumption scenarios are also slowly penetrating into office scenarios, home scenarios and even outdoor scenarios.

What needs to be paid attention to when expanding the category quadrant is the relevance of category cognition.

Ten years ago, Bawang Group, which was famous for its Chinese herbal anti-hair loss shampoo, extended its product line to the field of herbal tea beverages.

At that time, the industry had high hopes for this herbal tea. They believed that consumers were drinking a bottle of beverage to quench their thirst.

If Bawang can guide consumers towards the "family of traditional Chinese medicine" through various means during the process of expanding its herbal tea business, the problem of Bawang's brand extension relevance should be solvable.

Unfortunately, as soon as consumers hear about this herbal tea, they "always feel that Bawang Herbal Tea smells like shampoo."

Obviously, such category extension did not achieve much success afterwards.

Wonderlab, a meal replacement brand with sales exceeding 60 million in its first year, has been more meticulous in expanding its product categories.

Later, Wonderlab, which sells meal replacements, launched vitamin effervescent tablets on Tmall and began to enter the health industry.

For this reason, Wonderlab is not actually making meal replacements, but is trying to carve into a large market of oral food products for women to become more beautiful. Meal replacements are just the first category, a stepping stone.

After increasing its brand awareness with its meal replacement bottles and achieving first place in the category, Wonderlab is slowly upgrading from a fine consumer category of meal replacement to a personalized lifestyle for young women, integrating its brand philosophy with consumers' pursuit of "beauty" and continuing to enhance its brand potential.

This growth path, which both Onecup and Wonderlab are using, seems to be suitable for all new consumer brands.

above.

Author: Huang Xiaojun; Official Account: Jingyan Brand Lab (ID: JingyanLab)