The incremental consumption market has turned into stock, but 90% of brands are still using the same strategy as 10 years ago

The world has entered a new era, but our brand marketing methods are still stuck in the past. As market opportunities are gradually filled, category opportunities disappear, customer acquisition costs rise, and the stock market is ushered in, the previous tricks are no longer effective. What should we do? This article shares a few tips, let's take a look.

In 2023, everyone should have discovered that times are changing. What was useful in the past is no longer useful now.

When we were live streaming with Meiji, Runyu and Long Gonghuohuo a few days ago, we were all sighing that from the Internet, content, online education to the consumer industry, although each industry has its own pace, everyone is facing the same reality of change: we have changed from an old environment driven by supply and incremental land grabbing to a new environment driven by demand and stock game, but our brand marketing strategy is still stuck in the past.

• For example, most of us are still using massive advertising to desperately attract new customers.
• For example, many of us still want to find a hot formula to increase a large number of fans in the general traffic.
• For example, we still want to focus on cost-effectiveness, reduce profits, and sell more products at a lower profit margin.
• For example, we are also eager to gain speed through rapid financing.
• For example, we are always looking for one category, track and platform bonus after another.

Path dependence is an instinct, and copying past successful experiences to the present is an inertia.

But think about it, China's KPI is no longer GDP growth rate, but balance. How can we still look for dividends?

In this article, I would like to talk about a "consensus among a small number of people" and an "anti-consensus among the majority of people": Our approach needs to change from siege in the incremental era - seeking the greatest common divisor, to defending in the stock era - building a long and deep river.

This original statement is borrowed from what Runyu said during the live broadcast, and I fully agree with it.

01 Chase dividends, because they are opportunities for incremental market

In the incremental market, dividends are the key word. We are always looking for category dividends and platform dividends. At first, it was the Internet dividend, and later the Douyin dividend and the private domain dividend. Dividends, dividends, dividends.

The bonus is actually the information gap, the information gap under change.

In the incremental market, what is needed is the ability to "find the greatest common divisor opportunity point". In an economy with insufficient supply and strong demand, find the biggest market opportunity, use the cost leadership strategy, conquer category penetration, and form a mindset.

Do whatever runs fast. The only martial arts in the world that cannot be defeated is speed.

So money is also flowing in this direction, passing the parcel around, forming a consensus, and creating a Chinese brand at the speed of China.

New capital, new brands, new platforms, new content, and new bloggers emerged, forming a new pattern, which in turn formed capital dividends.

The essence of business is company profit.

Company profit = number of people * average customer spending * profit margin * repurchase rate * referral rate

The essence of the incremental market is supply-driven, which is a cost-leading strategy. It uses low cost to attract people, uses low cost performance to open up a large number of people, and uses scale to force recognition. It has low gross profit, but it can still make small profits but quick turnover with a large volume.

The brand effect of the incremental market essentially solves the problem of communication efficiency.

The purpose of brands in the incremental market is to solve the communication problem of "I am a well-known brand, you can't go wrong by buying from me."

So we see that there are many well-known trademarks and advertisements in China, such as ox ox ox sheep sheep sheep rat rat rat Hengyuanxiang.

Just by running a CCTV advertisement, it can be said that you are awesome and rich.

Therefore, the previous generation of Chinese brands did not need to be complicated. A memorable name, a memorable logo, and a catchy slogan were enough. Because the problem of communication efficiency was to be solved, as long as Chinese people could pronounce and remember it, it would be fine.

When overseas brands enter China, they use their sense of cultural superiority and successful overseas models to expand rapidly.

They were just one step ahead of us, and they had a lot of natural halos. In a market environment where Chinese people had no brand awareness, they quickly spent money on advertising.

02 Using incremental strategies to attack existing stocks will only lead to disappointment

As market opportunities are gradually filled, category opportunities disappear, and customer acquisition costs increase, we have to admit, even though we don’t want to, that we have entered a stock market.

Using the strategies for incremental markets to attack the existing market will only result in endless disappointment.

We should all find that people's joys are becoming less and less shared, and we just feel like we are making trouble for each other.

The formula is still this formula:

Company profit = number of people * average customer spending * profit margin * repurchase rate * referral rate

The population is becoming more and more segmented. The ceiling of the number of people is becoming more and more obvious, and the cost of acquiring the same number of people is getting higher and higher.

The promotions brought about by near-infinite competition have caused profits to drop lower and lower, and marketing costs have gradually increased. The repeat purchases brought about by the scarcity of supply have now also been snatched away by competition. Repeat purchases have decreased. Profits have decreased.

The original mental wall is gradually being divided into subdivided tracks.

We blame the high cost of traffic and say the situation is difficult, but the reality is that the rules of the game have changed.

But we must realize that in a stock market, the increase in customer acquisition costs means that there is a ceiling on the population base.

If we want to increase profits, the key lies in increasing the average order value, profit margin, repurchase rate and referral rate.

But we have never learned how to increase the average order value, improve the profit margin, and increase user stickiness.

The brand effect in the era of inventory is no longer a question of communication efficiency, but a question of solving the problem of "supporting premium and user stickiness."

The original memorable brand name, a recognizable logo, and a slogan that was passed down by word of mouth cannot be used. It only solves the problem of remembering it and knowing that it is famous, but does not solve the problem of why I must choose this little red among all the flowers.

03 How to build a brand in the existing market in 2023?

Then you may ask, in the game of existing market, what should we do since the previous tactics don’t work anymore?

I'm giving you some suggestions for your reference only. It's up to you to judge whether they are right or not.

1. Focus your resources on one point: one group of people, one category, one unique selling point. Then connect the dots.

Many times we all fantasize about becoming big, but when we become big we find that we have not done anything thoroughly.

For example, a new consumer brand wrote in its BP in its first year that it wanted to become a certain group in China. Everyone can paint a rosy picture for the VC circle.

But how can we go from a point to a line, from a line to a surface, and from a surface to a solid?

We are very good at doing something and creating one hit after another.

But behind the hit products, we found that there was nothing that could be connected.

That line can be a unified group of people, the same category mindset, or a unique formula and selling point.

Let me talk about my own entrepreneurial experience. When I founded DaoFa, I was ambitious and wrote down my mission to create a good Chinese brand and become a YC incubator for Chinese consumer products in 10 years. My model must have media, consulting, and training + marketing service companies to empower Chinese consumer products from all aspects.

The bigger the dream, the worse the reality. Because you can't do one thing well.

In 2023, I decided to return to the most simple and essential point. We can't do anything YC, and I'm not capable of that yet. What we can do is to provide marketing information and methodology for brand marketers. What we do is media + training.

Let’s go back to the first point and then cultivate our line: new brand marketers. Then the business will slowly grow like a tree.

2. Go deep. Instead of searching for the greatest common divisor opportunity, it is better to dig for water sources and dig out a long and deep river.

Let me talk about my own experience and story. I started writing articles on WeChat public account in 2015. At that time, I was in the United States. I wrote about the story of a Chinese doing marketing in the United States. My content is very broad, ranging from my emotional experience to my workplace and marketing observations.

But starting in 2019, I can no longer do this because there are too many general traffic types of content.

To generate general traffic, you must have the ability to carry the common interests of general traffic. Do you have the ability/appearance/content/taste/product to attract attention?

Do you have the same appearance/eloquence/product selection/charm as Li Jiaqi?

If not, just find a vertical track and go deep into it.

What I can do is to find a vertical and blank field to dig deep into. So I started to become a vertical blogger in the field of brand marketing.

The more I delve into this field, the more I find that there is so much that can be done in this field. I can share the brand marketing strategies and cases at home and abroad over the past century, study the latest marketing methodologies, and delve into the strategies of different categories at different stages, and even into different international markets.

When I think of the vertical field as a source of water bubbling out of the soil, and keep digging down, I will dig out a whole turbulent river.

Focusing on the cases that marketers want to see, my business has expanded from content to social networks, to course systems, to corporate training, to resource docking...

The same is true for consumer products. A few years ago, I wrote a case study about the To B to To C brand Fuqing. The founder originally wanted to be an expert in skin care, but later found that "acne removal" alone was worth decades of hard work. He always thought that the acne removal category was too small and not big enough. But if he really focused on acne removal and thought about it more deeply, he could even go beyond skin care and move into a more professional field.

In the past, we always wanted to find the greatest common divisor, but forgot to delve deeper into the areas we are best at.

3. Do it. Instead of spending a night with a large group of people, it is better to find a group of people who love you to accompany you until old age.

After all, our past thinking in the incremental market was to find as many people as possible to spend a night with me.

But in the existing market, there are so many products and everyone is tired.

In the existing market, what we want to find are 1,000 die-hard fans, 1,000 people who love you deeply, and then stay with them until old age.

In the existing market, the focus is not on attracting a large number of new users, but on cultivating super users.

Many people have built big businesses, but they cannot clearly explain who their users are. This is because in the past, under the concept of categories, there was no user awareness, and there were all kinds of users.

For example, if you sell China toothpaste, people of all ages use it.

But now it’s different, the values ​​​​between circles are becoming increasingly different.

Find your circle, become your core, and think about what long-term and unique value you can provide to them.

4. Create a product experience that is 3 times better for this group of people, attach spiritual attributes, don’t be afraid to set a high price, but make sure they are willing to pay this price

As Mr. Jiang Nanchun said recently, don’t focus on price-performance ratio anymore, focus on price-performance ratio.

If the number of people is not enough, the lifetime value can be used to make up for it.

If the scale is not enough, the average order value can be used to make up for it.

Don’t be afraid to set high prices, but think about what kind of high-priced products users are willing to pay for?

You may say that your product has no chance now. But if you do the 1, 2, and 3 points I mentioned above, let go of your original desire to serve a large group of people, and start to focus on one line and one group of people, you will find that there will always be a need for product segmentation and innovation.

Runyu mentioned a point that many of us have realized that in the new population, we need to add spiritual value to products, not just functional value. How to attach spiritual value to products is also an opportunity.

How can we add an "experience" that truly suits this group of people based on the product?

For example, in the maternal and infant industry, there is still a lot that can be done for the new generation of new mothers. There may be many mothers raising children alone in the future. What pain points will they have? What kind of experience do they want?

As long as you are willing to dig deep, there will definitely be a good product that can touch a certain group of people.

5. Target that group of people and create in-depth and sincere content

Content routines are becoming more and more common, but real and sincere content is becoming increasingly rare. These contents are like horoscopes, everyone who sees them thinks they are suitable, but there are very few contents that can really communicate with a group of people.

If you have chosen your group of people and are willing to make good products for them, you can definitely create sincere content that simply speaks to them.

When we were doing marketing content in the past, we always wanted to spread it beyond the circle, explode, and fission! This is what I am best at.

But have you noticed that this is an era of growth, and we need to develop marketing strategies that maximize communication efficiency?

In the era of inventory, what we should produce is sincere and penetrating content, not sensational and controversial content.

So you will see that there are fewer and fewer advertisements that are broadcast all over the Internet, but more and more small and beautiful branded content.

6. Build brand and reduce ineffective vanity advertising

Similarly, returning to the present, we no longer need to pursue a large number of vanity indicators, to boost GMV, or to boost scale. We do not need to go out of the circle unnecessarily.

We need to focus on our core group of people, unless we have reached the stage where we need to break out of the circle.

In fact, many brands have already done this in 2022, reducing a lot of unnecessary investments. As a result, they found that GMV did not decrease, but marketing costs decreased and profits increased.

It also makes them believe that it is meaningful to build effective brand awareness, but it is meaningless to launch large-scale investments.

Effective brand awareness will bring natural traffic, rather than the situation of "no investment, no sales, and decline once stopped".

7. Give up the vanity of exchanging capital for scale and do real and profitable business

The reason why we did the Vainglory advertising before was to create a story of scale together with capital.

It is better to make real profits. Scale makes people proud and vain, and profits make people feel at ease. We can generate our own profits.

In fact, profit itself is the essence of business.

Finally, the course of history is always highly consistent. We have already said the same thing about the incremental to stock theory in the Internet platform circle six years ago. Six years later, we did it again in consumption. Different industries and markets have different processes. In China, the incremental dividend is decreasing, but in another market, the dividend may just begin.

If you don't have the skills, don't take on the job.

It is our own choice to choose what kind of market and what kind of knife skills we should become.

As Teacher Li Qian said at our Knife Skills Open Day,

Building a brand is a process of seeing yourself, the world, and all living beings.

I hope that starting from 2023, we can all let go of our vanity, find our people, build a deep river, and create a brand ecology that coexists and grows together with consumers.

Author: Daojie Doris

Source: WeChat public account "刀姐doris（doriskerundong）"