Business ceiling = category value / (brand value x consumption frequency x consumption stickiness)

This article analyzes in detail the three leading snack brands in the snack market - Qia Qia, Three Squirrels and Bestore. By analyzing the strategies of these three brands from brand establishment to rapid growth, as well as their recent transformation and breaking the circle, this article attempts to find out the reasons for the rapid growth of these brands. At the same time, it analyzes the current situation of these brands and gives forward-looking speculations on their future strategies for breaking the circle. I hope it will inspire you who are concerned about brand marketing.

The "Snack Industry Development Report under the Background of Consumption Upgrade" shows that the total output value of the snack industry has shown a rapid upward trend, from 424.036 billion yuan in 2006 to 2215.64 billion yuan in 2016, an increase of 422.51%, with an annual compound growth rate of 7.98%. According to forecasts, the total output value of the snack industry will be close to 3 trillion yuan by 2020.

• Qia Qia: Urgent need to untie from Guazi
• Three Squirrels: Expanding from nuts to snacks
• Bestore: Positioning high-end and differentiating the market

The Yangtze River flows eastward, washing away all the waves; the bright night will shine upon the mountains and rivers.

1. Qia Qia: Breaking through the melon seed ceiling, the daily nut Rashomon

In 1992, Deng Xiaoping gave a speech during his southern tour. In 1995, Section Chief Chen Xianbao gave up his iron rice bowl and started his own business. Through bold innovation, he split a popsicle into two pieces. The two pieces of popsicles made Chen Xianbao his first pot of gold.

As soon as the two-piece popsicles were launched, they were loved by many local children and sales increased significantly. The difference in appearance alone was not enough to form an advantage, so he decisively adopted a low-price strategy. Through the innovative appearance and low-price strategy, the popsicles became a great success in several nearby provinces and cities.

Chen Xianbao once again made a bold decision to expand the Northeast market. Many people opposed selling popsicles in the freezing cold Northeast, but Chen Xianbao still insisted on his decision. In his opinion, everyone thought that the sales of cold drinks in Northeast China were not good, which meant that there were still many gaps in the market, so he had to give it a try! Popsicles became popular as soon as they entered the Northeast market. For a while, there was even a scene in Northeast China where "every family has heating and everyone eats popsicles."

The truth is often in the hands of a minority, and the entrepreneur’s cognition is the ceiling of the enterprise.

The popsicle business was very successful, but there was no technical barrier. As the popsicles became popular, more and more imitators appeared, and the market competition was too fierce. Where is the moat of the enterprise? Amid the cheers around him, Chen Xianbao felt not the excitement, but silence.

Anhui has always been famous for its roasted nuts, and Hefei is known as the "China's roasted nuts capital". Local climate and soil nurture local people, and local climate and soil nurture local businesses. Chen Xianbao decided to use Anhui's characteristics to do the roasted nuts business - to make a kind of melon seeds that will not make you get angry.

Once after dinner, Chen Xianbao went out for a walk and saw a group of people dancing the Cha-Cha in the square. He was attracted by the lively and dynamic music and dance moves. At that moment, Chen Xianbao decided to call his melon seeds "Cha-Cha" melon seeds.

Long before Qia Qia (1999) was launched, there were already many melon seed brands on the market, including Shazi, Zhenglin, Xiao Liu, Huiji, etc. How did Qia Qia melon seeds, as a latecomer, gain market share and occupy the vacant position in people's minds? Qia Qia's three tricks: product innovation, packaging upgrade, and CCTV advertising.

• Product innovation, water-boiling process: Eating too many melon seeds will cause internal heat, and your hands will be dirty after eating. Qiaqia melon seeds are boiled in water, which solves the problem of internal heat and your hands will not be so dirty after eating.
• Packaging upgrade, visual differentiation: Many brands of melon seeds have relatively simple packaging, and some are even sold loose. Qia Qia uses kraft paper to imitate the style of a large envelope. This kraft paper bag style packaging is still used today.
• CCTV advertising, seize the cognitive window period: 4 million CCTV advertising, seize the cognitive window period. In 1999, Qia Qia's revenue was 30 million, and the profit was less than 3 million, while the cheapest CCTV advertising cost 4 million. Chen Xianbao was determined to invest in CCTV, so he borrowed money from others and finally took a gamble.

In the process of an enterprise's development, there is always a thrilling and difficult decision, which brings the enterprise and the entrepreneur to another dimension. In fact, most mediocre enterprises have not made difficult decisions. In 2001, Qia Qia Sunflower Seeds became the number one brand of sunflower seeds with a revenue of 400 million. In 2012, Chen Xianbao ascended the throne of the richest man in Anhui with a net worth of 3 billion.

Qia Qia's three strategies have solved three key problems in development:

• Solved the problem of standardization and scale (changed from frying to boiling)
• Differentiated pre-packaging, entering the market (consumption upgrade)
• Seize the window of mind and gain the advantage of choice (CCTV advertisement)

Whether melon seeds are a big business or a small business is essentially determined by the natural value of the category.

• Volume: The domestic sales of melon seeds is about 30 billion yuan, with the pre-packaged and bulk markets split 40% and 60% respectively, so the volume is not too large.
• Crowd: 25-35 years old This group accounts for about half of the consumption of melon seeds. They are mainly salaried workers and have relatively free time.

The higher the salary level, the less people will spend on melon seeds. Qia Qia knows better than anyone where the ceiling of melon seeds is.

In 2010, it launched Kazhicrisp potato chips; in 2013, it launched Bo Le Dong jelly; the company also acquired Qia Kang and launched beef sauce, dried tofu, Weird U flavor, milky peanuts, etc. These breakthroughs basically ended in failure.

Potato chips and jelly are markets with high concentration of top brands and where people’s minds have long been occupied by brands. The result is naturally futile.

• Potato chips: Lay's, Shanghaojia, and Kebick, accounting for 60%
• Jelly: The top three, including Xizhilang, account for 40%

The second growth curve must be developed in a "no man's land", and only a clean mind can have room for growth. That is: the category has a foundation, but the brand has no cognition; the new product functions and characteristics brought by technology, the new aesthetics brought by new packaging, and the new consumer groups brought by new traffic dividends.

• New categories: Seize the cognitive gap and build a brand
• New traffic: seize the traffic dividend and convert it into a hit
• New features: Seize the first category features and proactively defend
• New packaging: good-looking

Three Squirrels was founded in 2012, with a revenue of 1 billion in 2 years, 2 billion in 3 years, and 4 billion in 4 years. The rapid rise of the nut category represented by Three Squirrels opened the door to Qia Qia's Rashomon - the Cha Cha small yellow bag. The daily nut market size exceeded 10 billion in 2019 and is expected to exceed 20 billion in 2021, with an annual compound growth rate of more than 30%.

• Focus on freshness: Solve the problem of poor taste and flavor caused by moisture in the storage of nuts
• Upgraded packaging: enlarged logo, emphasized core preservation technology: the small yellow bag enlarged the logo 3 times
• Buying points: Fresh label, zero additives, seven-day pack, evidence chain, raw materials, process
• Internet celebrity explosion: Luo Yonghao promotes Qia Qia yellow bag
• Focus Advertising: Chacha Little Yellow Bag, Mastering the Core Freshness Preservation Technology
• PR News: Average delivery volume per hour on Double 11 reached 6,000 orders
• Event marketing: The little yellow bag contributed to a daily limit for Qia Qia. To commemorate this daily limit, Qia Qia also made a special daily limit commemorative model.

2. Three Squirrels: Two 5-year periods, from the first half to the second half

In 2012, Chen Xianbao became the richest man in Anhui with a net worth of 3 billion yuan. In the same year, Zhang Liaoyuan quit his job with an annual salary of 280,000 yuan and started his own business in a private house in Wuhu. He would never have thought that six years later, the success of Three Squirrels nuts would bring a new breakthrough to Qia Qia melon seeds. At the beginning of the same year, Taobao Mall was renamed Tmall and began to cultivate Taobao brands.

• Taobao traffic dividend: In 2012, Three Squirrels entered the nut snack market and took advantage of the explosive growth of domestic platform e-commerce. In the first two months after Three Squirrels went online, the monthly promotion investment on Taobao was about one to two million yuan. In the first Tmall Double 11 event of the year, Three Squirrels achieved a single-day sales of 7.66 million yuan, ranking first in the nut industry, and then sat firmly on the first throne of Tmall Double 11 "snacks and specialties" for 8 consecutive years.
• Entering the market with explosive products: In 2012, pecans were still a blue ocean market in the nut field. There were not many brands producing pecan-related products and the market competition was not fierce. Three Squirrels started with this creamy nut and created a explosive product.
• User experience: Insight into the practical needs of consumers, and solve the pain points of nut products such as high rotten fruit rate, hard shells, dirty hands after eating, and nowhere to throw shells. The packaging does not only contain pecans, but also a shell opener for opening the shells, wet wipes for wiping hands, and a garbage bag for storing the shells.
• Traffic placement: In 2012, Zhang Liaoyuan, who received $1.5 million from IDG, spent all the money on advertising and paved a way for himself. In the first two months after Three Squirrels went online, the monthly promotion investment on Taobao was about 1 to 2 million yuan, which was used to purchase Taobao through trains, search advertising space, and participate in Juhuasuan and other activities.

At the beginning of the business, when Three Squirrels was still huddled in the Dubao community in Wuhu, Anhui, Zhang Liaoyuan posted on the Internet to talk about the trend: a new era has come, and e-commerce has a five-year opportunity. Within five years, an Internet e-commerce brand can be established. But after five years, it will be the beginning of demise.

In five years, Three Squirrels has achieved the speed that Qia Qia Sunflower Seeds took 20 years to achieve. In 2019, of Three Squirrels' revenue of 10.1 billion yuan, e-commerce platforms accounted for 97%, while offline channels accounted for only 3%. Zhang Liaoyuan achieved the first half of his sentence, and in 2020, Three Squirrels entered the second half.

3. Bestore: The main brand is positioned as high-end and actively differentiated, and the sub-brands cover segmented groups

• Laying a solid foundation offline: BESTORE was founded in 2006 and missed 12 years of e-commerce dividends. As of the end of 2020, BESTORE had a total of 2,701 offline directly-operated stores and offline franchise stores, distributed in 21 provinces/autonomous regions/municipalities and 162 cities across the country.
• High-end positioning: In 2018, in order to get rid of the price war and homogeneous competition, Bestore chose the high-end strategic transformation of "high quality, high appearance, and high experience". First, the logo was upgraded, and Wu Moufan and Dilireba were invited as brand spokespersons.

• Active differentiation: In 2019, it will address the core needs of pregnant women, postpartum women, children, the elderly, and fitness enthusiasts. Taking children's snacks as an example, it launched a sub-brand, Liangpin Xiaoshixian. As of the end of 2020, "Liangpin Xiaoshixian" had sales revenue of 223 million yuan and net profit of 25.4098 million yuan. The fitness meal replacement sub-brand "Liangpin Feiyang" had sales of 108 million yuan by the end of 2020.
• Online operation to make up for shortcomings : Starting from April 2020, a social e-commerce team was specially formed to operate the social e-commerce platform, and the operation began in September. The cumulative exposure on Douyin and Kuaishou platforms exceeded 100 million, and the number of views of many videos exceeded one million. The Tmall flagship store has attracted nearly one million customers, and the average customer price has increased by nearly 10% year-on-year.

4. Three powers stand out, and the final victory depends on a single word

• Three Squirrels disclosed its 2020 annual report. During the reporting period, the company achieved operating income of 9.794 billion yuan, a year-on-year decrease of 3.72%, marking the first decline in revenue.
• Liangpin Puzi released its 2020 financial report. Data showed that the company's revenue in 2020 was 7.894 billion yuan, a year-on-year increase of 2.32%, and its net profit attributable to shareholders was 344 million yuan, a year-on-year increase of 0.95%, achieving double growth in revenue and net profit.
• Qia Qia Food disclosed its 2020 performance report: the company's total revenue in 2020 was 5.289 billion yuan, a year-on-year increase of 9.35%; net profit attributable to shareholders was 790 million yuan, a year-on-year increase of 30.89%.

Competitive Value Five-paragraph Argument:

• Product stage: taste, packaging, raw materials, technology
• Channel scale: online, offline, width, breadth
• Brand awareness: advertising, publicity, news, public relations
• Brand awareness: category and feature relevance
• Spiritual culture: inner culture, spiritual attributes

The five levels represent the evolution of competition in a category market. The higher the progress of levels 1-5, the stronger the competitive moat for profit will be, and the more powerful the brand will be in pricing. Similarly, in a category market that uses brand as a competitive tool, it will eventually move from level 1 to level 5.

In the product stage, having a product is better than having no product, a good product is better than a bad product, and having technology is better than having no technology; in the channel stage, the quantity of offline and online companies will eventually be consistent; brand awareness is nothing more than celebrities + advertising, pictures and texts + short videos, traffic + content.

Competition on the product side, channel side, and brand awareness side has gradually escalated to competition on brand recognition. Equipment can immediately catch up, and production capacity can be enlarged. In the long run, offline channel distribution will eventually become a zero-sum game. Online, you can promote products on Taobao, JD.com, and Tmall, and I can do the same. These are not the most important. What really matters is who is the first to penetrate the mind and inject the brand into the mind. In the current melee stage, all brands have opportunities.

But the question is, what do you want to do about the brand? What is the word that the brand will eventually occupy? The word is the end: when there is no dominant brand at the beginning of the category, the core method is to enter first and let the brand represent the category. The value of the brand name does not lie in the brand name itself, but in whether the equal sign behind the brand name can be drawn.

Who are you, what are the differences, and how do you know? To answer who you are, you need to clarify the category, that is, to answer the boundary. What are the differences is the point of differentiation, which is essentially the cognitive anchor point of consumers. How do you know is the endorsement of trust, which can be from the media, sales volume, or industry. The stronger the potential energy of the media, the greater the trust.

After representing the category, we need to expand the category value. When the category ceiling appears, we need to return to a larger common denominator of demand. The purpose is to expand the audience of potential customers.

• Three Squirrels, building a brand, using animation and film plots to tie stories to the brand
• Bestore, focusing on high-end products, celebrity endorsements + online integration gradually expand the channel scale
• Qia Qia, with its technological innovation taking on the “fresh” feature, leverages its existing brand awareness and channel scale to flank Daily Nuts

The different internal snowball slopes of the word occupied by the brand determine the height of the brand moat in the later stage. Qia Qia urgently needs to untie itself from melon seeds, Three Squirrels expands from nuts to snacks, and Liangpin Shop is positioned as high-end and differentiated in the track - the three giants are in a tripod, and the decisive battle only depends on the battle of one word.

Author: Houshan Keju; Source public account: New Consumer Brand Research Society (ID: PPD6977)