The rise and fall of Xiangpiaopiao: Brand strategy vs. corporate strategy

As a brand, Xiangpiaopiao cup milk tea is successful, but as a company, Xiangpiaopiao is a failure. This article introduces the growth process of Xiangpiaopiao and analyzes its brand strategy and corporate strategy. If you are interested, come and have a look.

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.

1. Origin Crowd, Market Focus

In fact, when the product was first launched in 2004, Xiangpiaopiao did not produce and sell it on a large scale. It only selected four cities, Wenzhou, Fuzhou, Wuxi and Suzhou, and only selected one university, one middle school, one supermarket and one store in each city to test the prototype product. It also sent people to track the daily sales and draw a chart. After half a year of testing, the sales were satisfactory, which gave Xiangpiaopiao the confidence to expand the national market.

2. High-profile campaign and channel penetration

In 2005, Jiang Jianqi decided to enter the national market. As the pioneer of cup milk tea, he used high-profile advertising to place 10 to 20 million yuan of advertisements 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 were continuously collected in the company, which made the transition from 0 to 1 and from the original market to the national market.

3. Seizing the empty space, a battle of wits

Xizhilang soon discovered the growth potential of the new category of cup milk tea and launched a similar product, "Xizhilang CC Milk Tea", to extend the category, in an attempt to seize the growth dividend of the new category through Xizhilang's high-profile brand. At this time, Xizhilang was facing two fronts, the jelly battle and the seaweed battle. Xizhilang won both battles, especially the seaweed battle with Boli, 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.

4. Focus on the main business and clarify the positioning

In 2007, Xiangpiaopiao launched a grand development plan: first, to invest 30 million yuan to launch a new project of instant rice cakes; second, to open milk tea chain stores and enter the catering industry; third, to enter the real estate market. In the second half of 2007, it renamed its brand Youlemei Milk Tea and fought Xiangpiaopiao again. Xiangpiaopiao's loss of focus was in sharp contrast to Xizhilang's use of a 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.

In essence, it is not what the opponent did right, but what we did wrong. This is the core of winning - a gentleman has nothing to fight for, and he must shoot, but he will not hit himself.

After learning from the painful experience, Xiangpiaopiao closed the rice cake project in 2009 and sold the equipment. The two milk tea shops were also sold. After the real estate project was completed normally, it stopped getting involved and refocused on milk tea. It was not dangerous to stop. It also began to clearly and clearly convey to consumers the key information that Xiangpiaopiao was the pioneer and leader of cup milk tea (who am I) and the largest cup milk tea brand in the country (hot selling). It started running around the world (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: who you are, what makes you different, and why you are different. 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.

• 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
• 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
• 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
• 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

If you know where to fight and when to fight, you can fight thousands of miles away. - The Art of War by Sun Tzu

5. Repositioning, a little hungry and a little tired

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 the expansion of the category. So there is a new demand for a little hunger and sleepiness, and a drink of Xiangpiaopiao.

1. Repositioning category functions
2. Expand product categories and convert potential customers of coffee and beverages
3. Creating new scenes, feeling a little hungry and a little sleepy - Xiangpiaopiao ushered in a second spring

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 are in a competitive relationship is that their products are substitutes for each other. The five elements of substitution: switching cost, price, experience, and convenience.

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's a faster horse or a car. Nie Yunchen founded Heytea in Jiangmen, Guangdong in 2012, Nayuki was founded 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.

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 Xiangpiaopiao are too boring and standardized. They are essentially the same as instant noodles. In the first half of 2020, Xiangpiaopiao delivered the worst performance since its listing: Xiangpiaopiao achieved revenue of 991 million yuan in the first half of the year, a year-on-year decrease of 28%; and a loss of 92.5264 million yuan. In March 2020, Heytea's valuation in the C round of financing reached 16 billion yuan.

6. Xiangpiaopiao won the battlefield but lost the war

Xiangpiaopiao did nothing wrong, it just lost. As a pioneer and leader in cup milk tea, it could have used its brand recognition to open offline stores, solve the problem of convenience, improve the experience, and cross 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.

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.

7. Corporate strategy determines what to do and what not to do

The resources of an enterprise are limited. The strategy at the enterprise (organization) level is first about what not to do and what to do. Choose what industry (track), what market opportunities to target, what business segment to do, and what product line to plan. That is: industry-market-business-product line

8. 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.

9. Brand Strategy

Products occupy shelves, while brands occupy minds. The best strategy is to attack the enemy's strategy. Brand strategy is the best 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.

• In the first phase, Xiangpiaopiao created a new category of cup milk tea through product innovation.
• In the second stage, we will focus resources, make big moves, and seize the position of category leader.
• The third stage: repositioning, expanding category competition, and converting out-of-category customers
• 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

——If you can conquer people’s hearts, the rebellion will disappear on its own. It has been known since ancient times that soldiers are not for warmongering. If you don’t judge the situation, both leniency and strictness will be wrong. You must 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 the brand opportunity is gone, and it will look for other opportunities. After analyzing the resource capabilities formed by the company in the past, it discovered what the capabilities of film production were in the past - fine chemicals, nano-synthesis, and collagen processing. Therefore, it finally found the development of medical uses, especially the processing of collagen, and even produced an anti-aging skin care product, Ashita, which sells very well.

This is the result of looking at corporate strategy and brand strategy separately.

Equating brand strategy with corporate strategy, or 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. The flag on the city wall changed frequently, and success or failure was all in vain.

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