In the face of competitive pressure, what is the driving force for the development of enterprises? Two words, growth.
Many companies plan strategically every year, and even if the company's market is sluggish in overall growth, management still demands substantial revenue and profit growth.
When making annual plans, most companies offer more types of products and services in order to achieve their growth goals. Either enter other markets, acquire other companies or products, or establish joint ventures.
However, when doing "strategic planning", we often forget such an iron rule: "The more products we provide, the more we get involved in the market, and the more companies we cooperate with, the less money we make."
However, in China, there are "role models" for extending brands with many products and series everywhere:
China Resources Group started from trade, and now there are China Resources Beer, China Resources Wufeng, China Resources Beverages, China Resources Vanguard, China Resources Cement, China Resources Real Estate, China Resources Power, China Resources Gas, China Resources Pharmaceutical, and China Resources Finance. In 2016, the group's turnover was 500.7 billion yuan, the profit was 48 billion yuan, the profit increased by 9.2%, the performance was better than expected, and China Resources Land and China Resources Gas contributed to the profit.
CITIC Group started from the financial business, and now in addition to financial businesses such as CITIC Bank and CITIC Securities, it also includes CITIC Publishing Group, CITIC Pacific Special Steel Group, and CITIC Heavy Industries. Although finance is the main source of revenue and profit of CITIC, CITIC Publishing House has achieved the first financial management book category, CITIC Heavy Industries to do heavy equipment, national large-scale projects, railways, bridges, large aircraft, the Belt and Road, all have the shadow of CITIC Heavy Industries, more than 20 times a year on the "News Network".
Will the CITIC brand continue to extend or shrink its focus?
Starting from aviation, HNA Group now involves airport management, aircraft leasing, hotels, travel agencies, real estate, logistics, finance and other fields, and will soon enter the global top 100 from the global top 500. Now, HNA Group has fallen into restructuring difficulties.
The famous Tongrentang Co., Ltd., guarding a good brand, watched its peer Guangzhou Pharmaceutical Holdings obtain huge profits from selling Wang Laoji herbal tea, and also announced that it had entered the "big health" industry, and in 2016 launched two herbal drinks, Tongrentang Herbal Tea and Tongrentang Maca Oolong Tea.
Three reasons for brand extension
In addition to the reasons for the substantial growth of revenue and profits, the phenomenon of brand extension of Large Chinese Enterprises has three main manifestations:
The first is to meet the needs of customers with more flavors, more varieties and more choices;
The second is that managers may also lose their judgment due to extreme loyalty to the company and brand;
The third is to often see that after a certain category in the market is on fire, the brand quickly follows the trend and cannot see the differentiation trend of the category
The first phenomenon: managers often go into the wrong place, thinking that customers need more flavors, more variety and more choices.
That is, more extended brands.
The more products a company has, the more markets it has, and the more partners it has, the less money it makes.
Let's take a look at the companies that have in the range hood category, each with different marketing strategies.
Macro is known for its water heater series and has achieved a certain market share. In addition to the water heater, Wanjiale has also launched range hoods and other products, such as Wanjiale range hood, Wanjiale gas cooker, Wanjiale dishwasher, Wanjiale steaming oven, Wanjiale integrated stove, Wanjiale disinfection cabinet, Wanjiale wall hanging furnace, Wanjiale integrated ceiling, Wanjiale induction cooker, Wanjiale microcomputer rice cooker, Wanjiale health pot, Wanjiale tea coffee machine, Wanjiale electric pressure cooker, Wanjiale air purifier and other products.
Macro extended its Range Hood products, and Sakura did the same.
Sakura has launched a full range of products such as Sakura range hood, Sakura gas stove, Sakura dishwasher, Sakura disinfection cabinet, Sakura cleaning cabinet, Sakura steam oven, Sakura gas water heater, Sakura electric water heater, Sakura wall hanging stove, Sakura sink, Sakura integrated kitchen, Sakura wardrobe and so on.
Since its inception, Sakura has been committed to developing products that are closer to consumer needs, and Sakura's products are all aimed at satisfying customers with more varieties and more choices.
Consumers think in terms of categories and express themselves by brand. After the boss electrical appliances selected the "range hood" category, they seized the consumer's mind through the characteristics of large suction. Consumers buy range hoods, consider more "practical attributes", the location and product attributes determine that "high-end" is not the first feature of range hoods, and "strong suction" is.
The initial brand positioning of boss electrical appliances is not "big suction", but "large air volume", and later changed to "big suction", because large air volume is a single indicator, very easy to imitate, "big suction" is a system indicator, boss electrical appliances to create a large suction system, focusing on "suction, strong filter, fast discharge, energy saving" four indicators, to prevent competitors from directly facing competition, and even large air volume on the arms race.
Once the brand positioning of the big suction force is introduced to the market, with the advertising slogan of "in China, for every 10 large suction hoods sold, there are 6 from the boss", under the follow-up and imitation of competitors, the big suction has become the largest category in the field of range hoods, as the pioneer of "big suction", the benefit is also the most. Now, the market value of Boss Appliances is more than 45 billion.
For many companies, brand extension is an easy way out. It is seen as a cheap and logical way to grow. Companies that extend their brands wake up when expert brands are on the offensive, but it's too late and their lack of focus is dangerously inadequate.
This type of enterprise, especially has OEM or ODM product production capacity or rich production experience. Because what products will be produced, to start the brand, brand extension does not need to be much encouragement, in the enterprise does not need to deliberately promote will continue to occur. Companies are like rivers, always flowing in new directions or into caves in existing channels.
If you try to meet everyone's needs, you will inevitably run into trouble.
As the saying goes: "A hundred kinds of knowledge, not as good as the same fine", expensive is expensive in this "same fine".
The second phenomenon: Managers may also lose their judgment because of their extreme loyalty to the company and brand.
Giants like Pepsi can also make this mistake, and after the success of Pepsi, Pepsi Hassle launched products such as Pepsi Breeze, Pepsi Coffee, Zhongka Pepsi, Sugar-free Pepsi and Crystal Pepsi.
After the success of lee kum kee oyster sauce in a certain market, it has successively extended its brand in soy sauce, aged vinegar, sauce and other categories.
In 1888, Lee Kum Kee's founder, Mr Lee Kum Heung, invented oyster sauce in Nanshui Town, Zhuhai, Guangdong Province, and founded Lee Kum Kee. After more than 100 years of continuous development, Lee Kum Kee has become a household name in the sauce kingdom. LKK currently supplies more than 200 products to more than 100 countries and territories around the world. In addition to the Sauce Group business, LKK Group has also actively expanded other businesses through its health products group, allowing Lee Kum Kee Group to develop into a modern enterprise with diversified businesses.
Launched Lee Kum Kee Kum Kee Gumpool Oyster Sauce, Lee Kum Kee Fortune Oyster Sauce, Lee Kum Kee Flavor Oyster Sauce, Lee Kum Kee Chef To Fish Noodle Oyster Sauce, Lee Kum Kee Winery Oyster Sauce in the oyster sauce category;
Lee Kum Kee launched Lee Kum Kee Selected Soy Sauce, Lee Kum Kee One Pin Fresh Premium Soy Sauce, Lee Kum Kee Gold Standard Raw Soy Sauce, Lee Kum Kee Brine Juice, Lee Kum Kee Steamed Fish Soy Sauce in the soy sauce category;
Launched Lee Kum Kee Alcohol-brewed Rice Vinegar, Lee Kum Kee Alcohol-brewed Aged Vinegar, and Lee Kum Kee Alcohol-brewed Balsamic Vinegar in the aged vinegar category;
In the sauce category, the LKKHPG sauce, LKKHUM XO sauce, LKUM kee bean paste, Lee Kum Kee rib sauce and Lee Kum Kee pure fragrant sesame oil were launched.
In addition to oyster sauce, Lee Kum Kee faces strong expert competitors in categories such as aged vinegar and soy sauce.
Brand bloat is another reason for the expansion of a large number of company brands, so ask yourself, "What does our brand stand for?" ”
Or, in other words, you can ask consumers more "What does Lee Kum Kee stand for?" ”
Next, let's look at two examples, one is the boss of the balsamic vinegar category, and the other is the boss of the soy sauce category.
In the category of balsamic vinegar, it is favored by the majority of consumers, because the vinegar is famous Hengshun balsamic vinegar is the largest Jiangsu Zhenjiang balsamic vinegar production enterprises, but also China's largest vinegar enterprises, The first listed company in China's vinegar industry, and a key leading enterprise of national agricultural industrialization. Hengshun balsamic vinegar is made of high-quality glutinous rice as raw material, using the traditional technology of solid layered fermentation, and has been refined by more than 40 processes of three major processes of wine making, brewing and vinegar, which has the characteristics of "sour but not astringent, fragrant and slightly sweet, rich and fresh color, more and more mellow". Now, the market value of Hengshun vinegar industry has reached 20 billion yuan.
The head brand in the soy sauce category, Haitian soy sauce. Haitian Soy Sauce was established in 1955 as a public-private partnership to form the Haitian Soy Sauce Factory. Step by step, from small to large, from scattered to concentrated, from regional to national, from traditional family handicraft workshops to modern production and intelligent manufacturing.
In 2001, Haitian's sales revenue exceeded 1 billion yuan, in 2009 Haitian's sales revenue exceeded 5 billion yuan, in 2013 Haitian's sales revenue exceeded 10 billion yuan, and in 2017, Haitian's sales revenue exceeded 16 billion yuan. In 2018, the revenue exceeded 17 billion yuan, achieving the goal of "rebuilding a sea sky in five years and doubling the revenue".
By "drying out, sunning out incense, sunning out smell, drying well." 600,000 square meters of sunshine field, 365 days of such sun, Haitian soy sauce, really dried out of the good soy sauce, not only sunn for 180 days Oh ~" Brand story spread the spread of Haitian soy sauce advertising, its Haitian flavor extremely fresh single product sales exceeded the 1 billion mark, becoming the fifth large product with a sales value of more than 1 billion after Haitian Jinbiao raw soy sauce, Haitian grass mushroom old soy sauce, Haitian soybean sauce and other oyster sauce.
Haitian soy sauce has become the "Maotai" of the soy sauce category, and now, the market value of Haitian soy sauce has reached 497.8 billion.
In the long run, it is the companies that succeed with the highest focus and those that fail with the least focus. The principle of focus should be the guiding principle for every decision a company makes.
The third phenomenon: brands follow the trend, and it is not clear to see the differentiation trend of categories.
Over time, each category will also differentiate into new categories. For example, in 1997, Toyota introduced the first hybrid Prius. Subsequently, in 1999, Honda introduced the Honda Insight hybrid. By 2008, Elon Musk had launched his first electric car: the Tesla Roadster.
In recent years, the consumption of the soda market has increased dramatically. Looking at the production ratio of the global soda market, the output of soda in European countries has accounted for more than half, reaching 54.1%, while China's soda production accounts for only 7.2%, and the future development potential is still very large.
At present, China's soda industry is still in the barbaric growth period of rapid growth, and the market prospect is very broad. Data show that in 2016, China's soda market size has approached 8 billion yuan, 2020 is expected to reach 20 billion yuan, in the next few years, China's sparkling water market will show a huge growth momentum and development space.
According to the data, there are more than 1.66 million enterprises in China whose business scope includes "soda and beverage", and soda-related enterprises that exist, move in and move out. Among them, individual industrial and commercial households accounted for 73.10%, and limited liability companies accounted for 23.44%.
In recent years, with the change of consumer perception, market share has declined. However, with the increase of new carbonated beverages such as sparkling water and soda water, carbonated drinks are expected to grow further. Soda water, sparkling water and other products due to sugar-free and calorie-free, small burden on the body, relatively healthy by the market, the scale continues to expand rapidly. New carbonated beverages are driving growth in demand for food-grade CO2 products.
Recently, the beverage industry rookie Yuanqi Forest can be said to have attracted the attention of consumers, in the past 618 shopping carnival, Yuanqi Forest beat Coca-Cola and Pepsi and won the sales champion of the Tmall beverage category. In the first half of 2020 alone, the sales volume of Yuanqi Forest has exceeded 800 million. There is also news: "Yuanqi Forest" is about to complete a new round of financing, and the valuation after investment will be 2 billion US dollars, about 14 billion yuan.
Since the Yuanqi Forest soda sparkling water, many brands have followed up with the original brand name of the soda sparkling water, such as wahaha soda sparkling water, Neixue soda sparkling water, Yiquan soda sparkling water, Watsons soda sparkling water, Evergrande soda sparkling water, Mingren soda sparkling water and soda sparkling water. The highest market share of this category of soda sparkling water is not an extended brand, but a Yuanqi Forest, and its market share leads the country to run first, much higher than other extended brands.
Consumers often "think in terms of categories and express themselves by brands", and categories are the key forces hidden behind brands.
In our work scenario, around the computer, there will be a lot of differentiated brands, such as the display has an independent brand "Youpai", keyboard and mouse has "Logitech", the operating system has "Microsoft", the chip has "Intel", the hard disk has "Seagate", including memory, printers, scanners and some related software and so on. The differentiation of the personal computer category has created many opportunities for new brand building.
The smart way to do this is to quickly jump into a new category or new technology, not using the original brand, but using the new brand name.
Three major hazards of brand extension
Chinese enterprises should be vigilant against brand extension strategies in the process of diversification.
Although the brand extension strategy has many positive effects in the early stage of product launch, in the long run, it will bring three major harms:
One will damage the existing successful brand, the customer will feel that you are not doing the right thing, and the original brand will gradually become blurred and untrustworthy;
Second, it will affect your new products, customers will think that you are not the material for this line, and the extension of the brand will produce unprofessional cognition in the customer's mind;
The third means diversifying or launching more varieties of suits, which violates the focus strategy and disperses the company's limited resources.
The solution to brand extension
After analyzing the phenomenon and causes of brand extension in China's large enterprises, what better way to solve the problem of brand extension? There is only one way, and that is "precise focus".
If you want to succeed today, you have to focus precisely to form a symbol or a representation in the minds of potential customers. What does IBM symbolize? It used to symbolize the "mainframe computer". Today, it symbolizes everything, which is equivalent to saying that it is nothing. What does Lee Kum Kee stand for? What does Chigo stand for?
What is really powerful is the specialization company, not the generalist enterprise. The really powerful ones are Hengshun balsamic vinegar in the balsamic vinegar category and Haitian soy sauce in the soy sauce category.
The following gives some solutions to brand extension, from the perspective of the three major phenomena of brand extension, the main reason behind it is the growth problem, which is essentially to solve the problem of how to continue to grow.
The core of solving the problem of continuous growth is that your brand is represented in the minds of customers and can remember you in the minds of consumers, so as to fundamentally solve or achieve the problem of sustained growth. There are four major methods for reference:
Method one: Focus on a single category of products, for example, KFC only serves fried chicken, Southwest Airlines only provides short-distance flights, Hengshun focuses on balsamic vinegar, and Haitian focuses on soy sauce.
Method two: focus on preempting a single feature of the product. For example, what are the characteristics of a category? It is what consumers want to buy when they buy this category, such as the boss's big suction hood. Awesome! John Pizza insists on using "better ingredients". Your product may offer multiple features, but the information you focus on spreading should focus on one feature.
Method three: Focus on a single target market. For example, Dewei specializes in providing tools, and PepsiCo claims to be the choice of the younger generation.
Method 4: Based on the differentiation trend of categories, use new brands to occupy new categories. You can use mental resources to differentiate new categories and new brands. It is also possible to differentiate subdivision scenarios based on subdivision scenarios, such as dietary fiber drinks that aid digestion, which are innovations based on category differentiation.
In short, the problem of brand extension is solved, and the "problem of how to continue to grow" is solved.
By focusing on a product, a certain product feature, a target market, and using category differentiation to innovate brands, these methods can allow companies, especially large enterprises, to continue to grow.