At the end of 2021, cutting-edge consumer goods began to cool.
If you can't sell the goods and can't raise money, how can you save yourself? A lot of experts started to support it. Two days ago, I saw an article saying that channels, products, and traffic are all infrastructure, and even if the infrastructure is stable, the business will not be stable. Or you still have to throw money to make a brand first.
To be honest, I think that for many cutting-edge brands facing survival problems, prescribing a "do brand" prescription is like saying to a seriously ill patient to be healthy and work out for 1 hour a day. Such a formula, for the patient, can not cure the disease, resulting in death.
For the founders of many cutting-edge brands, branding is the metaphysics they are least good at. When making small money, being a brand means spending money to do a set of VI; doing business is slightly better, being a brand means finding a creative hot store to shoot a long video of feelings; when you make a lot of money, being a brand means asking a spokesperson to cast a wave of elevator media advertising. The last action is completed, basically not far from half dead, because once the big money of the brand is invested, the brand has not gotten up to say clearly, and the sales volume is not even compared with the money spent. The inventory is backlogged, and the next wave of "branding" money cannot be melted.
My point is that the dilemma of emerging brands is not that they will not spend money on brands. Rather, the infrastructure projects of "channels, products, and flows" for consumer goods businesses to survive are not stable enough and not up to date. In the consumer goods business, the territory is unstable, and it is very dangerous to start practicing metaphysics. It is better to repair your own longboard ability first and then use it in place.
Spring Festival happened to read two materials that are very important in the history of business strategy, and I can use recent real cases to support my "longboard ability" view: the 1975 Boston Consulting Group (BCG) report to the British government on the competitive strategy of the motorcycle industry, and the 1996 strategic management master Minzberg's "Revisiting the Honda Effect".
The most interesting thing about these two documents is that they outline the analysis and attribution of the same event from different perspectives. Although the background of the era is the European and American motorcycle market half a century ago, it is still a classic today, because for business cases, the same Rashomon-style after-the-fact attribution analysis is still repeating. Looking at success from an external perspective, the effect is often taken as a cause, for example, competitors succeed because the positioning is accurate and the brand is established in the target market. From an internal point of view, success is the result of a yin and yang, but it is also possible to seize this opportunity because some infrastructure capabilities are strong enough.
01
The BCG version of the European and American motorcycle market competes
After World War II, the United Kingdom was once the big winner in the European and American markets of the motorcycle cutting-edge brand competition. It has three major motorcycle brands: Triumph, BSA, norton, but from 1950 onwards, the British motorcycle industry changed from low growth to zero growth, and by 1960, there was even a negative growth trend.
The reason is that Britain has encountered a formidable rival: the Three Giants of Japanese motorcycles, led by Honda. The big three bring good news: the motorcycle market has grown significantly. But at the same time, there is bad news: the share of growth in British motorcycles can not be obtained, and even the original market share has been taken by Japanese car dealers. In the United States, the fastest-growing and largest market, for example, British car dealers' share of the market fell from 49% in 1959 to 9% in 1973.
BCG's report focuses on two points of analysis:
Why are Japanese car dealers so good?
How (how to ensure that the British do not withdraw from this market across the board)?
BCG attributes Why (why Japanese automakers are so good) to the proper strategy of Japanese automakers.
1. Japanese car dealers are targeting the scooter market first. In 1960, it entered the largest entry-level market in the motorcycle industry with cost-effective scooters;
2. After that, with the upgrading of demand in each motorcycle market, from small motorcycles to large motorcycles, from the first means of transportation to the alternative transportation of off-road outdoors on weekends, Japanese car dealers will launch moderately priced models for each market, and even finally become the benchmark price of the market. In most market segments, British car dealers will lose money if they are on par with the benchmark price of Japanese car dealers; if they sell more expensive than the benchmark price, sales are worrying. British car dealers can only retreat in these markets, and finally can only stay in the relatively smallest motorcycle market.
3. Japanese car dealers' advertising strategies are also very strong. Honda's phrase "You'll meet nicest people on a Honda" changed the wild image of motorcycle riding fanatics in the European and American markets, and pushed motorcycle riding into the mainstream of social people who commuted at home.
After that, BCG struggled to give two how (how to ensure that the British do not fully retreat from this market) strategy:
Option a
Focus on the large motorcycle market, increase the price to BMW (30% to 40% more expensive than the same displacement in Japan), abandon sales, and protect profits.
Option b
Create several motorcycle families composed of models distributed in different market segments, price benchmark Japanese car dealers, rely on explosive models to increase sales first, and obtain profits through the production scale effect.
1. Both strategies require an initial large investment in fixed assets, an investment cash recovery cycle of up to 20+ years, and whether the strategy is successful depends entirely on the performance of the new model that can be released after the fastest 3 years. Simply put, it is to bear the initial huge cash investment, long-term uncertainty.
2. The reason why the British have very few strategic choices is because the production capacity and product development ability are too poor. Going up, mainframes, high-end markets, the status quo is: not only the aging of the model, but also the fatal quality problems such as oil leakage. Because of the lack of modern equipment in Britain's old factories, they are assembled by hand, which is prone to errors. If the production capacity is not passed, the product is not passed.
3. Go down, produce several different motorcycles, and make full use of the same production line to the fullest extent in order to achieve the same production scale advantage as Japanese car dealers. For British car dealers, not only to challenge the development and design capabilities of motorcycles, but also to challenge the research and development and design capabilities of production lines, it is necessary to know that the reason why Japanese car dealers can achieve huge production advantages is because the production lines and parts and abrasives can be self-developed, so as to ensure the greatest degree of production synergy.
Judging from the BGC's report, the British motorcycle industry has few options for restructuring and has few chances of winning. The fundamental reason is that when Japanese car dealers entered the scooter market, British car dealers chose to retreat.
02
Honda executive version of the European and American motorcycle market competition
After the BCG report was published by the British government in 1975, an American scholar, out of curiosity, interviewed four Honda executives who explored the American market in 1982. I want to hear how they developed such a wise strategy.
However, the story of overseas market development told by Honda executives is not so much a far-sighted strategy and unwavering execution, but rather a response to death.
Honda's decision to expand into the U.S. market was made in 1959, and after sending three executives who spoke a little English to inspect the U.S. market, they came back and reported that everything in the United States was big and luxurious. Everyone drives a car, and it seems that the opportunity for the motorcycle market is not large, but considering that there are 450,000 registered motorcycles and 60,000 motorcycles imported from Europe (mainly the United Kingdom) every year, Honda should also be able to grab 10% of the imported motorcycle share.
This BP, which did not do in-depth quantitative analysis of market targets, and did not disassemble into specific market strategies and tactics, got the approval of Honda's founders, and gave a large stroke of money to the US market start-up capital of 1 million US dollars.
Why were Honda's founders so frizzy in making this decision?
The reason is that Honda, which grew up in Japan after World War II, has always adhered to the frizzy strategy of "seizing the opportunity and doing it again".
Honda's two founders, one named Honda Jun, is a car-loving, woman-loving, moody inventor. Another Fujisawa Jun, relatively rational, stared all day at Honda Jun's passion for inventing the racing engine for lucrative commercial applications.
One of the most important breakthroughs that Honda made in the Japanese market from a bunch of home-run motorcycle factories was the product innovation in 1956, which created a completely different market segment for the motorcycle industry. Jun Fujisawa observes an opportunity: motorcycles in the Japanese market are used by men as intercity transportation. At that time, there were a large number of husband and wife shops, and bicycles were still used for city deliveries. The financial power of these shops is controlled by wives, who boycott motorcycles that are expensive and unsafe, and rather bulky to operate. So Fujisawa challenged Honda Jun and said: Do you have the ability to invent a motorcycle that looks safe, cheap, and can be ridden with one hand (because the other hand needs to carry a shopping bag)?
Requested by Jun Fujisawa, This 50cc scooter, called "Super Cub", was invented by Jun Honda, which was a super success for Honda in the Japanese market. The influx of orders has forced Honda to build a large factory, frantically increasing production capacity, manufacturing cheap and reliable motorcycles, and at the same time, the channel business model has changed from first-come to post-payment to first-pay-after-the-money.
With the ability to keenly capture market opportunities and excellent product research and development capabilities, Honda has become a winner in the market, while also strengthening production capacity and becoming a company that is not short of money. As a result, when expanding into the US market, Honda continued to be "frizzy".
But the rich and wayward Honda can be frizzy, and the Japanese government, which has just emerged from the shadow of World War II, can not be frizzy. Japan's Ministry of Finance does not approve a $1 million foreign cash investment, saying that the cash can be taken out at most $11,000, and the remaining investment money must be used to buy Honda motorcycle exports. It seems that foreign exchange was quite important to the Japanese government at that time.
Which motorcycle to buy? Executives who do not have a clear strategic plan for expanding the U.S. market are tangled. In the end, it was decided to buy 25% of each from 50cc cubs to 305cc large models, from small to large 4 models. Although the number is evenly distributed, because the large models are far more expensive than the small models, most of the initial funds are used to buy large models. In fact, there is Honda Jun's own ambition behind it: as a racing enthusiast, he has love and confidence in the big model car he designed, and of course hopes to use the big car to conquer the American market, which is already big.
This purchase decision almost caused Honda's US market expansion plan to hit the street. Honda's proud car was hit by a wave of returns in the United States due to quality problems, and it was quickly ignored. The reason is: the United States, which is long on the highway, has a long distance between cities, and the riders drive a one-way car with a long distance and fast speed, and the performance of Japanese big cars cannot withstand the toss.
When the three executives were at a loss, someone asked to buy a 50cc super cub. The three executives were surprised, never intended to sell small cars, and intuitively felt that this car was not suitable for the luxury American market, and the small car was used by them to use it for themselves when visiting customers in the city, but they were favored by customers. At first they refused, thinking that we still wanted to build Honda into a Japanese brand that only sold big cars, and then because of the shortage of cash, they were so poor that they could only sleep on the street, and there was really no other reliable product to sell, so they could only bite their teeth and sell young animals. Surprisingly, sales of young animals took off. It is not the traditional motorcycle shop that sells the young animals, but the bicycle shops and sports equipment stores, and the young animals are not bought by tough guy knights wearing black leather jackets, but ordinary workers.
Even so, Honda executives in the United States still hold the heart to open up the tough guy car market. "Ride the Honda, you'll meet the friendliest person you'll meet," was an undergraduate student's classwork that was bought by Foxon's then-American advertising agency, Grey, for a sum of money to report to Honda's U.S. executives as Plan B. Plan A is certainly a version aimed at the tough guy car market. At that time, the CEO of Honda America chose plan A because he still wanted to realize the dream of the founder, Honda Jun, and sell the car to the Americans. Insisting on adopting Plan B's slogan for ordinary workers was the sales director at the time, who ran the front line all day, knew too well who was buying a car, and naturally knew what slogan could impress this group of people. As for how the slogan will be decided by the sales boss in the end, rather than by a leader, it can only be said that Honda America at that time was indeed a rather pragmatic company!
Honda North America's three executives restored the scene of the DEVELOPMENT of the US market, on the one hand, it proved that Honda is a company with excellent product development and production capacity, on the other hand, it also hit the face of a European and American consulting company that believes in winning positioning and strategic victory: Honda has no clear market strategy at all when developing the North American market. Or a market strategy derived only by intuition (targeting the market for large US models) and finally failing to execute. They were able to find, and even develop, a huge small machine market because of their excellent design and production capabilities, and because they were willing to respond to market demands in a timely manner.
This classic case even makes the history of business strategy, from emphasizing that brand strategy should first take the initiative to position, and then make detailed planning around positioning, evolving into an adaptive strategy and a school of capability positioning.
The positioning school emphasizes that the basis for victory can be laid through selection (market positioning). There is a kind of momentum that "the market I choose will be my no-man's land, I have everything in my hands, as long as I follow the plan, this market will be like a bag".
Compared with the positioning school that pays more attention to "what I want", the ability school emphasizes more attention to the overall environment, especially the uncertainty in it, and also pays attention to its own long board, that is, certainty, and tries to find market opportunity points that are compatible with the ability of the long board:
1. In a highly volatile market environment, the success of competition depends on predicting market trends and responding quickly to changing customer needs. In this competitive situation, the core of corporate strategy is not the company's product and market positioning, but its behavioral response and adaptability;
2. The strategic focus is on identifying and developing difficult-to-mimic organizational capabilities that distinguish a business from its competitors.
"Summary"
From the case of Honda motorcycles, what can be inspired by today's cutting-edge?
First of all, in the face of today's huge and ever-changing market in China, a rational consumer brand must have enough awe in the face of the market and emphasize adaptation to the market rather than domination.
Secondly, since it can also achieve small successes, it must also have its own unique advantages, and its own ability needs to be continuously recognized and continuously developed.
I suggest a review method:
Based on the four elements of product, channel, traffic, and brand, we must do an internal view and appearance.
What (how many) elements did past success do? In the organizational structure, what team is relatively capable and the personnel deployment is relatively perfect?
Are there new opportunities to use longboard capability elements across the big market?
To name two well-known beauty brands, Perfect Diary and Hanashiko for comparison. Both brands were once traffic gurus. Perfect Diary is a benchmark case of Xiaohongshu planting grass, and Hua Xizi bound Li Jiaqi, a brother of Tmall lipstick. However, after perfect diary listing financing, it began to acquire brands and open offline stores, which was quite fancy. Hua Xizi is relatively pragmatic, from Tmall to Douyin, 2021 Q4 monthly sales in Douyin has been 100 million, 70% of the sales are from self-broadcasting, product price control is also good, customer orders can reach 200 + yuan.
Many people in the industry who believe in positioning first, brand first, do not look at the traffic play, so that many new brands that start with traffic have changed their mouths to say that they only want to do a good brand in the future, frankly, I think playing traffic is not low at all, like Hua Xizi can deeply cultivate Tmall, and then deeply cultivate vibrato, immerse themselves in researching good traffic, buy traffic on a large scale, use good traffic, is an important ability with thresholds and barriers. At least it's much higher than the advertising barrier of a brainless loud elevator in a set shoot, and the barrier of the latter is money.
In the same way, in products, channels, brands and other elements, what is your longboard? I've seen ODM manufacturers of clothing with production capacity selling live on Douyin, and I've seen cutting-edge brands that are good at commercial space design get the core bunks of many top shopping malls. As a cutting-edge brand that is still in the survival period, don't rush to attack the unknown field, but further enlarge the existing longboard and use it in the right place.
Author: Left brain peach blossom source Zhongyin boss, from finance to marketing, because I think marketing = brain hole, so I love it. Doing and doing, I found that marketing is mostly science, and I still need to do arithmetic problems, but I still love. It burns the brain because of the change, and it is fun. In this private backyard, I mainly share my understanding of marketing, management and life, not objective, but all the truth.