Image source @ Visual China
Wen | Zheng Guangtao Grant
In the Internet era, explosive products are becoming more and more popular. But the explosives, apart from the gorgeous Internet mantle, do not seem to have a long life. For example, the dirtier the face, the more bubble masks, the divination tea that can divinate the auspiciousness... And now Ann zaizai?
10 years ago, there were many sayings about explosive products, such as fist products, star products, sharp knife products, the most well-known of which are large items.
Large single products are not as eye-catching as explosives, but from the perspective of volume, the current explosive products and the previous large singles are not in the same order of magnitude.
Now during the promotion period to sell 10 million yuan in sales is called explosives, and more Internet platforms have hyped up, making a list of explosive products, as if the Internet has become a explosive manufacturing machine.
But looking back at the inconspicuous big items in the past, it seems to make the explosives feel ashamed.
In 2013, Wahaha's Nutrition Express sales were 20 billion yuan. In the same year, Wangzai Milk sold 11 billion yuan, and it remained at 8.5 billion yuan in 2016. In 2016, Mengniu's Terunsu sales were 11 billion yuan...
The explosive products born on the Internet, the whole list together may not be worth a big single item.
Although there are many blockbuster products in the new consumer industry, it is not enough to compete with the previous large single products in terms of product life cycle and sales scale.
So how should new consumer companies view explosive products and become super brands? This article explores the following three issues:
(1) What is the difference between the explosive mode and the large single mode?
(2) What is the essence of the explosives model?
(3) How can new consumer enterprises change from explosive products to super brands?
01. The difference between the explosive mode and the large single product mode
Whether it is an explosive product or a large single product, its business logic is to concentrate superior forces and fight the war of annihilation, that is, a single product achieves sales of 1 billion yuan, which is better than 10 products to achieve sales of 100 million yuan.
This is particularly important in the environment of consumption classification, and the fragmentation of the social structure makes the product logic of "one Spring Festival Gala to meet the people of the whole country" no longer applicable.
New consumer enterprises should follow The First Law of Lanchester, and the efficiency of troops or weapons in the local battlefield must reach more than 1.7 times that of competitors, so that it is possible to defeat the traditional giants with the weak to defeat the strong.
For example, under the iron hooves of giants such as Maotai and Wuliangye, Jinjiu focuses on creating small bottle specifications - Xiaofangjin, concentrated in the catering channels in the Jiangnan region, and eventually becomes the representative of the health wine category.
However, there is still a very clear difference between the current blockbuster mode and the previous large single product model. In simple terms:
Explosive mode = cost-effective + market segment + social experience + social media dividend + e-commerce dividend
Large single product model = price center + mass market + scenario function + integrated communication + in-depth distribution
These characteristics determine that compared with the large single product model, the explosive mode is inherently insufficient and the follow-up is weak.
Pricing works differently
Xiaomi's explosive model is enshrined as the product bible of the Internet era, and the ultimate cost performance that Xiaomi has always advocated has also been responded to by new consumer enterprises.
Under the strong pricing of foreign brands, the ultimate cost performance does cater to China's basic national conditions, and the sinking market, Generation Z, and new workplaces have created a broad market for the ultimate cost-effective products.
Perfect Diary, as the representative of the ultimate cost performance, has also been supplying super brands such as Dior, Chanel, Estée Lauder, L'Oréal and so on. However, most of the products of Perfect Diary are priced at 49-129 yuan, and the multiplier rate is only 3-4 times, while the price of foreign brands is 109-630 yuan, and the multiplier is 5-10 times.
In addition, Luckin, Three and a Half to replace Starbucks, Little Bear Electrical Appliances instead of Midea, Suber ... "big-name flat replacement" has become a common pricing strategy for this generation of new consumer enterprises.
Looking back at the previous large items, their prices are usually not very high, but they are not necessarily cheap, at least they rarely take high cost performance as the most prominent selling point, and even tens of billions of large items such as Terunsu and Jindian are cut into the market at high prices.
Channel strategies are different
The characteristics of high cost performance determine that the profit margin of explosive products is narrower than that of large single products. This has led to explosive products often only being sold through the Internet where "no middlemen make the difference", which is called DTC (Direct To Customer) in a fashionable way.
This also leads to the lack of profits for explosive products to be laid out in high-end shopping malls and massive terminals. Dealers sell a Xiaomi mobile phone, it is not as profitable as selling an Apple or Huawei mobile phone, xiaomi's development of offline channels is difficult.
The intensity of demand varies
Explosives advocate social experiences and become social currencies.
In 2019, 1 million boxes were sold in a single month after the launch of the Polaria Bubble Mask, and consumers can see photos of bubbles everywhere on the Internet.
However, the bubble mask advertises that "the dirtier the face, the more bubbles there are", which is nothing more than the volatilization of fluoride, and it also damages the skin, so it quickly disappeared.
A few years ago, in the vibrato fire, you can divinate the answer tea, there are Hong Kong food god Dai Long secret recipe, after half a year of sealing test of the carving grandfather beef brisket, beautiful female boss driving a sports car to send pancakes of the Emperor Taiji pancakes, and so on, such explosive products have become the talk of a generation of netizens.
However, most consumers are taking advantage of the fun and returning home. Because the social experience created by the explosion is not really a need - you buy a mask to whiten, not to bubble and take photos.
The biggest failure when a blockbuster is when the consumer remembers all the hot attributes you have, but doesn't remember your brand.
On the contrary, large items are not as lively as social currencies, and prefer scenario-based functions - making product functions a fixed part of life scenes. For example, wangwang gift package binding New Year gift scene, Wang Laoji herbal tea binding hot pot scene, nutrition express line binding office breakfast scene.
Sustainability is different
Explosive products rely on pulling new customers, once the market heat decays, pull new deficiencies, performance will decline, and large items rely on the repurchase and recommendation of old customers, because large items are usually the endorsement of the brand, which can accumulate customer reputation and goodwill. For example, SK-II's Fairy Water and Huawei's Mate series mobile phones.
If the big item is a star, then the explosive product is fireworks, fireworks can cover the brilliance of the star for a moment, but soon disappear into the night.
Lin Sheng, founder of Zhong Xuegao, believes that "explosive products are not sustainable, because the products I end up selling are still honest chocolate-flavored and milk-flavored ice creams, which is what can be eaten for a long time." Therefore, Zhong Xuegao and Xiao xian stewed bird's nest ice cream, sold out 20,000 pieces in seven hours on the line, and did not continue to make such explosive products. After all, the ultra-high price of bird's nest ice cream is only suitable for hunting and tasting, and cannot be used for daily repurchase.
Replicability is different
Creating explosive products is like a metaphysics, even if you achieve the ultimate cost-effective, high-value, and attractive name, you may not be able to sell explosive. Because explosive products are usually the result of the superposition of market dividends, supply chain dividends, and channel dividends, all the efforts you make are only necessary and insufficient conditions.
On the contrary, the big single product is more like a set of marketing combat plans, so that each battle has a law to follow and rules to follow.
In 2017, By-Health formally proposed the big single product strategy, aiming to create a replicable success model, and one of the criteria for selecting large items is to copy to other items.
With the support of this concept, By-Health has created a mature model of large single product cultivation.
Source @ Debon Institute
Since then, Tomson By-Health's first major single product, Jianli, has turned a loss into a profit, with sales of more than 1.3 billion yuan in 2020, and gradually copied the large single product model to The three items of Jianshijia, Jian'anshi and Shu Baining.
02, the essence of explosive thinking
How to create a blockbuster? You may think of the ultimate value for money, good looks, attractive names and so on. But these are only things that are within the product, and have no special relationship with explosives.
According to Grant's communication with a number of explosive founders, explosive thinking can be disassembled into market dividend thinking, supply chain dividend thinking, channel dividend thinking and lean entrepreneurial thinking in essence.
Market dividend thinking: taking root on the soil ignored by giants
Explosive products originate from unmet demand in the market, which allows new consumer companies to avoid the eyes of giants and find market opportunities. Such market opportunities usually appear in new people, new prices, new categories, and new cognitions.
New groups: In recent years, makeup brands have sprung up, the most important reason is that the post-90s and post-00s emerging groups have produced a strong self-pleasing psychology, they are more independent and open than traditional women, and they pursue themselves more.
New price: Three and a half tons as a rising star, found a price gap of 5-10 yuan between Nestlé and Starbucks, and the taste is better than 711, FamilyMart and other convenience stores of 10 yuan coffee.
New category: The establishment of WonderLab in 2019 has discovered the potential of the milk tea flavor meal replacement milkshake category, specifically serving post-95 women who want to eat meal replacement to lose weight, but also like the taste of milk tea. As a result, WonderLab achieved sales of 60 million yuan in the first year.
New cognition: Post-90s consumers choose cosmetics not only to see brand advertising, but also prefer to look at cosmetic ingredients, so hyaluronic acid, amino acids, and niacinamide have become the cognitive focus of cosmetics consumption decisions.
Supply Chain Dividend Thinking: Investing troops in areas where supply chains are scarce
The emergence of explosive products must be behind the maturity of the supply chain. If the supply chain is not mature, it is impossible to achieve cost-effective and large-scale supply. Supply chain capabilities determine the cost structure, product advantages and delivery capabilities of the enterprise.
Striving to build in places where supply chains are scarce and rapidly hunting where supply chains are built is the essence of supply chain dividends.
In 1994, China's sanitary napkin market was controlled by Procter & Gamble, and a sanitary napkin sold for 1 yuan, while the average monthly salary of Chinese at that time was only 100 yuan. Liu Chongjiu, the founder of Beschut, spent 2 years to build China's first sanitary napkin production line in 1997, breaking the monopoly pattern of foreign supply chain. In 2000, the sales of Beschute exceeded 100 million.
In recent years, the makeup industry has exploded, and local foundries that originally served foreign brands have built their own brands or supplied other new brands.
Under the blessing of a mature supply chain, the gross profit margin of makeup can reach more than 60%. This provides ample profit opportunities for new makeup consumers, and also sets aside enough profits for traffic promotion.
However, with the disappearance of supply chain scarcity, overcapacity, inventory backlog, and price wars, explosive products have come to an end, which is the key reason for the current cold of the new consumer industry.
Channel dividend thinking: take the lead in running a horse fence on the new road
The new channel breaks the pattern of passenger flow distribution of the original channel, and small brands can take advantage of the "virtual" to enter, commonly known as "traffic dividend". In recent years, offline channel dividends have come from shopping malls, and online channel dividends have come from new media and e-commerce platforms.
In 2017, after the establishment of Perfect Diary, it aimed at Xiaohongshu, and rose rapidly through massive KOLs and KOC content marketing, and later "Xiaohongshu planting grass + Zhihu endorsement + jitter fast belt + Tmall harvesting" became the standard model of channel marketing for new consumer enterprises.
However, this model is no longer useful in 2022 (you know).
Lean Startup Thinking: Replacing intuition and luck with quick experimentation
Compared with the above three explosive thinking, lean entrepreneurial thinking is the easiest to ignore, but it also has the most practical value.
Biologist Morgan did not study humans before proposing the third law of genetics, but instead studied fruit flies. Because humans can reproduce the next generation every 30 years, and fruit flies only need two weeks, it is obviously more efficient to study the genetic laws of fruit flies.
This way of running in small steps and iterating quickly is lean entrepreneurial thinking, and it is also the most scientific means of creating explosive products.
Lean Startup originated from Silicon Valley Internet startups that have limited resources and can only validate product requirements through Minimal Viable Product and Minimal Viable Test. This provides a reference for the creation of explosive products.
In the past, explosive products were usually created according to intuition and luck, and lean startups can be tested through small batch development and online trial sales.
On the eve of the Spring Festival in 2022, Baicaowei tested new products through douyin live broadcast, created a gift box for pressing the old money, and after live testing, selected the color with the best conversion rate for production, and achieved sales of tens of millions of yuan during the New Year Festival.
Generally speaking, a new product can complete a round of lean startup test every 6 months, if the online sales and word of mouth is not good, it can be directly removed from the shelves, if the online sales are hot, you can enter the offline channels to shop on a large scale.
In contrast, in the past, new products found problems after completing the offline channel, it is difficult to improve or withdraw investment, while e-commerce platforms provide convenient conditions for trial sales and can get immediate data feedback.
Moreover, the minimum MOQ value of most foundries is generally within 500,000 yuan, even if a new product is removed from the shelves, the trial and error cost of lean entrepreneurship is also low.
Of course, if a new product shows explosive potential in online trial sales and begins to enter offline channels to shop, then this new product will also bring its own traffic in offline channels, making it easier to get distribution support from offline channel providers.
03. Explosive products are moving towards super brands
Explosives are good, but they are not a long-term solution. Because the explosive products of the Internet era are too easy to follow the trend, it is difficult to establish barriers to differentiation. For example, from 2018 to 2020, the number of small kitchen appliance brands increased from less than 500 to 850, and all brands were surnamed "Xiaomi", which was a face of net red.
When there is a lack of barriers to differentiation between brand owners, it is always the upstream and downstream partners who will ultimately benefit. For example, brand owners compete for e-commerce traffic, Tmall and Jingdong make money, brand owners compete for KOL exposure, Li Jiaqi and Wei Ya make money, brand owners compete for hyaluronic acid content, bloomage bio makes money...
When good products are scarce, consumers buy explosive products, and when good products are popular, consumers buy brands. If you can't guarantee that the product is too good for the competitors to replicate, then the brand is the best moat.
So how do blockbusters become super brands?
Resistance works together
Explosives believe in Internet thinking, that is, GMV = traffic × conversion rate × unit price, compared to the naked eye visible effect numbers, they are not willing to study the illusory brand.
This psychology of coveting immediate benefits and certainty, after the popularity of explosive products subsides, often falls into another trap - the unity of product and effect.
Brand is the result of the long-term, overall and consistent business behavior of the enterprise, and the effect is the immediate performance of the enterprise's promotion and inducement behavior. The principles of brand advertising and performance advertising are fundamentally different, so the integration of product and effect is just self-deception.
If the brand department talks about the integration of product effect and the sales department also talks about the integration of product effect, then why not merge into "product effect integration"? Since then, the brand director and sales director have been collectively referred to as the "director of product and effect integration".
The progress of enterprises and even society must be the result of each performing their duties and playing games with each other, not the result of harmony and mutual compromise.
Find markets with stable demand
In addition to the failure of product function and quality, the most important factor is the instability of market demand. For example, consumers buy bubble masks to feel the surprise of bubbles, and divination tea is to satisfy curiosity. These novel selling points simply cannot be grounded in real demand.
The development of explosive products to brands must first take root in the market with stable demand, and will not be uprooted by the outside world.
Xiaomi has created dozens of categories of explosive products, in addition to participatory marketing, the most important thing is to find a minimalist stable market.
In general, the more unique the product style, the fewer target users, and the more likely the market is to fluctuate due to changes in trends. Xiaomi's minimalist style, although not a moving style, is the most acceptable and the least susceptible to trend changes. Xiaomi brands have to undertake dozens of categories, and minimalism is undoubtedly the most stable market strategy.
The most profitable in the clothing industry is usually only two products, one is the fashion model, one or two will become fashionable every season, but every season to replace the new, the other is the classic model, the style has not changed for several years, but there is a long-term stable sales. In contrast, the explosive products are more like fashion models, and the big items are more like classic models, and the classic models are the foundation for the development of super brands.
Of course, many times, it is difficult for new consumer companies to find a broad and stable market like Coca-Cola, so it is advisable to cut into a high-potential niche market (a market segment with stable demand), and then gradually spread from the niche market to the surrounding market. This is the bowling market strategy, as long as you hit a bottle, you will ping-pong to knock down a piece.
Würth, Germany, is a company that produces screws, nuts and other connectors, and despite producing such humble products, Würth sales in 2019 reached 14.3 billion euros, and Baidu is of the same magnitude, with operations in more than 80 countries.
Initially, Würth's products were only used in some fixed industrial scenarios, but this market has a very large scope for expansion, as long as it hits the first "bottle market", it will continue to spread to the surrounding "ball bottle market". At present, Würth's products cover almost all industries from space satellites to children's toys.
Products continue to innovate and iterate
Markets change faster than marketing. From explosive products to super brands, the middle must go through a thousand hammers, thousands of hammers and hammers are not only to improve the efficacy and quality of products, but also to be deeply bound with the changing market demand.
Most of those explosive products that have a monthly profit and a loss can only skyrocket with a momentary heat, but they cannot continue to innovate and iterate.
"Dabao Tiantian see" is the advertising slogan of Dabao brand throughout the country, and its core product SOD honey occupies 17.8% of the skin care product market share in 2003 by virtue of the antioxidant effect of superoxide dismutase.
But from the 1990s to the early 2000s, Dabao SOD honey had little product innovation and iteration, and the formula was not optimized until 2008. Therefore, with the upgrading of consumption and the influx of foreign skin care brands, Dabao SOD honey's market share fell to 1% in 2005.
Product value is always the basis of brand value, and super brands must be supported by super product value.
The Estée Lauder Small Brown Bottle is the first bottle of essence in the history of skincare products. In an era when extraction technology was lagging behind, Estée Lauder innovatively added split yeast extract and hyaluronic acid to propose the concepts of sleep beauty and cell repair. Once the small brown bottle essence was introduced, it became a big item of Estée Lauder.
Over the past 39 years, the little brown bottle essence has been iterated 6 times, and the iteration speed is getting faster and faster, ensuring the experience and reputation of this large piece.
Source @ Minsheng Securities
Complement your product line with brand associations
Consumers remember the category and forget the brand, which is the most headache problem for explosive products. Therefore, new consumer enterprises should take advantage of the market heat and make the unique cognition of explosive products become the core association of the brand. One of the most effective ways is to supplement the product line with the brand Lenovo that the explosive product has.
After Estée Lauder won the awareness of anti-aging repair in the small brown bottle essence, it launched the small brown bottle eye serum in 2011, the small brown bottle eye cream in 2013, and the small brown bottle double layer film in 2015. Since then, Estée Lauder's small brown bottle has become a unique association of the brand like Coca-Cola's curved bottle, and has become synonymous with anti-aging repair.
SKII's skincare serum is known as "fairy water" by consumers with its rejuvenating yeast extract Pitera and its unique effects. As the popularity of Pitera's star ingredient soared, SKII added it to the mask, and soon produced a new blockbuster. Pitera has become the most unique brand association for SKII's fairy skincare experience.
When explosive products have distinct brand characteristics and maintain continuity, they are not far from super brands.
04, write at the end
Whether it is a blockbuster or a big single product, only by becoming an enduring product that represents the brand can it become a super brand. Looking at the super brands in the consumer industry, consumers first think of such products, such as Lancome's small black bottle, Shuanghui's King of Kings, and Luzhou Laojiao's National Cellar 1573. New consumer enterprises born out of the Internet, in addition to researching explosive products, also need more branding thinking.