Application of ten scientific theories such as Matthew effect and bucket theory in marketing (Part 1)

Marketing, blindly imitating big companies and causing trouble?

Marketing, a bold and generous move?

Marketing is about telling stories with beautiful words?

Maybe, but I still believe more in scientific evidence based on empirical evidence, such as these ten theories. Let’s see if they can enlighten us.

• Matthew Effect
• The Law of Wine and Sewage
• Bucket Theory
• Zero-sum game
• Forbidden Fruit Effect
• Beauty Effect
• Washington Cooperation Law
• Occam's razor
• Embarrassment Effect
• Halo Effect

1. Matthew Effect

The strong get stronger, the weak get weaker

Lao Tzu’s idea is: "The way of Heaven is to reduce the surplus and make up for the deficiency. The way of man is not so. It reduces the deficiency in order to serve the surplus." The "Matthew effect" is the idea of ​​"the way of man" in Lao Tzu's thought, and the "way of Heaven" can be likened to the overall will of the country. The national will is manifested in weakening the strong individuals within a certain scope and making up for other weak individuals.

Simply put, from the perspective of business owners or consumer groups: the better the products and brands, the higher the reputation and premium they are given. The lower the product or brand, the lower the evaluation and pricing rights they are given.

For example, iPhone products are so popular that people line up to buy them. Even though the price of the product is much higher than its actual value, it is still loved and sales volume continues to rise.

For example, OEM factories for various products, despite receiving huge orders, still have no say. They produce the main part of the product and take a very low profit (compared to the OEM party), and the biggest profit goes to the brand owner. Gradually, well-known brand owners have had more and more say and wealth; while OEM factories and unknown brands in the same category (note the same category) have less and less initiative, and their profit margins have been squeezed to extremely low levels.

For example, in a middle school class, students with good grades can get praise or material rewards from the teacher, and have the opportunity to continue sitting in the front row; while students with poor grades will not only be criticized, but also have no right to choose their seats, and continue to stay in the "bad student zone" in the back row.

Now that we understand the Matthew effect, let’s look at the “similar brands” emphasized above. This is the key point that startups should control! Under the Matthew effect, when products of the same quality are placed next to those of big brands, or even at a lower price, consumers will still prefer the big brands. “Buy this brand, it’s good!”, “Everyone buys this brand!”, “What kind of brand is that? I’ve never heard of it.”

Therefore, the simplest and most effective way for startups to get rid of the Ma Tian effect is to integrate their own characteristics, take a unique perspective, and go into a category where there are no big brands.

For example, I once said in my public account “Non-mainstream Zhu” why are selfie sticks so popular? Why can a small workshop with only tens of thousands of yuan in assets produce 60,000 selfie sticks per month? One of the reasons is that they found the right category and almost absolutely avoided the Matthew effect. They positioned this camera accessory product as: entertainment product + mobile phone accessory. And if you position your product in detail as: photography equipment accessories. Then, global companies like Canon and Nikon will kill you instantly.

2. Wine and Sewage Law

Remove "garbage" in time

Pour a spoonful of wine into a bucket of sewage, you get a bucket of sewage; pour a spoonful of sewage into a bucket of wine, you still get a bucket of sewage.

Just like "one bad apple spoils the whole barrel"

In marketing, we are all clear about positioning, focus, and category planning. But these are all studies on the advantages of enterprises and products.

On the contrary, in a large amount of literature, few authors touch upon the issue of enterprises (products) avoiding their shortcomings. How much impact do the shortcomings of enterprises (products) have on us?

For example: Taobao’s initial positioning was: “to provide a safe platform for online buying and selling for Chinese people.” Then, following the positioning theory and focus principles, continue to deepen core advantages. But reality always gives us unexpected complications.

Just like among the thousands of stores on Taobao, there is always one selling counterfeit products; among the thousands of rules for sellers, there is always one that is not well considered enough. But in the minds of the general public: "Good things are natural, bad things will never be tolerated." People always care about what they have lost, but ignore what they have gained.

After being spread once, spread twice...the bad thing becomes bigger and bigger. Due to the low probability of selling counterfeit goods on Taobao (objective analysis), Taobao has been dubbed as "a place that exclusively sells counterfeit and parallel imported goods"; a regulation of Tmall Mall was introduced at an inappropriate time, which led to the "Taobao October Siege Incident" in October 2011.

Under tremendous pressure from public opinion, Taobao launched a new product management procedure. Once a store was found to be selling counterfeit goods on a large scale, it would be permanently closed. Regarding the detailed management of small merchants on Taobao, Jack Ma made five concessions with tears in his eyes.

Another example is China Mobile, a large state-owned enterprise and one of the Fortune Global 500. In terms of mobile communications operations, we are quite responsible in terms of strategy, technology and services. Although this company is big, there are still some "junk" things happening around, such as some of its subsidiaries in city-level cities that indirectly consume customers' phone bills. This situation is very rare, but one example is enough. You see, if you search the Internet now, you will find a lot of news about mobile companies charging random fees.

So, when we cannot be perfect, at least we should have zero tolerance for "garbage".

3. Bucket effect

Be aware of weak links in your team

How much water a bucket can hold depends entirely on the shortest piece of wood in it.

I think everyone is familiar with this theory! After seeing this theory, many people began to question "positioning". Isn't it said that whether consumers can remember you and are willing to consume you depends mainly on our core competitiveness (long board)?

If we spend a lot of energy on improving our weaknesses, then won’t our strengths be less prominent? In other words, the product has become a "good guy" with no weaknesses or strengths?

Therefore, when applying the bucket theory to marketing. We need to pay attention, rather than focus on, the “weak links in the team” (the “team” includes the people, products, brands, etc. in the team).

In other words, we still need to focus on our strengths (positioning) and pay attention to which people and product details in the team are lagging behind. [Emphasis: Here we need to "pay attention" rather than "pay attention"]

The "Law of Wine and Sewage" is different from the "Law of the Bucket". The former discusses the destructive forces in organizations; while in the barrel theory, the shortest board is a useful part of the organization, but it is just slightly worse than other parts. You cannot throw them away as garbage.

For example, I talked about the swellbottle water bottle before, which is a high-end product (high-quality product). The appearance is extremely delicate; it can keep heat for 12 hours under special environment; it is made of 304 steel.

As a high-end water cup, its first basis is quality and appearance, and its second basis is a higher price. Neither is indispensable.

Under the barrel theory, if SwellBottle has quality defects (shortcomings), you can't just give up on quality! If Swell Bottle has a price shortcoming (for example, the price is very high, or the price is very cheap like wholesale utility goods), you can't give up the price change! (Arbitrarily set an unreasonable high price or cater to the general public and make the price particularly affordable, and note that it is a high-end product)

Therefore, the barrel theory is to study the basic elements and extended elements , and we cannot discard the weak elements; while the wine and sewage theory requires us to be tolerant , and we need to discard the "garbage" .

4. Zero-sum Game

With enterprises, we should pursue non-competitive intersections;

With consumers, we need to reduce zero-sum game conflicts.

The zero-sum game principle means that when two participants play the "game", what one party gains is what the other party loses. The total score of the game is always zero.

A marketing expert once said: "When all companies in the market are clear about their product positioning, there will be no competition in the market."

Just imagine that all companies understand product positioning, just like all companies now understand the need to add an IP (brand) to their products. We can all analyze the market objectively. Understand which categories in the market have been firmly established by other companies, which categories still have vacancies, or which new categories can be created.

When product positioning is unclear, there will be competition as long as we sell the same product. In other words, there is overlap in the positioning of the same products, and a "zero-sum game" exists between companies selling the same products. The consumers I missed went to other companies; the consumers missed by other companies came to my company.

But once all companies are clear about their product positioning, there will be no "zero-sum game" or competition among companies in the market.

Look, take men’s casual wear products as an example. When such companies are not clear about product positioning, their so-called product positioning is as follows:

1. Men's casual wear at the forefront of fashion;
2. Fashion-forward casual jackets for boys;
3. Simple themed boys' T-shirts;
4. Boys casual pants;
5. Preppy boys' casual jacket;
6. Urban fashion men's casual wear;

…

Have you noticed that there is overlap in the product positioning of these men’s casual wear products?

• 2 and 3, the “simple and fashionable T-shirt” between them, are the intersection;
• 4 and 1, the "frontline trendy boys' casual pants" between them, are the intersection;
• 6 and 2, the “urban cutting-edge fashion men’s casual jacket” between them, are the intersection;

…

In the same category (men's casual wear), the seemingly thoughtful product positioning of each company is actually not accurate at all, and overlaps with the product positioning of other companies. Any intersection means a "zero-sum game", which means that the customers I didn't earn were earned by you. There is competition among similar enterprises.

Let’s take men’s casual wear as an example. When all these companies are clear about their product positioning, their product positioning will be like this:

1. Korean style simple and fashionable mid-range hand-painted casual round neck T-shirt;
2. Low-priced men's casual trousers at the forefront of Chinese fashion;
3. XX Master International's top customized warm-colored men's casual shirts;

…

As competition in the buyer's market becomes more severe, companies will become more and more aware of product positioning and will define product categories more and more finely. In theory, these categories can be infinitely subdivided. That is to say, the finer the product categories, the smaller the intersection between similar products, the smaller the "zero-sum game" competition, and the competition between similar companies will gradually disappear.

Of course, after most companies understand product positioning, to truly achieve a competition without a "zero-sum game", the market economic system needs to be highly mature.

The above is from the perspective of competition between enterprises. If we look at it from the perspective of businesses and consumers, there is also a "zero-sum game".

If a company wants to make more profit, it needs to reduce costs or increase prices. This directly means that consumers will get lower quality or spend more money for the same product. This creates a zero-sum game between businesses and consumers.

Wherever there is game, there will inevitably be conflicts. How can we better buffer this conflict, or even solve this big problem in the marketing industry? Worth pondering...

at last

Applying the four scientific theories of Matthew Effect, Law of Wine and Sewage, Bucket Theory and Zero-Sum Game to marketing, we can get the following insights:

1. The strong get stronger, the weak get weaker
2. Remove "garbage" in time
3. Be aware of weak links in your team
4. With businesses, we should pursue non-competitive intersections; with consumers, we should reduce zero-sum game conflicts.

Next week, I will share the remaining six scientific theories in marketing:

• Forbidden Fruit Effect
• Beauty Effect
• Washington Cooperation Law
• Occam's razor
• Embarrassment Effect
• Halo Effect