Brand marketing strategy from 0 to 1!

What are the two most important methodologies during a company’s trial and error period?

What are the three main characteristics of the strategic origin period?

What are the top five strategies for overcoming the initial perception challenges of a new brand?

How to use lean startup methods to reduce the trial and error costs of enterprises?

In the strategic origin period, that is, the trial and error period, the enterprise is in a life-and-death situation. Anthony Yan, a partner at SAIF who is known as the godfather of investment, once said that the success rate of entrepreneurship is less than 1%. Although reality is cruel, we still have to have dreams (just in case they come true).

At this stage, there are two most important methodologies: one is positioning theory, which tells you how to form effective business hypotheses; the other is lean entrepreneurship theory, which tells you how to verify business hypotheses at low cost.

Characteristics of the Strategic Origin Period

The strategic origin period is the strategic trial and error period. The main characteristics of this stage are:

1. The company has not yet found a clear positioning - what it can do, what it wants to do;

2. Face initial cognitive challenges - new categories, new brands, lack of trust. Due to the mental safety law of consumers, it is difficult for them to accept new categories and new brands.

3. Failure to establish effective matching - representative products, pricing strategies, original customers, original regions, original channels, etc.

what to do? There are two important methodologies for getting through the origin period.

The guidance of “positioning theory” to the origin period

During the strategic origin period, effective business hypotheses should be formed through positioning theory. What is your positioning? What are the representative items? How to set prices? After that, we need to find the origin population, origin region and origin channel. An important factor that needs to be considered at this time is that whether it is the population, region or channel, it must have high potential energy.

The first is to overcome the initial cognitive challenge of a new category - first, an appropriate category name, and then extracting the core value to mobilize related cognition, such as six walnuts; utilizing the public relations value of the new category, for example, Tesla has done a very good job, it was very high-end from the beginning, and now people’s minds have been occupied before they have even seen it.

How to name a new category?

As a startup, you are often creating new categories, so you must name the new categories, which is also the primary task of the category creator. Moreover, the quality of category naming determines the future of the brand, or directly determines whether the brand can survive, because the category is the first question to be answered when communicating with customers: What are you?

These are the eight-character formula for category naming: rooted, favorable, straightforward, and brief.

1) Having roots;

As soon as you listen, you can tell what your connection is with the existing categories in your mind.

2) Favorability;

When you have several angles of expression, be sure to choose the more valuable one.

For example, margarine may sound unappetizing, but it is actually made from vegetable oil, so if it is called "vegetable butter", or "soy butter", or "soy cream", or "vegetable cream", it may be better than the original animal cream. But once it is called "artificial xx", it is very bad.

3) straightforward;

The category name does not need to be very unique, but it should be simple and clear, expressing the characteristics or image. So, some people say that our name is too simple and everyone will call us like that. Isn’t that good? I said that as a category name, everyone should call it this.

4) Be brief;

Because the product category is used frequently by customers, it must be short and easy to remember and spread. For example, two words, such as car and sailboat, are a good choice. A category name with four characters is a bit bad, for example, Master Kong’s “Mineral Water” is too long.

In addition, it is also necessary to overcome the initial recognition challenges of new brands - clearly convey differentiated value; have an excellent brand name, such as Zhou Hei Ya; and appear with credibility from the beginning, such as Lei Jun and Luo Yonghao.

1. Pricing strategy - When customers don’t know you, you need to lower the entry threshold, but not simply lower the price. Small packaging rather than low price. For example, Gengke used a low price at the beginning, but couldn’t make any money after selling. Finally, it changed to small packaging, which also reduced the trial and error cost for customers and made it easier to try. For services, don’t sign up for monthly or annual subscriptions right away. What if it doesn’t work out?

Smart pricing strategies help build a perception of cheapness without degenerating into a pure price war, that is, to make prices both comparable (to build a perception of cheapness) and not completely comparable (to tap into customer surplus).

Therefore, pricing has become one of the four core technologies of retail. It requires the comprehensive use of pricing techniques such as competitive pricing, psychological pricing, price discrimination, bundled pricing, cross-subsidy, step pricing, time-sharing pricing, and price anchor points to fully expand sales and tap into customer surplus without causing customer disgust or making operational management too complicated.

2. Origin area - high potential energy helps to build credibility. For example, Muwu BBQ can claim to be the best in Shenzhen because it has more than 30 stores in Shenzhen. If it were scattered across the country, it would be impossible to establish this credibility.

3. Original customers - avoid abstract groups that are difficult to reach. When choosing its target consumer group, Jiaduobao selected the commercial catering group as its original target group. This is because they often eat fried foods and have a strong need to reduce internal heat. In addition, these people are also high-spending individuals and have a demonstration effect on the products.

Tesla is also very accurate in targeting the origin population. Their first list of 1,000 clients includes the two founders of Google, celebrities such as Arnold Schwarzenegger, and Chinese entrepreneurs including Sina CEO Cao Guowei, UC Chairman Yu Yongfu, and Xiaomi CEO Lei Jun. It can be said that the first batch of people who bought Tesla were either rich or noble, and they were the most influential people in the Internet age. Their influence is more convincing than simple brand advertising.

4. Origin channel - First of all, we must consider the consistency of positioning. For example, Zhou Hei Ya cannot open franchise stores everywhere like Juewei. After the brand upgrade, Zhou Hei Ya chose to open stores in relatively high-end channels such as high-end commercial centers, airports, and high-speed railways. It also redesigned the logo and other brand identification systems, and the store style has become younger and more fashionable.

5. Active ecological isolation - sometimes the channels for new categories are not the original channels, such as Kuaifang Drug Delivery (Note: the first domestic company to launch the "Kuaifang Drug Delivery" APP, which provides one-hour door-to-door drug delivery service, and has upgraded all its pharmacies. Since its establishment, it has successively received millions of yuan from Jiuhe Venture Capital, 50 million yuan from Jingji Venture Capital, and over 200 million yuan from Tiantu Capital). The way to long-term stability is to establish a new industrial chain, a new ecology, and establish its own distribution center. It seems heavy in the early stage, but many companies doing O2O drug delivery just earn errand fees, while Kuaifang can earn the price difference of drugs.

Replenish:

1) How does brand naming relate to the customer’s mind?

Brand Name:

The first is to reflect the positioning, that is, to let you know what the company does as soon as you hear it, so it is easy to categorize it in your mind, and it also sounds like an expert brand;

The second is to reflect the brand, that is, you can tell it is a brand name as soon as you hear it. When a bunch of people are talking about your brand, someone passing by will know that people are talking about a brand and will easily put it into the brand category. When he sees your product next time, he will say, "I seem to have heard of this product." This sense of familiarity will give him a sense of security, so under the same other conditions, he will give priority to you because of this sense of familiarity.

Third, because the brand name is for your customers, you need to communicate with them, including communication and referrals between customers, so it must be conducive to dissemination. How can we facilitate dissemination? Be able to hear, remember and be willing to speak.

Brand names are also a categorization process, again because the mind seeks security. As long as there is a reflection of the brand, users will easily form a sense of familiarity, and familiarity is also a basis for generating a sense of security.

Other things to note when naming your brand:

Customers have limited mental capacity, so keep it brief;

They hate clutter, so no alphanumeric mix. Avoiding confusion is also because the mind has limited capacity. He has to remember these subtle differences, such as the difference between "Chow Tai Fook" and "Chow Sau Fook";

The mind also pays attention to differences. If two names are of the same type, it will only remember one, which is the authentic one, and will not remember the others.

The guidance of “Lean Startup Theory” to the origin period

Lean Startup is a methodology that applies scientific experimentation to business. This is a concept first proposed by Silicon Valley entrepreneur Eric Rise in his book "The Lean Startup" in 2012.

At the origin stage of the strategy, the goal is to reduce the company's trial and error costs. Enterprises should adopt scientific experimental methods and use the lowest possible experimental costs to quickly verify key business hypotheses and obtain the business knowledge required for business innovation. The two hypotheses that need to be verified quickly are the value hypothesis and the growth hypothesis.

The value hypothesis measures whether a product or service actually delivers its value when customers use it. For example, what are the customer’s needs? Are they willing to pay for it and how big the paying customers are. Many companies have been offering their services for free and have not been able to complete this hypothesis verification, so they should try charging a small number of customers as early as possible.

Another is the growth hypothesis. If a product or service proves to be valuable, what is its growth engine? A business without a growth engine is useless.

Success Story: Indian Village Laundry Service

Since the introduction of the theory of lean innovation, it has been well received by the public. Village Laundry Services in India used the theory of lean startup to complete its business hypothesis and achieve success.

In India, less than 7% of households own a washing machine. Most people either wash it by hand or hire a laundryman to do it. Generally, the laundry worker would take the clothes away, wash them in a nearby river, and return them 2-7 days later, and the clothes might not be clean yet.

Akshay Mehra, the founder of Village Laundry Service, was once the brand manager of Tide and Pantene in Southeast Asia under Procter & Gamble. He thought that people who could not afford to wash their clothes could have access to laundry services, so he returned to India and started a series of business ideas.

In his first experiment, they prepared a washing machine in the back of a pickup truck and parked it on street corners in Bangalore. They try to understand their potential customer base as deeply as possible, wondering what customers want when they hand over their clothes? Is it the speed of washing, or are they more concerned about the cleanliness?

After a week, they found that customers were willing to give their clothes to them for cleaning. But customers don't trust washing machines in the back of pickup trucks, fearing they might take the clothes and run away. To solve this problem, Village Laundry Service built a mobile kiosk-like vehicle and parked it in front of local small markets and supermarkets to solicit business and understand what services people are more interested in and how much they are willing to pay.

Based on these early experiments, Village Laundry Service eventually invented a mobile laundry kiosk that is 10 meters long and 7 meters wide, which includes an energy-efficient washing machine, a dryer and an extra-long extension cord. The laundry kiosk uses international brands of detergents and clean water to better ensure the cleanliness of clothes.

Finally, through this series of business assumptions, the Village Laundry Service achieved great success. It operates from 14 locations in Bengaluru, Mysore and Mumbai.

Negative example: SF Express Heyke

The initial assumption behind the creation of SF Heyke was to solve the last mile problem of community logistics terminals and share the rental costs. Heyke platform sells fresh food, grains and oils, mother and baby toys, household daily necessities, digital appliances, etc.

Customers place orders online or on tablets in stores, and pay through WeChat, Alipay, online banking, store cash, etc. All goods are delivered by SF Express. Customers can choose to have the goods delivered to their homes or pick them up at the Heyke store.

SF Express is also very wealthy, and it expanded across the board right from the start, opening 3,000 stores. But what is the result? It was eventually discovered that this was a false demand, as the Heyke store was almost deserted. SF Express invested nearly 1 billion yuan and learned a painful lesson.

Summarize

The origin period cannot be rushed, and rushing into things should be avoided.

1. Cognitive results are more important than commercial results - it is best for the CEO to go to the front line to gain on-site knowledge;

2. Avoid the hula hoop phenomenon - the product is not yet perfect; entering the inappropriate population too early; the danger of early negative cognition.

Author: Noteman

Source: Noteman