99% of product operators get it wrong: The 2/8 rule may not stand up to scrutiny

A few days ago, when I went out to meet a partner with a cute girl from the company, I happened to see the Coca-Cola advertisement being broadcast by Focus Media in the elevator room. The girl asked me curiously, "Why do they keep running ads when everyone knows about Coca-Cola?"

Since I was thinking about the cooperation with the client at that time, I simply told her that it was to "strengthen the user's memory." Thinking about it afterwards, I feel that this answer is rather one-sided and not rigorous enough. So I took some time out these two days to carefully sort out some of my thoughts, and I’d like to share them with you today.

“Why does a brand like Coca-Cola, which is so popular among the public, continue to advertise?” There are two fundamental reasons:

1. Increase short-term product sales
2. Accumulate brand potential to build long-term brand equity

We all know that no matter how well-known a brand is, its user structure is distributed in a "funnel" level. Even for a super soft drink brand like Coca-Cola, this is unquestionable. Taking Coca-Cola as an example, its user structure can be roughly divided into three levels: light consumer group, heavy consumer group and core consumer group.

As shown in the following figure:

We all know that there are two super brands in the cola category ( Pepsi and Coca-Cola). Let's take the consumption data of Coca-Cola in the US soft drink market in 2012 as an example. The X-axis is the number of times American users buy cola, divided into 0-16; the Y-axis is the proportion of each purchase frequency.

We can clearly see from the data in the chart that even for Coca-Cola, nearly 45% of users never consume it every year, and Pepsi accounts for more than 65%. It should be noted that the United States is the "base camp" of the cola market.

If we classify users who consume 0-2 times a year as light consumers, the light consumer group accounts for as much as 65% of the market in the United States! If Coca-Cola's continuous advertising can make these users increase their purchases by 1 to 2 times per year, how huge will the market growth be?

Here, we also found something very interesting. I believe everyone has heard of the 80%-20% principle: that is, 20% of users generate 80% of sales. The cost of acquiring a new user is five times that of maintaining an old customer. In fact, this statement is exaggerated! (This is actually the lazy way of thinking of most people)

We can see from the chart below that for most consumer brands, the proportion of consumption by old users only hovers around 50%, far from the 80% that is often mentioned. In other words, the sales of new users only account for half of the total sales. Therefore, the light consumer group is very important!

From the perspective of brand loyalty, heavy consumer groups and core consumer groups are often more loyal to the brand. If brand owners want to seize a higher market share, their real battlefield should be among these light, "swinging" users, because these consumers make purchasing decisions more rashly and need more persuasion.

At the same time, there is another interesting point about low-priced mass consumer goods. Take Coca-Cola as an example. Their average order value is too low, and the cost of maintaining an old user is much higher than acquiring a new user. In other words, increasing revenue is often more important than reducing costs, so it is very necessary for them to continue to cast a wide net and advertise.

The above is the first point. There is also a second point: accumulating brand potential to build long-term brand assets.

We all know that the essence of a brand's existence is to accumulate potential energy for future sales. In other words, we cannot just focus on making money in the present, but also lay the foundation for making money in the long run.

We all know that advertising is done for four purposes: to inform, to remind, to persuade, and to reinforce . What we want to do by reminding and reinforcing is to constantly use advertising to consolidate the company's brand assets, make loyal users more loyal, and make wavering users more loyal.

To some extent, advertising can be said to be a form of repetitive brainwashing, which constantly instills the ideas that the brand wants to achieve into your mind, strengthens the connection between the brand and you, and creates an "instant association" effect in you: Coke - Coca-Cola, making you more comfortable when you pay.