How can domestic brands become popular in China?

"I was busy until 11 or 12 every night, but no one was interested in my products. I was rejected countless times and didn't get a single chance."

1. Are domestic products on the rise?

(one)

"It was then that I realized that domestic products are naturally not trusted."

"We have made hyaluronic acid the largest in the world, but it is labeled as garbage and three-no."

"I bought a pair of ERKE sneakers. My colleagues asked me which street vendor I bought them from. They only recognized Adidas and Nike."

Recently, a short video titled "China's Hot Selling Products" was widely circulated on WeChat Moments, receiving 53,000 reposts and 81,000 likes in 6 days.

In this documentary jointly created by Tmall, New World and Li Jiaqi, the bitterness of domestic brands in the past touched the hearts of many people.

But now, things seem to be changing. Since the second half of 2019, domestic brands have grown rapidly. According to Tencent statistics, the annual compound growth rate of domestic brands has been around 33% in recent years, and nearly half of sales come from users born between 1990 and 2000.

This year, Xiaohongshu released the "2021 Lifestyle Trend Keywords", and "National Trend" has been at the forefront.

Beauty and cosmetics market: Perfect Diary, Huaxizi, and Little Autine are creating a wave of "Oriental beauty".

Food market: Yuanqi Forest, Zhong Xue Gao, Heytea, and Lao Xiangji are challenging the traditional sphere of influence of Coca-Cola and KFC.

Clothing market: Hanfu and e-commerce brands are advancing by leaps and bounds, while foreign fast fashion brands are failing. ZARA is out of fashion, FOREVER21 has withdrawn, TOPSHOP has gone bankrupt, and ETAM has retired.

Cultural consumption market: Derivative products of the Forbidden City, White Rabbit, Miao embroidery, and Pop Mart have become high-end pursuits among young people.

Overnight, thousands of domestic brands have sprung up like mushrooms after a rain. This is a great era of new consumption. Every area of ​​consumption seems to be worth redoing and can give birth to new brands.

(two)

The venture capital circle has polarized views on the rise of domestic products.

In the eyes of optimists, the rise of domestic brands is a major trend and a great opportunity. The Chinese economy is facing a change in its driving force, from the traditional investment and export-driven to consumption-driven and dual-circulation structure. The rise of consumption is the general trend, and this is the right time.

China has become a "manufacturing maniac". Our long-term experience in OEM for big brands has enabled us to have a strong and complete supply chain system. This is the material basis for the rise of domestic products and this is our geographical advantage.

China is entering the "fourth consumer society". Consumers have changed from simply competing with big brands to being savvy, rational and mature. They are gradually getting rid of the superstition of European and American big brands and starting to pay attention to local brands. This is the psychological basis for the rise of domestic products, and this is human harmony.

From Made in China to Created in China, from low-priced imitations to big-brand substitutes to putting forward one's own brand proposition, everything is just in time.

But there is also cold water: "You are too optimistic, they are all substitutes for big brands, all bubbles!"

In the eyes of pessimists, everything is an illusion, a "trend" created by burning money through large-scale financing. New domestic products are nothing more than following the old path of “spending money, offering low prices, competing in marketing, and adopting the internet celebrity style.”

Behind each sales miracle, there is no real market demand and user loyalty to support it, so the hype is just empty talk.

It seems that domestic brands are improving, but the bubble is also expanding rapidly and seems likely to burst at any time. This is a race between life and death. How to compete head-on with well-funded international brands instead of becoming a "flash in the pan internet celebrity gimmick"?

There are two possible solutions:

Path one: introduce non-staff product managers to better understand users.

Path two: focus on niche markets and be restrained and confident.

Path 1: Introducing non-staff product managers

(one)

A few days after "China's Hot Selling Products" became popular on social networks, Li Jiaqi appeared at the Boao Forum for Asia 2021 Annual Meeting and had a conversation with Dong Mingzhu at a Sina Finance event. Prior to this, on March 1, Time magazine selected Li Jiaqi as one of the top 100 influential people of the next generation.

This is a landmark event. When live streaming hosts appeared on the Boao Forum and Time magazine, despite being controversial, "live streaming with goods" has become the most formidable new marketing trend.

What interested me most was that Li Jiaqi mentioned that he was called an "extra-staff product manager" by many brand partners and actively participated in the cultivation, design and development of many brands.

The anchor has started to make products. Is a marketer who can’t make products not a good anchor?

As a former product manager and a media practitioner, I have always been interested in Li Jiaqi's live broadcast skills.

What makes his live broadcast so hypnotic? It’s as if a new product will immediately become a hot item among girls as long as he gives it a “finishing touch”.

(two)

Simply disassembling Li Jiaqi's words, you will find that this is a very classic marketing template:

1. The audience is sufficiently focused.

"All girls, sisters!"

2. The needs are very clear and the pain points are very clear.

For example, how to get female fans to buy men's cosmetics: "Buy this cheap facial mask for your husband, don't let him use your expensive facial masks! Don't let him use your Estee Lauder and SK2 facial cleansers, he squeezes a lot every time, unlike girls who squeeze a little at a time!"

"This foundation is perfect for office workers. It won't come off even if you're out all day!"

"When you are thirsty in the desert, just eat this. Your saliva will drown you!"

3. The usage scenarios are clear at a glance, you will definitely need it.

"It's stress-free to wear it on important occasions. Once you put it on, you'll be like a lady, with the perfect hostess temperament!"

"If you're too lazy to put on makeup when you go downstairs to buy groceries, just wear this hat!"

"Rooftop garden, man-killing fragrance, perfect for summer!"

4. The most terrifying thing is his terrifying empathy, which immediately makes people have corresponding feelings and emotions.

"Like little pixies dancing on your mouth."

"It's full of girlishness, the feeling of first love."

"Apply it on your face and it will melt into water immediately, just like ice cream, melting as soon as it touches your skin, making your face glow and feel smooth and tender."

5. It often has a dramatic effect.

For example, the iconic phrase that appears repeatedly: Oh my God, buy it! This color is so pretty!

For example, various interesting experiments: drop a drop of water on the powder cake, the water droplets will not penetrate into the powder cake. Make some bubbles with your facial cleanser and place a coin on top of the bubbles.

For example, directly diss a certain super brand, advise sisters not to waste money, or even slam the table on the spot and angrily cancel the cooperation.

6. Of course, there are also various promotional tactics (discounts, limited quantities, etc.).

However, even if we can summarize and extract the 123, we who sit upright and serious probably still cannot learn to express empathy in the way he does. As far as I can remember, the last time I heard such a "heart-touching" product story was probably more than ten years ago.

"If you want to store music, this storage is enough for you to go to the moon and back while listening to music!"

“It’s not an mp3, it’s 1,000 songs in your pocket!”

"This is the thinnest laptop in the world, it's as thin as paper!"

“We made the buttons on the screen so pretty that you’ll want to lick them!”

“Only those who are crazy enough to think they can change the world can actually change the world!”

That’s right, this person is Steve Jobs, and he is also a product manager. Although he created the greatest technology company in the world, Jobs himself was not a technical master, but more like an artist.

Such people have a strong "fool talent" and can empty their minds of all professional knowledge and product information in a few seconds, tell a story completely from the perspective of an ordinary user, and depict a moving scene and experience.

From this perspective, Li Jiaqi really looks like a product manager. He may be able to turn himself into a girl in a few seconds and think completely from the perspective of his sisters.

He will conduct satisfaction surveys and online voting on lipstick colors.

He is vertically focused enough and has tried more than 100,000 beauty products. He only works in areas he is good at and does not touch fresh fruits or health supplements.

He has conducted more than 1,000 live broadcasts, and combined with his previous experience as a BA (beauty consultant) at L'Oréal, he has accumulated deep user insights in his mind.

These are all standard basic skills of a product manager, he just doesn’t write a PRD (product requirement document).

This may provide a new idea for the creation of many new brands: find a non-staff product manager who is as close to the users as possible.

(three)

Compared with traditional product managers, "extra-staff product managers" can be more neutral. They do not need to be employed by a certain brand, but can stand completely from the perspective of a third party.

This angle provides ample freedom and choice. Li Jiaqi connects with the business team to select products from 15:00 to 19:00. The overall pass rate of product selection in the live broadcast room is less than 5%, and usually 15-30 products will eventually win.

"Extra-staff product manager" also means that the top marketing figures have limited involvement in the product. In the past few years, many internet celebrities have built their own brands, but because they are not good at supply chain and company management, they have fallen into the trap again and again.

"Non-staff" means that everyone can make the most of their strengths and advantages to maximize overall efficiency.

(Four)

This involves an essential issue of marketing.

At the beginning, marketing and R&D were clearly separated. What marketing should do was to ensure that the product could be sold no matter what it was like. So what was being talked about at that time was a "scam", like selling a comb to a monk and selling garbage for gold.

Then, marketing began to merge with R&D, and expert consultant marketing emerged: I kept communicating, gradually understood customer needs, and helped them choose suitable solutions.

Today, an obvious trend is that marketing has begun to take the initiative to directly intervene in brand building and product research and development, with deep integration of the front-end and back-end upstream and downstream:

"Not only do I understand the user's choices, I also have a say in the supply chain, and I am directly involved in the development of suitable new products."

The era of "extra-staff product managers" has arrived. No matter whether they are anchors like Li Jiaqi, short video UP hosts, or experts on Xiaohongshu and Zhihu, as long as they are infinitely close to users and can have a deep insight into users' needs (and prove it through content), they can become the external brain of new brands and become deep participants in the research and development of new brands.

This was unimaginable in the past, but nowadays, as supply chains become more and more "agile", big data becomes more and more intelligent, and social networks are ubiquitous, everything is possible.

Path 2: Segmentation, and then segmentation

(one)

"Traffic is not everything. When traffic comes, it depends on whether the brand can 'receive' it and whether it can continue to create value and surprises." said Li Jiaqi, a non-staff product manager.

What does it take to catch it? In the bloody sea of ​​business wars, how can a brand survive?

In Li Jiaqi's view, brands that young people like should be interesting and useful, and have four characteristics: safety and compliance, excellent quality, distinctive innovation, and extreme details.

If a new brand wants to go from 0 to 1 and create a hit product, on the one hand it needs an "extra-staff product manager" and someone who is best at telling stories to users, but on the other hand it also needs to be "detailed enough."

To paraphrase an old saying, your heart should be higher than the sky and your cutting point should be thinner than the tip of a needle.

According to classic marketing theory, the core of brand building lies in positioning, segmentation, and finding the right "segment":

Segment the market, segment the population, segment the demands… Only by segmenting enough can you be accurate and in-depth enough, put forward your own brand proposition, and continuously create value.

Of course, this "segmentation" must have the potential to become a barrier, and international brands will not be able to catch up even if they spend money.

After all, anything that can be solved with money is not a problem. Only things that cannot be bought with capital can become real barriers.

What is needed first is restraint, to be firm enough and to be able to keep calm.

In recent years, domestic beauty brands have all been sufficiently "segmented" at the beginning: Perfect Diary became popular with eye shadow, Little Autine became popular with eyeliner, Colorkey became popular with lip gloss, and Huaxizi became popular with loose powder.

Even international brands like Estee Lauder and Lancome only had one category and a few products for a long time when they were first established. So the question is, how do we judge whether the "segmentation" strategy of a new brand is effective enough, rather than making a random division based on our own ideas?

(two)

A brand must include three parts: practical value + added value (packaging design, emotional proposition, social currency, etc.) + value communication.

There are five clear criteria for judging whether a brand is just a "flash in the pan" or truly established:

1. Have you found new segments of the population, especially those who are more interested in new brands and new products?

Consumption is becoming differentiated and the population is becoming segmented. The key is to find your right dimensional circle. According to the analysis of brand operator Jerry Li, people who are interested in new brands today generally include:

Dimensional culture: 2D, cosplay, model toys, Lolita, JK

Appearance: CHIC style, design style, white, thin and young

Fun and healthy living: fitness, yoga, healthy nourishment, sugar-free, cute pets

Exquisite life: home control, black technology, storage, smart home appliances

National style trend: Chinese comics, Hanfu, Chinese style

Find one of them to cold start, isn’t it great?

2. Have you found the unmet needs of the segmented population and provided a solution that is better than the existing solutions (and cannot be followed up)?

For example, many people want to give tea as a gift, but they don’t know how to make tea. When they are at a loss, Xiaoguan Tea appears, focusing on “luxury tea” and specializing in gifts: high-end price, designed by Japanese designer Hideo Kanhara, and 8 tea-making masters...

Although both are makeup removers, the Zhuben makeup remover is targeted at people with sensitive skin and combines skin care with cleansing.

For cosmetic contact lenses, Moody targets the market vacuum in which “domestic brands focus on long-disposable lenses, while foreign brands focus on daily-disposable lenses”, and targets the Chinese people’s demand for smaller-diameter, more natural cosmetic contact lenses.

3. For the specific groups of people, are the brand’s visual elements attractive enough to attract attention and impress people?

Also for eye shadow, Perfect Diary launched the National Geographic series, with themes such as Pink Plateau and Red Danxia, ​​integrating the beauty of mountains and rivers into eye shadow palettes.

Girlcult launched a series of mountain and sea monster cosmetics, while Huaxizi copied Chinese carving technology to launch carved lipsticks, spreading the "Zhang Chang eyebrow painting" culture.

Such packaging design and visual elements come from traditional Chinese culture. This kind of "aesthetic barrier" cannot be easily followed by international brands, just like Disney's "Mulan" which looks weird no matter how you look at it.

Consumers are first and foremost emotional, and the power of their visual and auditory senses often touches their hearts.

4. For the specific groups of people, does the value proposition proposed by the brand touch their hearts and bring enough social currency (prestige)?

What Coca-Cola sells is not sugary water, but American happiness.

IKEA does not sell furniture, but a fashionable and tasteful lifestyle.

What Starbucks sells is not coffee, but a third living space.

What Apple sells is not electronic products, but outstanding people working together to change the world.

By the same token, are China’s White Rabbit perfume, Forbidden City lipstick, and Zhong Xue Gao just selling products?

5. Do you understand the language and psychology of specific groups of people well enough to tell them stories they like to hear and convey the above values?

Especially for a new brand with an unstable foundation and insufficient funds, a prominent question is: how to achieve a cold start from 0 to 1, and how to win the first wave of popularity to become a hit?

Fortunately, we have short videos and live broadcasts today. There is a popular saying in the venture capital circle: to build a new brand, traditional marketing may take ten years, e-commerce may take three years, but live broadcast may only take a few months.

We hope that through the wave of non-staff product managers, segmentation determination and video dividends, China's blockbuster products can be truly implemented and truly rise rather than just a passing fad.

4. Case Study: Beauty Wars

(one)

Finally, let’s look at a real case.

In 2020, the beauty and cosmetics sector disclosed a total financing amount of 4.812 billion, with a growth rate of 324%. If consumption is the hottest thing in the venture capital field today, then beauty and cosmetics is the hottest and most popular thing in the consumer field.

This is also the front line where domestic brands and international brands come into close combat.

The CBNdata report pointed out that the scale of China's beauty market will reach 364.4 billion yuan in 2021. Deloitte data shows that from 2019 to 2024, the compound annual growth rate of cosmetics in China will be as high as 17.6%. However, compared with the per capita cosmetics consumption in Japan, South Korea and the United States, there is still huge room for growth (8-11 times).

China is already the world's second largest cosmetics market, and the beauty industry is booming. This is a market that no one dares to ignore or give up.

A fierce battle took place in 2020, with international brands such as L'Oreal, Estee Lauder, and Lancome on one side, and domestic upstarts such as Perfect Diary, Huaxizi, and Colorkey on the other.

This is not the first showdown between Chinese and foreign brands. Since the 1990s, L'Oreal, Johnson & Johnson, Avon, Shiseido and others have successively invaded the Chinese market.

At that time, foreign brands were wealthy and powerful, and they adopted the simplest and crudest model of spending money and buying. L'Oreal acquired Little Nurse and YSL, Johnson & Johnson acquired Dabao, and France's Coty acquired Ting Jiayi, directly using the power of capital to strangle domestic brands in the cradle.

In the following decades, although new domestic brands continued to emerge, overall the status of international brands was unshakable.

In the "Double Eleven" battle in 2020, domestic brands seemed to have suffered a miserable defeat, and their performance was even worse than in 2019.

Among the top 10 brands in personal care and beauty sales on 22 e-commerce platforms, international brands such as L'Oreal, Estee Lauder, and Lancome still dominate the list, and the only visible domestic brand is Chando (there were 4 domestic brands in 2019).

This battle sounded the alarm for Chinese cosmetics and exposed some problems:

1. Excessive marketing and insufficient product research and development.

Domestic beauty brands' investment in R&D is mostly around 1%, while foreign companies such as the L'Oréal Group's R&D expense rate is consistently between 3.1-3.5%.

The direct result of insufficient research and development is that low- and mid-end fields often make rapid progress, but it is difficult to make any progress in the truly most profitable and valuable high-end fields. The high-end market size of the beauty industry accounts for 51% of the total, but this "bonus zone" is firmly occupied by international brands such as L'Oreal and Estee Lauder.

Therefore, as long as the big brands have discounts, they can quickly dominate the charts.

2. The stereotype of “substitutes for big names” still exists.

In many people's minds, the only advantage of Chinese cosmetics is their low prices. Price wars often attract buyers who are greedy for bargains and who like to try new things, rather than loyal users.

3. Financing dependence.

As long as the power of capital cannot be continuously injected, the path of "spending money, offering low prices, and competing in marketing" will be unsustainable, the story will not be able to go on, and eventually the bubble will inevitably burst, the dream will be over, and everything will be in vain.

4. With various forces rushing in, it is inevitable that there will be a mixture of good and bad, and it will be impossible to win the trust of consumers.

It is understandable why Li Jiaqi set up a QC quality inspection department within the company with great fanfare some time ago, to check the quality of quality control, qualification certificates, word-of-mouth and public opinion one by one, and signed contracts with Shanghai Quality Inspection Institute and SGS company as an authoritative third party to carry out quality management and product supervision.

After all, beauty products are used on the face, and any problem would be a disaster.

(two)

But on the other hand, international brands may not be optimistic. Looking at the longer term, have domestic brands really failed?

If even international brands have to lower their airs and engage in price wars in order to barely maintain their suppressive momentum, this is definitely not a good signal for L'Oreal, Estee Lauder, Lancome and others.

Where is the "brand power" you promised? Why do we have to compete on low prices and discounts?

At the same time, a new force is emerging. "Short video content IP + live streaming + private domain traffic" these new channel strategies are becoming a supporting force. New domestic brands are leveraging the power of thousands of Li Jiaqi, Wei Ya, and Luo Yonghao to become popular products. The industry's gameplay and rules are quietly changing.

On the pre-sale skin care product sales list for Double Eleven 2020, domestic skin care products have quietly occupied 20%. Among the nearly 50 beauty and personal care brands in Tmall’s Double Eleven “100 million yuan club”, nearly 40% are emerging domestic brands and transformed traditional brands.

In the same year, Generation Z accounted for more than 30% of online beauty and skin care consumers, and more than 40% of the products on their dressing tables were domestic products.

Domestic cosmetics brands account for about 70% of wow colour. According to the "Cosmetic Consumption Trend Report in Third-tier and Below Cities", the penetration rate of domestic affordable cosmetics in the sinking market exceeds 90%, and the sales of lipsticks and lipsticks have increased by more than 60% year-on-year for two consecutive years.

What’s even more interesting is that domestic beauty products have begun to shift from domestic sales to exports, entering an aggressive expansion mode and frequently flexing their muscles in overseas markets.

In the first three quarters of 2020, 752,500 tons of cosmetics were exported with an export value of US$3.139 billion, a year-on-year increase of 13.2%. The growth of overseas sales on Double Eleven in 2020 was more than 10 times, among which lipstick, eye shadow, and blush were popular categories, and mascara and powder had great development potential. Perfect Diary’s parent company Yatsen E-Commerce announced that it will acquire the international high-end skincare brand Eve Lom.

If one day in the future the situation changes suddenly and the monopoly of international brands in China collapses, they should perhaps recall the day in 2020 when they had to bend down and engage in a price war with new domestic brands. Everything had already shown signs.

When the giant fell, his body was still hot.

We look forward to the day when we can say: Sirs, times have changed.

Author: Li Muyang

Source: Li Muyang