"Wang Baobao"'s new brand marketing methodology

In April 2020, Black Ant Capital led the investment in Wang Baobao's Series B financing of nearly 100 million yuan. At the end of the same year, it continued to increase its investment in its Series C financing of several hundred million yuan. Yang Cheng, partner of Black Ant Capital, once said: "Healthy food is the focus of Black Ant Capital. Cereals are a relatively universal category of healthy food and have a huge market space in the future. Big trends, new groups, and good categories are the essence of this matter."

It is not unreasonable that this "unconventional food company" that has reinvented cereal is favored by capital. In August 2018, Wang Baobao opened its Tmall flagship store, and in June 2019, it became the number one store in the instant drink category on the Tmall platform. In 2019, it participated in Tmall Double 11 for the first time, and its sales exceeded 10 million yuan in 69 minutes, ranking first in the category, and has since secured the position of the number one online cereal brand. It also drove the sales growth of the cereal category on the Taobao platform in 2019 to more than 50% year-on-year.

Black Ant was deeply impressed by the founding team of the cross-border startup. Before founding Wang Baobao, the experiences of founder Yao Jing and co-founder He Yaxi were quite special: they were from the communications industry, had worked in the beauty e-commerce business, and had been beauty and food bloggers on Weibo... These two "outsiders" in the food industry entered the cereal market, operated a niche category with a new perspective and logic, and delivered a surprising answer.

There are often voices in the outside world that attribute Wang Baobao's rapid growth to its marketing capabilities, and Yao Jing agrees with this. But in her opinion, Wang Baobao’s “this marketing is not that marketing”.

In recent years, with the development of the Internet and mobile Internet, the way brands and users communicate has undergone tremendous changes. Wang Baobao was able to keenly perceive the emergence of a period of change, seize the traffic dividend opportunities brought by the decentralization trend for new brands, develop products around the needs of the target group, and use decentralized traffic to accurately reach target users; what is even more rare is that the company has had a deeper thinking about the retention of the brand in the minds of users from the very beginning, and is committed to establishing consumer perception that the brand is equivalent to the category, so as to achieve higher operational efficiency.

This is a story about cognition and choice.

01. Precision innovation: hitting the pain points and itch points of target users

“Think about consumer value based on first principles and improve products.”

When working as a beauty and food blogger, Yao Jing observed that the living habits of young users began to undergo some obvious changes: there were more and more scenarios of eating alone without cooking, and the market space for convenient fast food had grown significantly; on the other hand, while young women pursued delicious food, they also had higher and higher requirements for its health attributes, and "afraid of getting fat because of eating delicious food" became a common pain point.

Yao Jing and her team selected young women aged 18 to 35 as the core target users, and searched for categories and designed products based on their demands. They finally chose the cereal category as a business entry point, which has a certain universality but does not have a strong brand retention in the minds of domestic consumers.

At that time, the mainstream cereal in the market was Western instant oatmeal represented by Quaker and Nestlé, which was low in fat and high in fiber but had low acceptance among young people; another new type of cereal was puffed cereal represented by Calbee, which had a crispy texture but in recent years has begun to be considered unhealthy due to puffing and additives.

Wang Baobao has done some user research. Young people generally know about cereal and perceive it as healthy, but few young people eat it because it is "not tasty", "old-fashioned, and something old people eat". If there are products that are healthier, more delicious and less "old-fashioned", they will be happy to try and buy them.

Yao Jing realized that there is user demand among young people, but there are no manufacturers or brands to provide better products to meet their needs. This requires some innovation in the product. Wang Baobao uses a low-temperature baking process to ensure that the dietary fiber of the oatmeal is not destroyed while improving the taste. It uses stevioside and oligofructose that are more in line with the health demands of modern people; dried fruits, dried yogurt and other ingredients are added to enrich the taste and appearance of the product.

Philip Kotler, the "father of modern marketing", once said: "It is not enough to meet consumer needs, you have to make them happy." Using Maslow's hierarchy of needs theory to explain, when people's basic needs are met, they will inevitably pursue higher levels. In Yao Jing's view, healthy food is a rigid demand of users and is also the current trend; making healthy food delicious and good-looking, and further satisfying their higher psychological demands - a sense of happiness and satisfaction, is Wang Baobao's original intention in making products.

Yao Jing shared a small detail about a founding team debugging a new product. The dried fruits in traditional mixed oatmeal are usually made into small particles and mixed evenly with the oatmeal, which can roughly ensure that the amount of dried fruit in each spoonful is consistent. But co-founder He Yaxi suggested mixing large pieces of dried fruit into the cereal to increase users' sense of happiness when eating cereal.

Yao Jing, who has an engineering background, tends to have rational product thinking and finds it difficult to understand the abstract sense of happiness. He Yaxi is more emotional. The different sizes of dried fruits do result in inconsistent taste in each spoonful, but "why can't we look forward to the feeling of the next bite?" Subsequent tests and the product's performance in the market also confirmed users' expectation and recognition of an experience that exceeds expectations.

The product attributes of novelty, health, taste and good appearance meet the demands of young female users for food that is "delicious and not fattening". On the other hand, it has also become a kind of "social currency", attracting users to actively share and spread it on the Internet. In 2018, before Wang Baobao made a major effort on Xiaohongshu, a large number of users spontaneously spread the word of mouth, making it appear on Xiaohongshu's annual food rankings.

As Lu Xiuqiong, former CMO of Coca-Cola and senior consumer brand expert, analyzed, "In the Internet+ era, the focus of WOW experience is to seek recognition. The tone is set by what users want and what surprises we can provide that exceed expectations. After the tone is set, the entire supply chain will fine-tune it and the circle will be targeted and exploded."

The combination of large pieces of dried fruits was also one of the reasons why Wang Baobao built his own factory in the beginning. The dried fruits in traditional mixed oatmeal are small in size and can be premixed with the oatmeal and then packaged at one time. However, Wang Baobao's dried fruits are of uneven sizes, and the materials need to be loaded separately, which means the production line needs to be redesigned.

What impressed Yang Cheng, partner of Black Ant Capital, most about Wang Baobao’s founding team was their dedication to the product. “Generally speaking, people with a background in beauty have a stronger understanding of traffic. They have been studying low-temperature baking technology, building their own factories and supply chains from the very beginning. In other words, they have seen the essence of the food industry - making good products.”

At present, Wang Baobao maintains a pace of launching a new product approximately every three months, meeting the needs of different consumers in different scenarios through flavor innovation and the addition of instant cereal series. In terms of flavor innovation, Wang Baobao pioneered the launch of peach oolong, coffee and other flavored cereals, which received a very good response in the market. Black Ant Capital added that these new flavors are the result of Wang Baobao's team observing some consumption characteristics of young consumers in other categories, digging them out and applying them to the cereal category to make innovations. "This highlights Wang Baobao's team's strong user insight ability and their ability to develop products from the perspective of consumer value-added."

02. Saturation attack: attacking a group of people with a high concentration

“The way to acquire new traffic and new customers is to be half a step ahead of market peers.”

With clear target users and sophisticated products, the next key is how to accurately reach target users, stimulate their purchasing desire, and achieve efficient marketing.

With previous experience in the beauty business and as beauty and food bloggers, the founding team is well versed in the ins and outs of Internet content marketing and the “sales power” of KOLs for new brands. Before launching his Tmall flagship store, Wang Baobao launched his Taobao store in May 2018. At that time, the founding team found three KOLs on Weibo to recommend new products. Surprisingly, in May alone, Wang Baobao’s sales reached more than 2 million yuan. For a brand-new brand that has yet to establish trust among its target users, this promotion was undoubtedly a great success. From another perspective, it also verifies the feasibility of Wang Baobao's products and the market potential for flavored cereal categories.

Yao Jing and her team have estimated that on average each user needs to be reached about five times to be considered fully engaged and able to remember the product and brand. Based on the precise target user portrait, Wang Baobao's marketing strategy is to concentrate the target users in the unit population and achieve high-frequency reach of target users through "saturation attack".

In this process, two problems need to be solved. One is to produce appropriate marketing content to attract users to read and leave an impression; the other is to accurately push appropriate content to the target audience.

Content Marketing: Learning from Beauty Marketing Experience

In the early days, in terms of product promotion, Wang Baobao borrowed popular marketing schemes such as "ingredient party" and "beauty tutorial" in the cosmetics industry to communicate with target users: emphasizing the lower calories and higher nutritional properties brought by low-temperature baking technology to highlight the value of the product; on the other hand, using exquisite pictures or videos to show innovative ways of eating the product, such as eating it directly dry, and the combination of "yogurt + Wang Baobao", to complete product marketing while achieving light education for users.

A considerable part of marketing content reaches target users through KOLs’ “planting grass and pulling grass”. With experience in the beauty business and blogging, the founding team has a better "feel" for the effective combination of content and KOLs: the content needs to reflect the selling point and be conducive to dissemination, while not being too hard-selling; and the KOL's personality should also be personalized and authentic, so that fans have a high degree of trust in them and the conversion effect can be good. Therefore, when choosing KOLs to cooperate with, Wang Baobao did not pay too much attention to the number of fans, but instead formulated corresponding cooperation strategies based on their content production capabilities and fan stickiness.

Distribution channels: trials and iterations across multiple platforms

There are many social media platforms in China, and the algorithm logic and user characteristics of each platform are different. This brings many opportunities and challenges to new brands.

In the early days of the company, Wang Baobao's marketing efforts were mainly concentrated on Weibo and Bilibili. There are vertical categories on both platforms, and users form different circles based on their different interests and hobbies. The people covered by some circles such as beauty, food, drink, and fashion are highly consistent with Wang Baobao’s core target users - female users aged 18 to 35.

At the same time, Wang Baobao also closely follows the development trends of other new media platforms and conducts trial iterations. Yao Jing introduced that in the early days of the company's establishment, it had also conducted a trial launch on a platform dominated by female users, but the algorithm logic of the platform was not clear enough at the time, making it difficult to evaluate the effectiveness of the launch. Ultimately, the company temporarily suspended its large-scale launch on the platform.

With the rising marketing trend of platforms such as Douyin, Wang Baobao's key distribution channels have successively increased to include Douyin, Xiaohongshu and other platforms since the second half of 2019. Different platforms have different characteristics, and their content delivery strategies also vary. For example, on Bilibili, it takes a relatively long time to communicate with users, and the content must be exquisite and interesting; on Douyin, the logic is that content finds people, and continuously launching the same type of content can quickly increase the concentration of the segmented population, but the content rhythm must be fast, and there must be several reversals in just 15 seconds to attract users to finish watching.

At present, Wang Baobao’s marketing department is divided into two teams, one is responsible for content production and tone control, and the other is responsible for data and researching the algorithm logic and changes of different platforms. When placing an ad, Wang Baobao will analyze the matching degree between the platform, users and content, and then make corresponding exposure and coverage to achieve refined operations.

In Yang Cheng's view, Wang Baobao's "way of acquiring new traffic and new customers is half a step ahead of its peers in the market" and "this team's unique understanding of new media and new traffic, as well as continuous exploration and iteration in delivery, enable them to continue to find 'traffic depressions' at a lower cost."

03. Three-dimensional marketing - "three-level exposure" pursues the integration of brand and effect

“We have done some misaligned competition with our peers.”

Simply put, there are two main purposes for a company to conduct marketing: one is to increase product sales, and the other is to enhance brand image and recognition, that is, to build brand assets.

In Yao Jing's opinion, many people, including colleagues, pay more attention to effect goals when talking about Internet marketing. Even when the outside world evaluates Wang Baobao's marketing ability, they believe that his investment-output ratio is high, but "in fact, our marketing is all brand-oriented."

Wang Baobao's brand goal is to establish the perception in consumers' minds that "Wang Baobao brand is equivalent to the cereal category." Although as a startup company there is a strong need for sales conversion, Wang Baobao insisted on brand exposure from the very beginning.

Nowadays, more and more players are entering the flavored cereal market. In addition to start-ups, there are also some established food companies. Among this group of players, Wang Baobao undoubtedly has a certain advantage. However, one of the keys is to maintain or even expand the advantage, build strong brand assets, and thereby gain higher recognition and brand premium value.

Since the beginning of 2020, Wang Baobao has further clarified the principles of advertising, and all advertising is based on the three-dimensional marketing logic of "three-level exposure". The so-called "three-level exposure" is to gradually build up the awareness of Wang Baobao in the minds of consumers through the combination of brand advertising and performance advertising, thereby influencing their consumption behavior:

The outermost layer is to use strategies such as brand promotion to let a wide range of consumers know that Wang Baobao makes cereal; the middle layer adds brand positioning to make consumers and target groups further recognize that Wang Baobao makes healthy and delicious cereal products; the inner layer uses promotional, snap-up and other performance advertisements to "push" target users to achieve purchase conversions.

From a brand perspective, Wang Baobao’s three-layer exposure logic corresponds to its entire brand strategy: the outer layer is the brand strategy, which is to establish consumer awareness of the brand as equivalent to the category and build brand awareness; the middle layer is brand positioning, which extracts the differentiated attributes of the product as “healthy and delicious”, and then cultivates consumers’ habit of eating cereal; the innermost layer is the direct conversion effect of marketing.

In the past year, live streaming sales have been in full swing. Yao Jing and her team are aware that live streaming and coupons can bring a very high purchase conversion rate, but it is difficult to cultivate user loyalty or even awareness of the brand. Wang Baobao regards live streaming as a defensive strategy and chooses to cooperate with anchors who can both promote the brand and increase sales.

Since 2020, Wang Baobao has gradually increased the proportion of brand-oriented advertising and tested the waters in multiple traditional advertising channels. Yang Cheng introduced that when many of his peers focused their attention on online channels, Wang Baobao began to place ads in offline, radio and other traditional channels, "engaged in some staggered competition with peers" and achieved good results.

Most brands face the problem of low loyalty among young consumers. In Yao Jing's opinion, brands cannot change the fact that consumer loyalty is low, but they can establish and deepen brand awareness in consumers' minds through three-dimensional exposure, thereby influencing consumer behavior. After data analysis, the company found that Wang Baobao’s mention rate on social media and other platforms was higher than that of other brands. Data from Tmall also shows that more than 80% of users search directly for "Wang Baobao" to enter the store, rather than searching for cereal to find the Wang Baobao store.

Wang Baobao’s main strategic goal in the next period of time will still be to attract new customers. Although it has become the number one in the online cereal category, Yao Jing believes that Wang Baobao is still a startup company, "at this stage, we are still very small."

In her opinion, Wang Baobao’s existence as an “Internet celebrity” brand is valid, but to become a national brand, it still lacks some widespread trust. For this team, continuously increasing the brand's trust among the target population is also the direction they need to continue to work on.

Black Ant Capital believes that to truly become a national brand, Wang Baobao must first have more comprehensive channel reach, so that consumers can feel that it is a trustworthy, youthful and interesting brand in all aspects and at all levels; second, it needs to broaden the breadth of product categories around various scenarios, and use more categories to enable it to have more scenarios and more frequent reach with consumers.

To put it more simply, building channel power is also the only way for emerging Internet brands to grow from 1 to 10, or even to N. In terms of channels, after completing the B round of financing led by Black Ant Capital, Wang Baobao accelerated the channel expansion plan. They have developed a three-phase plan. In the first phase, the company will enter high-end supermarkets in first- and second-tier cities, such as Hema, Ole, Yonghui and other supermarkets with stronger new retail attributes that young people are willing to visit; the second phase will include convenience stores and traditional KA supermarkets; and the third phase will be omni-channel expansion. Currently, Wang Baobao’s channel expansion has entered the second phase, with remarkable results. As of the end of 2020, offline shipments were basically on par with online shipments.

The expansion of offline channels remains at the strategic core of Wang Baobao’s 2021 plan. Yao Jing introduced that last year Wang Baobao achieved the creation of offline channels from scratch. This year, the team will conduct more offline "grass planting" attempts and iterations, including display, promotion, and precise matching of products and channels, in order to improve the efficiency of offline product sales.

In terms of product categories, Wang Baobao plans to launch new product categories this year, and the new product categories will also follow the "original intention of making healthy food." Black Ant Capital agrees with Wang Baobao’s strategy of focusing on the right people and expanding product categories. But whether it is multi-channel or category expansion, Wang Baobao still needs to strengthen the construction of a systematic organizational system first, "This is the most basic capability."

People-oriented, Wang Baobao created from scratch, redefined the cereal category, stimulated the needs of young consumers, and opened up a new consumption track. In this market segment, it also occupies an absolute leading position. What will be the next step of growth? From internet celebrities to brands, from online to omni-channel, from pulse to base, all this batch of new consumer brands are experiencing a critical node of growth. How to bridge the gap and achieve sustainable growth is also the focus of Black Ant Capital's post-investment empowerment. Let us wait and see, and hope that these new brands can successfully complete the leap from 1 to 10, 10 to 100, and even 100 to 1000.

Author: China Europe Business Review

Source: China Europe Business Review