Perfect Diary suffered a huge loss of 2.7 billion. Have you fallen into these misunderstandings about branding?

2020 is a period of key strategic investment for Perfect Diary , including offline layout, product research and development, and brand upgrading. It has acquired Little Autine and international high-end skincare brand Galénic, and invited Zhou Xun, Zak Ye, Luo Yunxi, Zhu Zhengting and other spokespersons to promote the high-end brand.

However, the reason why Perfect Diary suffered such a huge loss this time is mainly because its sales and marketing expenses accounted for too large a proportion. In 2020, Perfect Diary's sales and marketing expenses reached 3.412 billion yuan, a year-on-year increase of 172.74%, accounting for 65.24% of total revenue, seriously consuming the company's profits.

In fact, as the "L'Oreal of China", Perfect Diary completed its listing in the United States last year, but profitability is still difficult, and its marketing expenses have remained high since 2018. In 2018, Yatsen E-Commerce's marketing expenses accounted for 48.7%, 41.3% in 2019, increased to 62.2% in the third quarter of 2020, and reached 65.4% for the whole year of 2020.

Perfect Diary's development model has always been to excessively pursue traffic, rely too much on marketing, acquire customers through large-scale investment, gain advantages through rapid new product launches, and compete with low-priced and low-profit substitute products. This model will easily fall into losses if traffic costs rise and user growth hits a ceiling.

Looking at many Internet celebrity brands in recent years, they all have the problem of being overly obsessed with traffic dividends, which is a very representative misunderstanding. In addition, the development of new brands is prone to encounter other pitfalls. The author briefly summarizes five situations here, hoping to provide a mirror for brand operators.

01. Traffic addiction - one-sided pursuit of traffic

In recent years, China's Internet has experienced several waves of traffic dividends, including official accounts, the rise of mobile e-commerce, live broadcasts, short videos, Xiaohongshu, etc. Some brands have rapidly grown with the help of traffic and completed a gorgeous transformation from 0 to 1 and from 1 to 10.

However, many of these brands have formed a path dependence on this traffic-generating method. After their debut as the center, they still rely on traffic-generating methods such as live streaming, grass-planting, and cross-border cooperation, instead of consolidating their internal strength, strengthening their minds, and converting traffic into loyal users of the brand. Once the traffic dividend is over, traffic will be difficult to transfuse, the brand may lose blood and face a stall in development.

The consumer purchasing process is a complex chain from attention, interest, memory to purchase and sharing. If you just harvest traffic and focus on the short-term attention and interest, then there will be a serious lack of subsequent formation of cognition and memory, conversion and repeat purchase, as well as the formation of user word-of-mouth and loyalty, and this model will inevitably not be sustainable.

Comparing the two new brands Perfect Diary and Huaxizi, it can be seen that Perfect Diary has always relied heavily on low prices, KOLs, cross-border collaborations, and continuous and rapid launch of new products in order to maximize traffic. Despite signing Zhou Xun as its spokesperson, placing crazy elevator advertisements, acquiring international high-end brands and seeking to become a high-end brand, these actions were mainly money-burning, with less emphasis on product research and development itself and brand connotation, and there were also some negative voices about product quality at one point.

The Perfect Diary brand was originally a "substitute" for big brands, and its brand personality was not strong enough. In addition, it relied too much on traffic and burned money. Now its brand tone seems to be becoming more and more mediocre, and it is in danger of becoming a traditional brand. Its losses are also very serious.

On the other hand, Hua Xizi has also been using brand live streaming, product promotion, cross-border cooperation and other traffic-generating methods, but at the same time it has been making progress in brand building, including signing Ju Jingyi and Du Juan, who have the temperament of oriental beauties, and inviting Zhou Shen to launch the theme song of "Hua Xizi". Overall, it has been centered around the core of "Orient", and its brand connotation and personality have always been online. I think it will have more stamina and go further than Perfect Diary.

02. Straight male promotion - forcibly changing consumption habits

Consumers' habits can only be guided and cultivated, and are difficult to change by force. Even if some changes can be made, the cost of educating consumers is extremely high, unless the entire social atmosphere is changing, and you are wealthy and are not afraid to spend money and are willing to do public welfare education for the industry.

Let’s take the example of “how to sell combs to monks”. The sellers did not force the combs on the monks to let them keep their hair and use the combs. Instead, they told them that they could be given as gifts to pilgrims, turning the combs into a medium of emotional expression, conforming to the inherent habits of pilgrims and creating new reasons for purchase.

When Christianity first came to China, missionaries initially used the pure teachings of the Bible to teach believers. However, in China, a secular society that focuses on practical functions and advocates Confucianism, people simply did not buy into this.

So the missionaries changed their strategy. On the one hand, they transformed themselves into quasi-scholars who understood Confucianism, combining Christian doctrines with Confucian connotations, and attracted a group of China's upper-class elites. On the other hand, missionaries told the people that believing in God could cure diseases and disasters and obtain salvation, which attracted a large number of ordinary people to believe in religion.

Therefore, the correct approach is to guide and cultivate new habits based on consumers’ existing life situations. For example, brands such as Cass Milk, Tiandi No. 1, and Wanglaoji focus on replacing and upgrading Chinese people's beverages when they go with meals and have guided new habits; the aromatherapy skin care brand "Zhuben" has extended the occasions for women to remove makeup from makeup to sun protection scenarios.

03. Brand calcium deficiency – DNA deficiency

Branding is like writing an article, it must have a unique central idea, which is the soul of the brand and also determines the brand's personality, tone and direction of advertising slogan.

The reason why many brands have no ideas is that they always feel confused and caught in a dilemma. Various elements are inconsistent, marketing actions have no standards and footholds, and various resources cannot be integrated. It is because they lack the DNA to open up the Ren and Du meridians, so it feels that the brand has no unity.

Some brands seem to have DNA, but they are all general words like health, fashion, nobility, intelligence, etc. There is no difference at all. Such DNA is not deeply extracted and has little significance.

Take the most classic Wanglaoji as an example. The DNA of "not getting angry" is extracted from the common cognition of Chinese consumers. It determines its brand tone - authentic and classic (later auspicious culture was added), determines the slogan - if you are afraid of getting angry, drink Wanglaoji, determines the brand image - the red color and cool ice cube elements related to getting angry, and the hearty and powerful fonts, determines the typical target market - eating hot pot and barbecue, and determines the preferred sales channel - catering channel...

So, has your brand opened up the Ren and Du meridians?

04. Obsessive-compulsive disorder: trying to satisfy everyone

Many brands have a misunderstanding of market size. They think that the more people they capture, the bigger the market will be, and they want to firmly grasp all target groups in their hands. This is wrong.

Indeed, when brands choose a track, they must select products with large potential market size, so that they have prospects. However, when it comes to actual implementation, it is impossible for a brand to cater to all target groups at the same time.

There are three reasons:

First, the needs and tastes of different groups of people are different. If you want to satisfy everyone, then your brand differentiation will have no fulcrum, your brand image will inevitably be mediocre, and you may not even be able to come up with a suitable slogan. If a brand is not sharp, it will not be able to penetrate the strict barriers in consumers’ minds in a market full of competing products.

Second, in the early stages of a brand’s establishment, resources are generally limited. You must find one or two segments of the population that are easiest to penetrate and do the most in-depth research. Don't make your choices too broad, because the approaches to different groups may be completely different. Otherwise, your resources cannot be focused and you won’t be able to go deep into each market.

Third, if you want to capture all the people at the beginning, you will affect too many competitors' jobs and will inevitably make more enemies. If these enemies surround and suppress you from all sides, the brand's survival environment will not be very good.

The correct approach is for the brand to first combine its own advantages, positioning, competitive environment, and consumer demand to find 1-3 key target markets to enter (and these markets must be clearly divided into core, key, and secondary key markets. Of course, other groups of people can be rejected if they want to buy, but there is no need to actively promote them). After the brand is established, it can be extended to other target groups, expanding the consumer group step by step.

05. Dong Shi Xiou Pin - blindly imitating

We Chinese have a strong ability to imitate, which enables us to quickly learn Western technology, upgrade the technology after learning it, and finally surpass others. On the technical level, imitation is undoubtedly very important.

However, in terms of business models, including brand building, blind imitation may cause the brand to die faster. Why is this? This is because what you imitate is just the appearance. The corporate resources, living environment and other factors that support this appearance are a complete system, which you do not have. If you blindly learn its superficial actions, the effect may be the opposite of what you expected. In short, just because others can do it, doesn’t mean you can do it too.

For example, IKEA's model is to provide high-quality and low-priced products and allow customers to assemble them themselves. Okay, then you learn, the products are good and complete, the price is low, and customers assemble them by themselves, but their low prices are based on low costs - including a strong supply chain, streamlined store staff, and rental discounts brought by the strong brand effect, etc.

In order to save costs, IKEA may not open a store in a busy area in the city center, but instead in the suburbs, because it has strong brand awareness and brand marketing capabilities, and consumers do not mind coming here. However, if you don’t have brand awareness, opening a store in the suburbs may not necessarily attract traffic.

Customers can assemble them by themselves, which requires extremely strong standardized and modular production capabilities. In addition, with so many styles, the purchase quantity of each style is inconsistent, which requires flexible production and poses a huge challenge to inventory management. Can you handle all of these?

As a market player, brands have four competitive strategies: leader, challenger, follower and niche player. Among them, being a follower has its specific conditions, and you can't just follow if you want to. Moreover, this kind of following is more about following the development rhythm and marketing actions, not completely blind imitation; even if it is imitation, you must have your own unique value to have a foundation, otherwise how can you surpass it?

Especially when the benchmark brand has established a strong mindset in consumers' brains, if you follow its positioning and imitate its actions, you will always be a younger brother. Because consumers don’t need a second, identical, weaker brand and product.

On the contrary, in this situation, you can follow the law of opposition, go against the other party, and fill the other end of the demand that the competing products cannot cover.

For example, if you sell classics and style, I will sell youth and heart (Jiang Xiaobai); if you focus on international style, I will emphasize Chinese style (Hua Xizi); if you say you taste good, I will say healthy and sugar-free (Yuanqi Forest); if you say you are five-star and luxurious, I will say economical and practical (Hanting, 7 Days Inn); if you say you are a big brand with all categories, I will say I am an expert in the category (too many examples); if you say you are a designer and noble, I will say it is not purely original but cheap, with many styles and fast (fast fashion brand)...

Author: Xin Ye said

Source: Xin Ye said