Yuanqi Forest and Perfect Diary’s brand growth strategies

The cost of traffic is always the lowest at the moment.

Yuanqi Forest

Brands do not need to work hard to guide consumers' objective needs, because needs exist objectively.

• Emotions are the ignition point of needs
• Interest is the search for needs
• Purchasing is a choice of demand
• Fear is the shortest path to action

In the field of marketing psychology, there is a concept that users can only remember seven brands in a category. In the current era of media information explosion, products are not competitors, but the competition for attention itself is. Attention first comes from the demand for categories, followed by the presentation of media + traffic + content, and then the choice of brand. That is, demand - search - interest - comparison - selection - purchase - evaluation - sharing - repeat purchase.

Only in an industry where others are doing well will you have the opportunity to do better. In an industry where others are not doing well, you have no reason to do well. The form is more important than the person. The core of business decision-making is all in after selection, rather than the choice after all in. Don’t forget the basic probability for anything. The probability of an event happening is equal to = basic probability * the probability of the event itself. Category is the foundation and ceiling of business. In a declining industry, you cannot escape. The basic foundation of the category largely determines the probability of success or failure.

• Category development trend: Big water means big fish, shallow pond means more turtles
• Breakthrough in industry competition: Dare to be the last in the world
• Consumer demand insights: latecomers come first, all in on single products
• Product differentiation: 0 sugar, 0 calories, low fat
• Leverage traffic to reap the benefits: Xiaohongshu + Internet celebrities, online + convenience stores

Discover first, then invent. Objectively speaking, anything you can think of has already been thought of or even done by someone in this world. The world has never been and will never be able to achieve the so-called "flat state". The successful businessmen compete on who can be the first to exploit the information gap to gain benefits.

In Yuanqi Forest’s products, you can almost find the shadow of its products in another business society. Whether it is burning tea, sugar-free sparkling water, milk tea, or electrolyte water, the success that has been verified in a market after daring to be the best in the world is often more likely to succeed, or has a greater probability of success.

Sugar-free tea has long had a very high penetration rate among Japanese consumers; Yuanqi Forest Beihai Ranch Yogurt corresponds to the American Greek yogurt brand CHOBANI. CHOBANI’s sales exceeded 1 billion US dollars in 5 years; Alien Energy Drink competes with Monster, and Monster challenges Red Bull’s absolute leading position and has become the most dazzling company in the US food and beverage industry since the 21st century.

Latecomers but early adopters: insights into local consumer demand

• In 2017, the light functional tea drink "Rancha" was launched to compete with the tea drinks of Japan's Ito En and Suntory.
• In 2018, the sugar-free sparkling water "Yuanqi Forest" was launched, Perrier + San Pellegrino + O-Cola
• In 2019, the "milk tea" with "0 sucrose", "0 preservatives" and "low fat" is positioned to compete with Japanese "milk tea"
• 2020 pushes energy drink "Alien Electrolyte Water" to compete with Monster

In an industry with many strong competitors, it is important for new entrants to focus on a relatively small niche, meet the needs of the niche, actively differentiate large categories, establish themselves as experts or leaders, and become the first choice in the subdivided category. At this stage, the new demands brought by new categories are often more attractive than brands. Category value is the biggest differentiation of new brands and the most efficient expression of communication between new brands and consumers.

• Organizational inertia: The hardest thing for an elephant is to turn around; big brands often have no time to take care of small markets.
• Consumers have existing brand awareness: The original brand awareness cannot make traditional brands both traditional and innovative
• It is important to note that you should choose a category segment that represents a trend, not a popular one.

Eliminating the tip products, focusing on 0 sugar

My favorite is the Kamagra flavored sparkling water, which has 0 sugar and is guilt-free to drink - this is how netizens commented on Yuanqi Forest.

In 2017, Yuanqi Forest achieved success by using burning tea as a breakthrough point and sugar-free + sparkling water. The demand for delicious, non-fat and healthy products is driving the growth of new product categories. Products are the basis of marketing. If the products are not good (whether the products truly meet the needs), no matter how good the marketing is, it will be short-lived.

Yuanqi Forest has led Chinese beverages into the 6 yuan era. Compared with brands such as Coca-Cola, Red Bull, and Uni-President, it is more particular about raw materials. For example, milk tea uses milk powder instead of cheaper non-dairy creamer (commonly known as creamer) . Tang Binsen said: This is the only beverage in the Chinese market where the "sugar water" in the bottle is more expensive than the bottle.

5-6 yuan a bottle of soda and tea (Yuanqi Forest, Burning Tea)

Energy drinks for 7-8 yuan (alien)

10 yuan a bottle of milk tea (milk tea)

What kind of packaging is more likely to attract attention? The most eye-catching packaging factor in the minds of consumers is: the packaging product name is novel (63%) . Among them, 89% of people pay attention to the production date/shelf life, 76% pay attention to health/nutrition-related claims, and 73% pay attention to the nutritional ingredient list. Let’s take a look at Yuanqi Forest: “0 sugar, 0 calories, low fat, 0 trans fatty acids” the reason is self-evident.

Xiaohongshu + Internet celebrities promoting products

Traditional brands have three weapons: media advertising, celebrity endorsements, and depth of online channels. However, Yuanqi Forest did the exact opposite. It avoided the fierce battlefield of communication advertising in the media, and chose online media + influencers such as Xiaohongshu to bring products. Through its investment in new media, Xiaohongshu delivered a satisfactory market answer in the early stage of going viral: in 2019, online transaction volume accounted for 40% of total sales. On Double Eleven 2019, Yuanqi Forest ranked second in sales on the entire network, beating Coca-Cola and Pepsi.

There are 50,000 articles promoting Yuanqi Forest on Xiaohongshu, and the number of fans of its flagship store has reached over 3.3 million; the number of fans of Yuanqi Forest’s flagship store on Taobao’s official website has reached 3.35 million, surpassing Nongfu Spring’s 1.05 million, Master Kong Beverage Flagship Store’s 471,000 and Coca-Cola’s 722,000.

• During the 6.18 period in 2019, Tmall sold 2.26 million bottles of beverages.
• In 2019, the total sales volume of the entire network reached 3.23 million bottles, and the total sales revenue exceeded 15 million yuan.
• In May 2020, Yuanqi Forest's monthly sales reached 260 million yuan, exceeding the full-year sales in 2018.
• In the first five months of 2020, a total of 190 million bottles were sold, with total sales reaching 660 million yuan.
• In 2020, the company achieved sales of nearly 3 billion yuan

Convenience stores sink into the market, reaping the potential

Yuanqi Forest seized the "opportunity" of channel change and effectively connected with consumers through two "emerging channels": chain convenience stores and e-commerce platforms. ”

• In 2019, e-commerce platforms accounted for only 3.4% of China’s beverage industry sales channels. Offline channels accounted for 96.6%
• 7-Eleven data shows that consumers aged 20 to 40 account for 88% of the convenience store consumer population.
• There are currently about 6.8 million mom-and-pop stores in China, with 800-1,500 SKUs and 2-3 brands in each product category.

In the vast Chinese market, mom-and-pop stores, grocery stores, retail stores, restaurants, and tobacco and alcohol shops still occupy a large share. Build a brand in first- and second-tier cities and collect profits in third-, fourth- and fifth-tier cities. Build a brand in KA stores and make money in mom-and-pop stores, grocery stores, and tobacco and alcohol shops - this is the eternal logic of the beverage industry.

Perfect Diary

Market introduction stage: large categories, small market, high appearance

• Major category: cosmetics. In 2019, the growth rate of total retail sales of consumer goods in China ranked second, and the industry ceiling is high.
• Small track: Skin care VS makeup. The technical threshold of skin care is high, the user conversion cost is high, and the brand competition is fierce (Estee Lauder, Lancome, etc.) . Foreign big brands are not focused enough and domestic brands do not have an expert image.
• High appearance: Want customers to exclaim "Wow!" at this moment. 'If you want to attract customers and make them stop and stay, you must rely on eye-catching packaging. Lipstick and eye shadow are particularly suitable for presenting product features through beautiful pictures and short texts.
• New volume: From 2017 to the present, the scale of China's beauty market has increased from 358.1 billion yuan to nearly 453 billion yuan, with an annual growth rate of about 7%. From 2018 to 2019, the transaction amount of skin care products on Taobao and Tmall increased by only 33%, while the growth of cosmetics reached 40%.

Product promotion + brand: all in hot products

When Perfect Diary was first launched in 2017, it did not adopt an omni-channel, multi-media approach to lay out its content, but instead put all its resources into Xiaohongshu. Pyramid-style advertising layout: including top and mid-level influencers, as well as large-scale advertising by passers-by and amateurs (top influencers endorse products, mid-level influencers promote products on a large scale, and passers-by and amateurs serve as customer testimonials) . The lower the frequency of delivery, the larger the budget. Taking Double 11 and 618 as opportunities, concentrate all firepower to attack one city gate.

At most, I received 10 advertisements in a month, 4 of which were from Perfect Diary. "Working with Perfect Diary is quick and hassle-free. They pay me directly without saying anything, which is very worry-free." - said a blogger on Xiaohongshu

• Mainly divided into celebrities (certified, such as Zhu Zhengting)
• Well-known KOL (with V certification, such as Li Jiaqi)
• Top influencers (number of fans > 500,000)
• Waist Expert (50,000 < Number of Fans < 500,000)
• Primary Talent (5,000 < Number of Fans < 50,000)
• Amateur (300<Number of fans<5,000)
• Passersby (less than 300 followers)

• In July 2017, Perfect Diary was listed on Xiaohongshu
• Starting from February 2018, Perfect Diary has arranged a large number of related grass-planting notes on Xiaohongshu to cooperate with the new cycle and important e-commerce nodes such as the Double 11 promotion and Double 12 promotion.
• Perfect Diary's sales in June 2018 approached 50 million
• During the 2018 Double 11 Shopping Festival, Perfect Diary became the top domestic beauty brand on Tmall. During this period, the search exposure related to the brand on Xiaohongshu increased 12 times.
• During Tmall’s Double Eleven in 2020, Perfect Diary achieved sales of 600 million, becoming the number one in the beauty category;
• In 2021, the official account of "Perfect Diary" on Xiaohongshu had about 1.92 million followers, over 3.68 million likes and collections, nearly 310,000 related notes, and had cooperated with nearly 15,000 KOCs.

It was precisely in 2018 and 2019 that Perfect Diary's marketing and promotion expenses accounted for 48.7% and 41.3% of its net income respectively. Among them, more than 15,000 beauty KOLs spread across platforms such as Xiaohongshu, Douyin, and Bilibili have become one of the largest expenditures among Perfect Diary's billions of marketing expenses.

Since 2018, brands such as MAC, Lancome, and YSL have successively launched Douyin and Xiaohongshu, and YSL has even started live streaming to sell products. According to data from CICC Research Institute, after focusing on new traffic channels such as Xiaohongshu, Douyin, and live streaming and starting to try to cooperate with grassroots KOLs, Shiseido, L'Oreal, and Estee Lauder all increased their sales by more than 60% in 2020, while Perfect Diary's sales growth was only 22% during the same period.

——The wild period of a new brand mostly benefits from the traffic dividend. Today, more than 70% of Xiaohongshu's users are born after 1990, and more than 50% of its users are born after 1995. Throughout 2020, they posted nearly 300 million notes on Xiaohongshu and generated 100 million searches every day. On Xiaohongshu in 2021, the cost of promoting and recommending through KOLs and KOCs has also risen sharply, and recommendations in the beauty category have increased by 13-18% compared to 2020.

Brand-effect operation stage: public domain + private domain, brand-effect integration

First build the shared domain and then the private domain. Without investing in the shared domain, there will be no private domain, and the shared domain will have zero product effect. Through large-scale deployment and wide-ranging seeding of KOL/C on Xiaohongshu, traffic-type purchasing users are brought in. After the transaction, traffic is accumulated through traffic positions (official accounts: Perfect Diary, Perfect Diary Full Alliance, Perfect Diary Experience Store, mini programs: Official Flagship Store, Perfect Diary Heart Selection, Perfect Diary Home) , thus forming a 48 million traffic pool belonging to Perfect Diary. Convert, repurchase and share traffic fans through discounts, free gifts, trial packages, etc.

At the same time, Perfect Diary has also established hundreds of (Xiao Wanzi) personal accounts. These WeChat customer accounts use the Perfect Diary brand image as IP and are operated by real people. While completing the service, users are stratified, penetrated, repurchased and converted.

Brand promotion stage: advertising + public relations, cross-border promotion

For consumer goods, brand is particularly important. Whether your brand has been formed or not, whether it is high-end or mid-to-low-end in the perception of consumers, consumers' demands and price acceptance are completely different. For a hot-selling product, the significance of going viral is to be "seen", and the value of the brand lies in the mental traffic pool. Otherwise, "buying traffic and selling volume" will eventually become a zero-sum game.

According to the changes in the word cloud of Perfect Diary's official WeChat public account over the years, when Perfect Diary was first established in 2018, it was in the stage of creating explosive products, highlighting cost-effectiveness, and gradually transitioning to product words. In 2021, Perfect Diary's "exquisite", "fashionable", "high-end", "stunning", "innovative" and other emotional product adjectives appeared in the word cloud, while the word "cost-effectiveness" was still there, but the proportion began to shrink.

The proportion of KOLs at the top, shoulders, waist and tail of Perfect Diary

First half of 2020 2:4:22:75

Second half of 2020 2:2:20:78

First half of 2021 3:3:28:68

Brand start-up stage: mass coverage of mid- and low-end KOLs to promote brand penetration and popularity

Brand growth stage: Top KOLs help to improve brand favorability and elevate brand status

Collaborate with the Discovery Channel to launch the Explorer 12-color eyeshadow palette and collaborate with Li Jiaqi's dog Never to launch a cute pet palette, or choose popular IPs with high audience recognition such as Oreo to achieve cross-border collaboration. In the first half of 2020, Perfect Diary's brand voice was 15.61% among men, and 84.39% among women; in the first half of 2021, Perfect Diary's brand voice was 20% among men, and 80% among women.

——Perfect Diary is working hard to break through the circle

It is important to remind you that brand building is a long-term battle - advance planning and accumulation of strength over time, otherwise there will be a backlash effect of imbalance between brand and effect. The cost of traffic is always the lowest at the moment. Especially for new consumer brands, brand is the bottleneck of sales growth. 300 million yuan in sales is a hurdle for new brands, breaking through 500 million yuan is the key, and when the sales reach 1 billion yuan, it is too late to go back and plan and build the brand.

Author: New Consumer Brand Research Society

Source: New Consumer Brand Research Institute