Selling hot products = building a brand? Don’t call selling goods a brand

This year is truly the year of brands. Everyone should have noticed that the VCs that were previously busy investing in Internet platforms have now turned their heads to research consumer brands.

A few days ago, 36Kr also reported an article titled "Seizing Consumer Brands: China's Last Hot Battlefield for VCs", which said:

"In the past, venture capitalists believed that only Internet platforms could achieve explosive growth and potentially bring a hundredfold return. Traditional consumer brands were lucky to achieve 100 million yuan in revenue within three to five years, which was completely inconsistent with VC thinking... But starting last year, VCs suddenly began to look at brands."

indeed. Since the end of 2018, I started writing about the journey from 0 to 1 of new consumer brands. No one was interested at the beginning, but since the end of last year, VC institutions around me have been adding me and wanting to talk about consumer projects.

But at the same time, I also found that these investors who have just started to look at consumption often find it difficult to break away from the inertia of their past thinking about the Internet, and they tend to look at consumer brands by looking at growth rates.

For example, they often ask me: A certain brand is growing very quickly, is it worth investing in?

I believe that the value of a consumer brand does not lie in its growth rate but in its brand value.

For those who really want to build a brand (not just sell products), pursuing the growth rate of the brand and good-looking numbers is meaningless in the long run, except for looking good for their own face. The value of a brand lies not in its growth and efficiency but in the brand equity it builds.

01. Selling hot items does not equal building a brand

When it comes to increasing growth, it is actually very simple at the moment if you want to find a category with potential to enter and create a brand worth 100 million yuan.

To put it simply, the steps are as follows:

First, find a category with opportunities, identify a blank but fast-growing population and price range, and launch a hit product. The characteristics of a hit product are that it must have visual effects that are suitable for social media, such as being able to spray out rainbows, or changing states... For example, the bubble mask I wrote about will foam when you put it on your face.

Then, invest in a few social media platforms that offer bonuses, do some live broadcasts and offer discounts to quickly increase the volume.

After two months, find a new category and repeat the process again. This is not difficult. I have written about many brands and they all started out this way.

Often at this time, the brand will announce in the industry media how much revenue it has achieved in just a few months and how many rounds of financing it has received. So most people will start to take it seriously.

This is actually a very powerful approach in the logic of the Internet platform. The essence is to create a minimum viable product (MVP), and then quickly find explosive lightning growth. Through the growth hacking method AARRR, you can quickly occupy the market and increase the volume. If retention is done well, the valuation will actually grow rapidly.

It seems that such brands are indeed very imaginative in terms of capital, but if they only do this, it is not branding, it is just selling products.

The value of a consumer brand does not lie in its speed of growth but in its accumulated brand value.

02. What is the difference between building a brand and selling products?

I often point to certain brands and say, this is not a brand, it's just selling products. So my friends often ask me: "Why is this not a brand?"

Selling goods is a discovery of business opportunities. For example, I found that there was a gap in the market for 9-color beauty eyeshadow palettes priced under 100 yuan, and many people recently need good-quality beauty eyeshadow palettes, so I quickly launched such a product to fill this business opportunity, and quickly put it on the market through channels to encourage others to choose to buy my eyeshadow palette. This is selling goods.

Does the ability to sell a lot of goods mean that this brand is worth investing in?

uncertain. If you can sell a large number of goods, it is very likely because you have hit a temporary gap in the market and traffic dividend and entered a window period. However, whether the brand can maintain the growth rate and sell more goods depends on whether it can accumulate barriers during the window period.

What are the barriers to consumer goods? Consumer products do not have network effects like Internet platforms. For example, with Didi, the more users there are, the more car owners there are, and the more car owners there are, the more users there are. The larger the scale, the higher the barriers.

The barrier to entry for consumer goods lies not in scale but in brand.

What is a brand? A brand is a symbol that increases in value over time. For example, in my last video "How did the religious brand Lululemon come to be with a market value exceeding Adidas?" I talked about this: Why is Lululemon's market value so high? Because it has become a high-value symbol, even a cult, a symbol loved by middle-class and educated American women.

This symbol represents quality assurance (perceived value), represents premium rights (I will buy it even if your price is expensive), and represents association (you are in my heart = the way I love you).

The reason why a brand is valuable is that over time, consumers have given associations and meanings to this symbol.

These associations become a kind of promise and guarantee - as long as the product comes from this brand, I can rest assured that it will not disappoint my expectations.

This symbol also helps companies reduce their communication costs, because when consumers see this brand, they will automatically have associations and corresponding emotions, so when this brand launches other products, many people will naturally flock to it, and there is no need for forced sales.

This kind of association and brand value is repetitive, an accumulation of constantly superimposed emotions, which turns into a belief and even a religion with its believers and communities.

It is not the same concept as selling a hit product.

If a brand is a predecessor with a very good reputation and who makes people respect her, then a hit product is Kardashian who attracts attention time and time again.

The threshold for selling goods is very low. Your competitors can do the same thing. They can immediately copy your product and sell it at a price a few yuan lower than yours, then intercept your traffic on all your traffic platforms. If you look for Zhang Yixing, he can look for Wu Yifan. In fact, you are competing with your competitors in terms of ability to discover traffic, diligence speed, and the financial resources behind it.

And the brand is the moat. A brand is a long-term business with continuity, while selling goods is a collection of single businesses with discontinuities.

A brand is like a TV series, and selling products is a collection of individual sketches.

The brand is "Friends", a show that has become more and more popular with each viewing over the ten seasons, implanted in people's minds, and has remained a classic for decades. The product being sold is the hit series from the first season, iPartment, which was a distant dream.

The brand is repetitive. The constant consolidation and strengthening of the same mindset behind the scenes can produce a compound interest effect.

Selling goods is superimposed. In fact, every time we do this, we have to start all over again. There is no synergy between products except for traffic. Brand awareness does not transfer.

03. Only when the brand is valuable can there be an exit path

Many people may say, I also want to build a brand slowly, but the capital is chasing me, the conditions do not allow it, and the investors can’t wait.

In fact, I think building brand value is not just a dream, it can be "very utilitarian".

Let's be more practical. Today we have many entrepreneurs who are engaged in consumer brands. Once they have received financing, they still hope to be acquired or listed, which means they need a so-called "exit path." Otherwise, stocks are just numbers in the account book.

When it comes to exit paths, we can look overseas.

Overseas acquisitions in recent years include Coty's acquisition of Kylie Cosmetics, Shiseido's acquisition of Drunk Elephant, Estee Lauder's acquisition of Too Faced and Becca, and recently I heard that Charlotte Tilbury is being considered for acquisition by the Spanish Puig Group.

Why were these overseas brands acquired? Because they are growing fast?

no. They were acquired because their brands are unique and scarce, and have a unique group of young consumers behind them. These are things that consumer goods groups cannot obtain on their own and hope to improve efficiency by purchasing them.

If your brand today only produces hit products time and time again but has not formed unique brand value and consumer groups, consumer goods groups will not be willing to acquire you.

It can completely find the same supply chain on its own, use a stronger brand to make a similar hot product, and their research and development can be even stronger.

The reason why "new consumer brands" are valuable is that they are "new". Behind them is the brand core that gathers "new consumers". This core requires time to accumulate to create its scarcity, and this scarcity has become a very high value.

04. How to judge the brand value of a company?

So how can we judge the brand value of current products? Some people would say that brand is a very mysterious thing and I can’t measure it?

I give my own three dimensions to judge brand value: breadth of brand awareness, depth of brand association, and height of brand perception. The product of these three is the brand value.

(Thanks to David, Kevin Keller and Uncle Yi for the inspiration)

Breadth of brand awareness: How many people know your brand? How well-known is your brand and how widespread is its penetration? How many people out of 10,000 know you? This can be simply understood as "popularity".

Brand perception level: Among users who know you, how do they perceive your quality? Do they think it is excellent, above average, or average? Do they feel you are on the high or low end of their spectrum of experience, and are they willing to associate you with their own identity? To put it simply, it has a "high-end feel". It can also be negative, which is a "low feeling".

Which brands have negative perceived heights? I won’t mention any names. Of course, don’t judge third- and fourth-tier brands with the eyes of first-tier brands.

Depth of brand association: Among your known users, how deep is their association with your brand? Have they just "heard of your brand" or "know what you do", or can they clearly describe the characteristics of your brand, or can they not only describe the characteristics of your brand but also have some emotional memories? I call this dimension "emotional depth".

The rectangular mention obtained by multiplying these three is the commercial value of the brand.

The perception is high, the brand recognition is wide, and the association depth is deep, such as Apple. I feel that Apple computers are very popular. Everyone knows Apple. And when we look at Apple, we can see that today's Lenovo has a founder and leader, Steve Jobs, who is obsessed with products. Apple is a brand used by designers, so the brand value is great.

Or maybe China's Li Ning has reached a consensus with the whole nation on the association of "national tide", and the perception is high.

Those with low perception height, broad brand awareness, and shallow association depth may be some of the well-known new consumer brands now (I won’t name them). Although everyone knows them, they think they are cheap and discounted products, and there is no other association with this brand except cheapness.

Brands with high perception, low brand awareness, and deep association are niche or vertical high-end brands, such as Mao Geping.

If this is still difficult to understand, we can use the "emotions between people" as an analogy. Being a person and building a brand are actually very similar.

Some people are very famous and have a very good reputation in the circle. Everyone loves her and thinks she is highly respected. That is a person with a loud name, deep associations, and high perception. This is a person with very high personal brand value, for example, I think of Tuo Buhua.

But some people are very famous, but when you think of them you can't think of anything positive, and you don't know them that well. It feels like they are someone you don't want to be friends with, such as the gentleman who stole the official seal.

If you are a consumer brand today, don’t measure yourself by sales volume. Instead, use the above formula to measure your brand. Ask yourself, am I simply seeking the breadth of brand awareness instead of the depth of perception?

If a consumer today falls in love with you in 15 seconds, she can also fall in love with someone else in 15 seconds.

So in the end, who loves our brand? What mental states/associations are left behind? Or will it end up being just a passing mention in the minds of many people? Or has he long been considered the gentleman in the consumer product?

The next step is to dig deeper and see if the remaining associations are unified. Isn’t it unique? Does it consolidate a fixed scenario in everyone’s consumption? If we put this brand on a new product today, can it extend the brand perception? … (I can’t write this anymore, I’ll write it later)

If not, maybe you are just selling products under a different brand name. There's nothing wrong with selling goods. People who can sell good goods are particularly powerful. It's just that that's a different logic. Don't fool yourself into thinking that selling goods is building a brand.

05. This is an era for brand people

We are actually born in a very bad era, but also in a very good era.

1988 was a baby boom, and those born in the 1990s are officially turning 30 this year and becoming the backbone of society. Next, Internet natives born after 1990 will become the main consumer force.

The penetration of online Internet is still growing. By entering into consumption through e-commerce and combining it with the rising social dividends of Douyin, Kuaishou, etc., many people who did not have the opportunity to start their own business in the past now have the opportunity to make money while standing.

In the past, some people have always said that China only has famous brands, not brand names. But I think the biggest opportunity for brands has already arrived with the new Internet environment and the rise of new groups of people.

Whether in beauty and personal care or food and beverages, there are many opportunities to create a new generation of young Chinese brands.

This is an era that belongs to brand people. In the next 5-10 years, new Chinese brands and even new brand groups will be born.

But building a brand is really difficult. We are experiencing the conflict between short-term revenue and long-term brand building all the time. Sales volume is the basis of survival, and brand is the cornerstone of long-term existence. How to balance sales and brand has always been a pain point for marketers and brand people.

I deeply feel the opportunity to build a brand and understand the hardships and difficulties involved, but when the day comes that my China New Brand Group is established, I also hope that women's swordsmanship can become a force behind the rise of new consumer brands and help everyone get rid of anxiety. We need to understand the "art" of new gameplay and traffic effects, but we must not forget the "Tao" of the brand that supports long-term value.

A brand is not about chasing speed, but about shaping a unique brand value. This value often comes from the founder's firm heart. The founder is the stabilizer that can maintain the hearts of the people in the ever-changing times.

Don’t forget, our original intention in creating a brand is to make good products while leaving behind an exciting and lasting spiritual force.

Author: Daojie Doris

Source: Daojie Doris ( doriskerundong )