Revelation of JD.com’s 618 marketing promotion!

Whenever "618" comes, consumers find it hard to resist the temptation of discounts and can't stop buying. As consumers become more rational in their shopping, do discounts still have that much influence on purchases? The author of this article will analyze consumers' rational and irrational consumption behaviors from three aspects.

84% of consumers make rational purchases during e-commerce promotions rather than impulsive purchases. If consumers compare discounts rationally, is there any difference between large, concentrated promotions and smaller, dispersed promotions?

Viewpoint: Consumers’ brains may be rational, but their eyes are uncontrollably irrational.

1. Why 618? Irrationality in the eyes of consumers

Consumers need information to make rational decisions. And what information they can "see" is completely beyond the control of reason.

1. The invisible gorilla

Daniel Simons of the University of Illinois conducted the famous "invisible gorilla" experiment. The subjects were required to watch a video and answer the question "How many times did the students wearing black clothes pass the ball to each other in the video?" The subjects basically answered the number of passes correctly, but when asked, "Did you see a gorilla walk by?" most of them answered "No."

With the explosion of information and commodities, user attention has become the most scarce resource. This most scarce resource is usually used unconsciously by users.

The gorilla clearly appears in the user's field of vision, but the user just "can't see it". Consumers are such contradictions. They compare information rationally and carefully, but they cannot decide what information to "see".

In the e-commerce industry, there are various small promotions of 10 yuan off for purchases over 100 yuan, promotions for foreign festivals such as Christmas and Valentine's Day, and promotions for traditional festivals such as the Dragon Boat Festival and Double Ninth Festival...

Compared with the 618 big promotion, the discounts of these small promotions may be similar. The platforms spend a lot of money on discounts, selling points, channels, galas, and building big IPs for big promotions, not to be better at "rational decision-making", but to win the "battle royale of attention". Escape from the fate of the gorilla, adapt to this "irrational" situation, and allow consumers to "see" the information.

2. How to become a visible gorilla

How to make information “see” by users? The common practice is to make the information come more violently.

When I was a child, I heard on TV “I won’t accept any gifts this year, the only gift I will accept is brain XX”. When I grew up, I heard in the elevator “Where are we going to take wedding photos? XX travel photography”. What changes is our media, what remains unchanged is the way information is delivered.

Brighter visuals, repeated advertising slogans, dangerous, sexually suggestive content, from static to dynamic... By increasing the freshness, frequency, intensity, coverage, etc. of the information, the stimulation can be made more intense.

What else?

A better approach is to look beyond the information, that is, the "association" of the information in the consumer's mind. Through external information + internal association, consumers are strongly stimulated.

The UK once held a micro-fiction competition in which only six words were allowed. With such a limited number of words, people were able to imagine a 50,000-word novel. This is the power of "association".

The input information is very small, but because the information stimulates the "association" in the brain, it produces strong stimulation. For consumers, the strongest stimulus is always “All about themselves”.

For example. For Pavlov's dog, all it took was the sound of a bell to cause him to salivate, because a "bell → bone" relationship was established in his brain.

In order to secrete the same weight of saliva (emmm, a bit disgusting), when there is only external information, you may need to place a bone with a diameter of 5cm and a length of 20cm in front of the dog. But if there is an inner association, what is needed is a clear ringtone.

How to get this association? Build your own, or steal someone else's.

First, build your own associations. Brands can solve trust problems, cognitive problems, etc. We often say that we need to build brand assets. Ultimately, it is "brand association" - the connection between the brand and function or emotional appeal.

JD.com’s 618 event originated around 2010. It was originally called “Dark Moon and High Winds, Lao Liu’s Special Event” and its characteristic was the release of products at prices above the reserve price from time to time. Today, 10 years have passed since the 618 promotion. In terms of independently establishing brand associations, continuous large-scale promotions have a natural advantage over small-scale promotions. Every year’s activities continue to strengthen this association and increase brand equity.

Secondly, seize other people’s associations. When the weather is good, you will automatically be in a good mood. Beautiful music can make people relax. Some elements can stimulate the "mindset" in consumers' minds. By using these elements, you can use the "associations" that come with them to make the information more penetrating. Common elements that can stimulate consumers' mindset include: mass, low probability of occurrence, reciprocity, scarcity, authority...

3. Elements that stimulate “mindset”

1) Volkswagen

Mindset: When deciding what is right, consumers will act based on the opinions of others.

Alibaba announced its sales of XXX billion in one hour in the early morning of Double Eleven, and the box office of the movie reached XX million the day after its release. Eunuch Jiang once thought that these were report cards for analysts to see, but in fact they were a reminder to consumers.

So many people are already buying it, why aren't you buying it? The reasons for conformity are three motivations in the minds of consumers: making correct decisions as efficiently as possible, looking at oneself from a positive perspective, and gaining recognition from others.

There are so many promotions and prices are dropping every day. Everyone is stockpiling goods on 618. Buying at this time saves the time of comparison and reduces the probability of anticipated regret. Then people can just post a message on WeChat Moments saying “I’m going to have to eat dirt again this month.”

2) Low probability of occurrence

Thinking pattern: The smaller the probability of a piece of information occurring, the more important it is.

In 1995, IKEA began selling hot dogs for 10 kroner less than the market price (5 kroner at IKEA, 15 kroner on the market). The pricing principle of IKEA’s founder is “heart-moving price” – that is, the price cannot be lower than that of ordinary merchants, but must be so low that people are stunned and have to buy it. Later, IKEA changed this strategy to the "10 hot dog strategy" - that is, creating 10 products like hot dogs with "attractive prices" in IKEA.

Another store that also adopts the “heart-warming price” policy is Costco. Costco's 3-pound roasted chicken costs only $4.99. Costco's CFO said in an interview with CNN: "In order to maintain the price of $4.99, Costco loses $30 to $40 million every year." A seemingly impossible, contrasting, unexpected, and abnormal message is easier to be "seen"

3) Reciprocity

Mindset: After consumers accept goodwill, they feel an obligation to repay.

The first step is to give users discounts.

Step two: Ask for more payment. Free products, discounts, and free samples may seem like a promotion, but they are also a gift. While giving gifts, it stimulates the user's sense of indebtedness.

I am a TV and stereo salesman. Customers can choose warranty services ranging from one to three years when purchasing a machine, but no matter which contract is sold, the rewards I receive are the same. I realize that most people are not willing to buy a three-year warranty, so initially I always persuade them to buy the longest, most expensive contract. This gives me a great opportunity to fall back on a relatively inexpensive one-year extended warranty if the customer refuses my sincere push for a three-year warranty. This approach proved to be very effective because, on average, 70% of my customers purchased the extended warranty, while the rest of the salespeople in the department only sold about 40%.

——Compiled from "Influence"

4) Scarcity

Mindset: Less is more.

Movies are shown for a limited time, and promotions are offered for a limited time, increasing value by creating scarcity.

5) Authoritative mindset

Consumers tend to obey authority. Top-tier stars, 1 billion investment, first-rate production team, big IP, good picture quality, it seems that we are often deceived by authority, but we obey authority again and again.

4. Summary

Consumers' brains may be rational, but their eyes are uncontrollably irrational. How to become a visible gorilla? Stimulate inner associations. This can be done by building associations on your own (brand assets) or by stealing other people’s associations (some elements can automatically trigger consumers’ “mindsets”).

Let’s go back to the question at the beginning of the article: If consumers compare discounts rationally, is there any difference between concentrated large promotions and dispersed small promotions?

The purpose of big promotions is not to outperform “rational decision-making” but to win the “battle royale of attention” through large-scale distribution. On the one hand, large-scale promotions can better maintain "IP assets", and on the other hand, large budgets can better invest in elements that can stimulate "mindsets".

2. Why 618? The principles of creating popularity

The previous part is the 618 revelation from the consumer perspective. What if we think from the distribution side?

As a platform, JD.com’s logistics, warehousing, traffic, etc. are core capabilities provided to merchants. The 618 event, created by the combined efforts of all platforms, is also an empowerment for merchants - promotional IP empowerment. 618 is more like a big IP, just like Mickey Mouse from Disney. As long as businesses print Mickey on their products, they can enjoy the fans' love for Mickey. Similarly, the merchants participating in the 618 event are responsible for providing various discounts, while JD.com is responsible for creating trends and building IP.

1. Limited and large-scale issuance

Limited release and large-scale release are two commonly used marketing and distribution strategies. Under the limited distribution model, with low marketing investment, the product continues to ferment through word of mouth. Under the large-scale distribution model, high marketing investment is used to create the greatest volume in the shortest time, concentrate bombing to generate potential energy, and break through the siege. The development of word of mouth is a slow process. The large-scale distribution model seizes time by purchasing elements that users can "see" with a large budget.

Which model is best, limited release or large-scale release? That depends on whether you want to promote a "product" or create a "trend".

If you want to create a mass hit (movies, music, clothing, new product launches, price cuts), or if the content you want to promote has a time limit, large-scale release will usually be much more effective than limited release (see the Warner vs. NBC case below for details).

In retail, “big sales” and “new product launches” are definitely the things most closely associated with pop culture. 618, Double Eleven, etc. all adopt a large-scale distribution model with the aim of creating mass popularity.

2. Warner vs NBC

Let’s look at an industry governed by the same rules – the film industry. The heads of Warner Bros. and NBC have adopted different strategies.

In 1999, Horn became president of Warner Bros. Horn will select four or five "blockbuster" films that are most likely to be recognized from the 25 films to be produced each year and invest in them, giving them the highest production and marketing budgets.

In 2007, Zucker was promoted to head of NBC. His philosophy is to reduce production costs and reduce risks. He gave up big IPs and turned his attention to smaller IPs with more reasonable prices, reduced the production costs of content, and stopped hiring overpaid first-line stars and production teams...

A few years later, Warner Bros., under Horn's leadership, became the only studio in history to set a box office record of more than $1 billion for 11 consecutive years, and produced blockbusters such as the Harry Potter series and the Hangover series...

NBC fell from first to fourth, and Zucker was called "the most destructive media executive in history." Objectively speaking, the so-called big production, stars, special effects, production team, critics' reviews, etc. will not affect consumers' evaluation of a movie. They just want to hear a good story. At the same time, the "blockbuster model" is also a very risky bet. The production cycle of a movie usually takes several years. In a few years, consumer tastes could change, production teams could water down their products, competitors could get there first, anything is possible.

However, film companies are still enjoying the "blockbuster model" and rely on this model to survive. Take high risks in exchange for high returns. Because "these elements" purchased with big budgets can determine whether users go to the cinema and whether the movie can be "seen". In a very short window period, accumulate volume and create popularity. The general public is swept up in this popular wave and is being "seen".

"Our ultimate goal is to attract audiences to the theaters," Horn said. "We hope that more expensive movies can attract more potential fans. Audiences like stars, which costs money; audiences like special effects, which also costs money; and you have to let the audience know that the film is online, so publicity is absolutely necessary, which of course also costs money. In this way, the number of blockbusters that can be produced in a year is really limited."

——Compiled from "Best Sellers: How to Create a Super IP"

3. Summary

The 618 event, created by the combined efforts of all platforms, is also an empowerment for merchants - promotional IP empowerment.

Which model is best, limited release or large-scale release?

That depends on whether you want to promote a "product" or create a "trend". If you want to create a mass hit (movies, music, clothing, new product launches, price promotions), or if the content you want to promote has a time limit, a large-scale release model will usually be much more effective than a limited release.

Let’s go back to the question at the beginning of the article: If consumers compare discounts rationally, is there any difference between concentrated large promotions and dispersed small promotions? 618, Double Eleven, etc. all adopt a large-scale distribution model with the aim of creating mass popularity.

Conclusion

The e-commerce festival-making mode has entered the second half, from Black Friday, Double Eleven, 618, New Year’s Goods Festival…

The gameplay, promotion rhythm, and pricing strategies of various e-commerce companies have become similar, creating a red ocean of homogeneous competition. What is even more curious when studying the 618 promotion at this time is: "When consumers have returned to rationality, is there any difference between concentrated large promotions and dispersed small promotions?"

First of all, from the consumption side, consumers are irrational.

Secondly, from the distribution side, the large-scale distribution model adopted aims to create mass popularity and provide promotional IP empowerment.

Author: Jiang Taigong

Source: Grandpa Jiang (ID: grandpa_jiang)

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