Luckin Coffee brand promotion strategy!

In April 2019, Luckin Coffee launched four types of Xiaolu Tea in its stores. Three months later, the official promotion of "Xiaolu Tea" invited the young and handsome "Liu Haoran" as the spokesperson for Luckin's brand "Xiaolu Tea" . At the same time, a press conference was held. In less than two months, it started cross-border cooperation and collaborated with the well-known folk band "Mr. Lu Band" to create an exclusive song "A Letter to Miss Lu" . There is a most touching love word in the lyrics. I remember it was "Drink a cup of Xiaolu Tea and talk about your heart."

From the eye-catching color "blue" to the diffraction of "Little Deer" in the name of "Xiao Lu Tea", to the two major IPs, the Deer IP + celebrity spokesperson "Liu Haoran" plus the newly signed spokesperson "Xiao Zhan" a few days ago .

This kind of reverse operation during the market downturn, when the entire catering franchise and direct investment promotion are difficult to do, the industry has reduced its dimension to attack the vertical field, coupled with the pursuit of capital. Obviously, it doesn’t matter what kind of tea is sold (of course I believe Xiaolu Tea will do better). This kind of high-profile and bold operation , from Shenzhou Rent-A-Car to Luckin Coffee, to Xiaolu Tea, I believe that only Luckin Coffee’s team dares to operate and play like this.

Today, the editor has analyzed Luckin Coffee’s and Xiao Lu Tea’s early market strategies and basic branding models , and shared them here. I also hope to give some side thoughts to friends who are doing branding and marketing, and hope it will be helpful.

1

- "Build the VI system and store SI system first" -

Luckin Coffee:

The visual configuration is placed on "Shenzhou Car Rental", "Ruixin" or "Xiaolu Tea". The operation team personally feels that it is placed first, because this is the place closest to the user. It is not difficult to see that this operation method is also used by "Luckin Coffee" . When the plate was just started, the VI system and the visual store SI system were first equipped, which can be seen from the store form in Wangjing.

In terms of customer acquisition during the trial period, we adopted WeChat’s LBS advertising + store coupon subsidies and WeChat’s fission mechanism “group buying” . The difference in the gameplay of “group buying” is “I pay the bill, and invite friends to give you a cup” . In fact, on the one hand it is a subsidy, and on the other hand “the price of a single cup is slightly higher”, and the price of two cups together is estimated to be about one-third different.

By taking advantage of the fact that users are getting a bargain and offering a free gift when they buy something, the company has brought about explosive growth. On the other hand, the cost of acquiring customers is very low. The cost of acquiring customers is basically one-third of the cost of subsidies to bring in a new user. It is just another way of expressing it.

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Fawn Tea:

As mentioned at the beginning, before Xiaolu Tea operated independently, Luckin Coffee had already been testing the waters for "tea" drinks. Previously, Xiaolu Tea launched four test products for sale in stores in Guangzhou and Beijing. The trial results were good, and in July, it began to expand to other cities, from "Luckin Coffee big brand" to "Xiaolu Tea category" to "independent split."

After the split of Xiaolu Tea, the "single category to brand" only has part of the C-end traffic , and all this traffic is deposited on the "Luckin Coffee" brand . From a strategic level, we can see that the official announcement is to sink and split into TOB business, using the direct sales + franchising method, so in terms of customer acquisition, it has shifted from toc to tob.

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Xiaolu's first dynamic market strategy after the split followed Luckin's old routine, positioning the VI system and store SI system, and signing a new spokesperson "Xiao Zhan". After that, it started to build the brand first. In the sluggish market, it was difficult for each franchise to do business. "Xiao Lu Tea" occupied a market position and mind position through exposure and invited the media and some related people to participate. After their participation, it received overwhelming exposure and came out with franchise policies, which saved a lot of money on continuous advertising and "played a big role" .

It will definitely attract the attention of people in the department and there will be many potential customers. Just imagine how much does “a celebrity endorsement + a press conference + a series of media exposure” cost? Assuming you take the franchising route, these companies can basically take care of the initial store site selection + training + operation SOP. In the early stages, since "Xiao Lu Tea" attaches so much importance to its brand, it will also put extra effort into site selection and operation of the first few stores.

If we follow Luckin's strategy, after the first store is opened, with "various fancy marketing in the store" + "WeChat LBS peripheral placement", and if we also have "celebrity store visits" and "KOL influencer exposure", and if the post-operation is strong, and if we add "seed user community operation" membership system and all these other methods, then even if the business is bad, how bad can it be? However, if a single store is profitable, further verification may be needed.

2

- 'Marketing strategy' -

Assuming that Luckin Coffee follows its old market strategy , if the location of the first store is OK, the operation process is OK, and the marketing activities are OK, will "Xiao Lu Tea" also have community advertisements "all over the mountains"? Zhiyuan believes that this is not necessarily the case, because Luckin Coffee is doing business with C-end users. However, "Xiao Lu Tea" is a tob business, and this aspect is worth thinking about.

Zhiyuan has experience in joining the direct sales system. Through the accumulation of experience, Zhiyuan believes that "Xiao Lu Tea" should adopt a single-point market penetration strategy (of course, everything I said was wrong) .

After running the first store well and making it a success through marketing activities or word of mouth, it will be more stable to open it to franchise around the entire provincial capital or city . However, if the investor requires "market acceleration" , I think "Xiao Lu Tea" may "expand rapidly" . In that case, there should be no problem in expanding the scale in the short term, but more effort may be needed in store management in the later stage.

In terms of the market, the current customer acquisition method of "Xiao Lu Tea" that we can see is still the more traditional "Baidu bidding". However, compared with the franchise products of other companies in the market, it can be seen from the report of 36Kr that, compared with the franchise of COCO tea beverage, after comprehensive consideration of various expenses, the total cost of joining a store is 100,000 to 150,000 yuan, the deposit is 50,000 yuan, and the equipment procurement cost (coffee machine and milk tea equipment) is about 150,000 yuan. These costs are as high as 300,000 yuan, not including rent, store clerk company, water and electricity bills and other operating costs.

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Luckin Coffee’s customer service gave a payback period of 18 months, but how long it actually takes still needs to be verified. It is rumored in the market that COCO’s profit period is 3 months.

Coffee machines and milk tea equipment are both fixed assets. The more products are sold, the lower the investment is, which is like a scale effect. The rent and personnel costs in lower-tier cities may be lower. Compared with "Ruixin" in first-tier cities, certain costs may be saved. Under the influence of comprehensive factors, if "Xiao Lu Tea" can maintain sufficient "explosive sales" and continue to spread fixed costs, it may have the opportunity to change market pricing.

What is worth our deep consideration about these relevant data is the issue of ROI . Perhaps "Xiao Lu Tea" is just a "hot-selling chess piece" of "Luckin Coffee", a strategic product that may not necessarily bring higher profits, so there is no need to think too much about it.

Without discussing the core business issues mentioned above, from the perspective of overall market strategy, Xiaolu Tea’s “brand” and “market” approaches are worth learning from and drawing lessons from.

3

- "Public relations communication techniques" -

This should be considered one of the core communication methods of Luckin Coffee. When there is a big event, hold a meeting first . In fact, the communication effect of holding a press conference is far greater than the effect of PR writing a lot of manuscripts and issuing articles with the help of third parties, because the press conference is visualized. Pure PR manuscripts can only be theories + posters, without visual impact, and the press conference is different . There are on-site photos and videos for exposure and communication, and visualization can bring more impact.

Also, imagine the budget for a press conference. Zhiyuan thinks that a cost-effective one can be held within 300,000 yuan, including lighting, sound, stage design, host, etc.

Secondly, you can invite many KOLs and media teachers in vertical fields to the scene. These media teachers and KOLs have their own private traffic, are all big Vs, and cover a wider range of people. Look at the mobile phone industry, Xiaomi, Huawei, and iPhone, they all use press conferences for communication, because in addition to exposure, on the one hand, the brand can maintain media relations and leverage the power for communication , and only needs to give the media teachers some relevant remuneration.

The format of a press conference can also give competitors a sense of "suppression" and "occupying a position". A press conference may not bring much growth or GMV, but it can bring an invisible pressure to competitors in the same industry or vertical fields.

Final Thoughts

“Brand strategy and market approach complement each other”

Of course, the above viewpoints can be used as a reference for brand strategy and market promotion. Projects with sufficient capital support can also have such a great driving force. For pure business and entrepreneurial projects, we still have to think about "survival". I hope to bring you some independent thinking from the brand perspective.

Author: Wang Zhiyuan

Source: Wang Zhiyuan