How to create a new brand from 0 to 1?

The scientific spirit can help us find relative certainty in uncertainty and increase our chances of winning.

For example, in life, we can find patterns, discover truths, and optimize models to put ourselves on a clearer, positive cycle path. The same is true in the professional field. As practitioners in the branding field, we have always believed that branding is not a matter of feeling, but there are fundamental rules behind it.

This article discusses the scientific method of building a brand from 0 to 1.

When I met many bosses of consumer product companies, I found that they all had the following common problems:

1. Competition among e-commerce platforms is too fierce now. We were able to reap the benefits a few years ago, but now we can no longer do so. Profits are declining every year.
2. I have opened dozens of stores, but the profits are mediocre. How can I break the expansion limit?
3. Although we have done a lot of promotion, it is difficult to increase sales due to fierce competition from peers.
4. It feels like I have been selling goods all the time, but when the traffic stops, the sales volume stops.

Behind the growth anxiety, we need to rethink a question: Why some products have always been goods and cannot become brands?

In other words, most products are not actively searched by users. They only have a chance to be seen if they are placed on traffic shelves. Even if they are seen, the probability of being selected is much lower than that of the industry leaders, and the transaction cost is extremely high. This is the cruel reality faced by most products today when commodities are infinitely abundant.

Some people say that this is because there is not enough advertising and not enough channels, but we need to understand a rule: without good brand building, all large-scale investments and expansions are a waste of money. In fact, the more you invest, the faster you die, because you cannot effectively accumulate your own brand recognition assets.

Based on our theoretical summary and practice, this article will talk to you about the essence of creating a brand for a company that has only been selling products, and systematically share how to scientifically build a new brand from 0 to 1.

1. Brand is a cognitive efficiency tool

Coase's transaction cost principle tells us that the reason why enterprises exist is that they reduce social transaction costs . Before the emergence of enterprises, to buy clothes, you had to first go to a small shop to buy fabric, and then find a tailor to design and sew. After the emergence of enterprises, to buy clothes, you only need to go to a clothing store like Uniqlo to pick out a piece.

All the work of the enterprise can be divided into two categories:

1. Reduce internal transaction costs;
2. Reduce external transaction costs.

Among them, internal transaction costs refer to organizational efficiency, namely supply chain management, human resource management, equity incentives, etc., and external transaction costs refer to consumer cognitive efficiency, that is, how to make consumers recognize and choose brands faster.

Brand is not only the core result of a company's long-term operation, but also serves as a cognitive efficiency tool for consumers. Building products, languages, and visual systems is like creating a signal transmission tower. Only when the signal is full can consumers receive brand information clearly and quickly.

But what is the source of the signal from this signal tower? Why do some brands in the same industry have high information transmission efficiency while others have low information transmission efficiency? Everything stems from the understanding of a key business word: category.

2. Brand originates from category differentiation

More than 100 years ago, Darwin used a big tree to describe the continuous differentiation and gradual evolution of species in nature, and called it the "tree of life."

Darwin's hand-drawn diagram of the "Tree of Life"

Species differentiation is through natural selection. Since any species produces more individuals than it can survive, there is a struggle for survival. Then any variation of an organism, no matter how slight, will have a better chance of survival as long as it is beneficial to itself under complex and changing living conditions, and will therefore be selected by nature.

There is no doubt that this great evolution is also happening in the business world. The difference is that in the business world, various categories and species are constantly emerging. For example, the differentiation of cars is a process of continuous horizontal and vertical evolution.

"The driving force of business development is differentiation, which gives birth to new categories. A true brand is the representative of a certain category. Once the category disappears, the brand will also disappear."

This is also the most important point in the entire positioning theory system.

A brand represents a category and its characteristics. Improving the brand’s cognitive efficiency is a process of effectively controlling the category and its core characteristics. For example, at the beginning of its establishment, Mengniu used the name to control the core resources of the milk category "Inner Mongolia Grassland Milk" and closely tied itself to Yili, the leader in the category.

In China today, the speed of category differentiation is faster than ever before. When we open Taobao or walk into offline supermarkets, the commercial competition we see is all brands participating in the competition on behalf of the categories.

Category research has become an indispensable step for companies to build new brands. After 2000, in addition to the "Positioning" system's research on category strategy, some domestic brand experts have also made many theoretical upgrades and supplements based on different perspectives. For example, there are relatively in-depth thinking in works such as "Thirteen Laws of Categories" and "Upgraded Positioning".

Through scientific research and analysis, we can find the relevant rules of a certain category to help us judge issues such as entry timing, category affiliation, and category core resources, thereby providing a favorable source of information for brand building.

Next, let’s take a closer look at how to scientifically build a new brand from 0 to 1. Our model consists of three steps:

1. Determine the optimal mental category

When we mention takeaway, we think of Ele.me; when we mention air conditioners, we think of Gree; when we mention underwear, we think of Ubras.

Take-out, air conditioning, and underwear are all product categories of Ele.me, Gree, and Ubras, and are also the first question we need to answer in brand positioning: "What are you?"

For product brands, there are three principles for determining whether the category is correct:

1) It is the last level category in the customer’s mental decision-making process

The underlying thinking of the category concept is "class thinking". From the perspective of cognitive psychology, we understand a thing following the Gestalt principle, that is, the whole first and then the part: first classify it, just like storing information in existing drawers in the brain, and then open the drawer to find something. If you want to know more, you can read an article I wrote before, "The thinking behind modeling: class thinking"

To understand a category, one must understand its hierarchical structure, and it must be the hierarchical structure in the minds of customers. For example, although Gree is under the large category of "electrical appliances", people will not think of Gree when they think of electrical appliances, because the level closest to the minds of customers is air conditioners. Similarly, when we want to buy "clothes", we won't immediately think of Ubras. The brand name will only appear when we want to buy "underwear".

2) The mental capacity of this category is large or strong enough

The mental capacity depends on the degree of consensus . For example, in the "juice" category, orange juice has a larger mental capacity than apple juice; in the "milk" category, cow's milk has a larger mental capacity than goat's milk; in the "catering" category, pasta has a larger mental capacity than mutton. This is extremely reflected in the historical positioning case of Xibei Youmian Village. Xibei successively positioned itself as a northwestern cuisine and a mutton cooking expert. Due to limited expansion, it was finally changed back to "Youmian Village".

Of course, it does not mean that the larger the mental capacity, the better. Large capacity also means more intense competition, especially in this era of unprecedented abundance of goods. At this time, if we can find a category with a smaller capacity but strong enough mind to enter, it would also be a good choice.

For example, a video call robot brand called "Xiao Yu at Home" would have no competitiveness if it was positioned in the entire video call field. Later, they focused on a very niche but highly demanded scenario: accompanying the elderly, positioning themselves as smart companion robots, and achieved success.

3) This category is in its growth phase

For new brands, it is important to know when to enter the market and customize different strategies for different stages. The key to judging the timing lies in the analysis of category progress. "The Thirteen Laws of Categories" provides us with a category progress tool, which is very practical.

In the early stages of a category launch , there is often no consensus on the category name due to cultural reasons, and the communication cost is very high. Therefore, it is not the best time for new brands to enter. In the 1990s, a brand wanted to popularize Chinese wine and invested 2 billion yuan. Today, this brand can no longer be found.

After passing the critical point, the category enters the start-up period , and a certain consensus begins to form on the category name. At this time, the brand takes the lead in controlling the most core category mental resources and defining the category, and can often gain the upper hand. For example, Wanglaoji was not the first to make herbal tea, but it was the first to find and control the core resource of the category of "preventing heat stroke."

In the early stages of growth , categories have a certain convergence effect, demand is strong, and consumers begin to actively search for category names, accompanied by industry price wars. At this time, you need to provide product optimization solutions, quickly gather category resources through brand tools, and increase communication to establish brand potential, so as to become a high-quality player in the category in everyone's mind. The early stage of category growth is the golden period for brands to enter.

In the later stage of growth , market share converges, competition intensifies, and the brand structure begins to take shape. At this time, the focus of new brands entering is to find unmet demand points. For example, the cake category is already relatively saturated, and the new brand Panda Buzou has entered a new scenario: Panda people deliver cakes to people's homes.

When it comes to the mature stage , the market structure is stable. Generally speaking, the combined market share of the top two companies is greater than 40%. At this time, the chances of new brands entering are small and the evaluated input-output ratio is low. You can look for opportunities for category changes.

In general, it is more advantageous to enter the market by combining one's own advantageous resources during the start-up and growth stages of a category, but caution must be maintained in the early stages of launch and the mature stage.

2. Locate the best category resources

The best category resources provide different solutions for different stages of category development.

1) Seize the common resources of the category during the launch period

The commonalities of categories are also category attributes. All innovative categories must have their own basic attributes and at the same time be endowed with new attributes. For example, the basic attribute of new energy vehicles is “a means of transportation”, and its new attribute is “rechargeable”; the basic attribute of smart phones is “making calls”, and its new attributes are “operating system, self-installed software, and full touch screen”.

In the launch phase of a new category, the category itself is a completely new solution to demand. What industry leaders need to do is to define and represent it and become the brand that most resembles this category.

Uni-President Orange Juice makes the orange juice that looks most like orange juice, Qia Qia makes the sunflower seeds that look most like sunflower seeds, and Mengniu, as a latecomer in the startup phase, makes its brand more like Grassland Milk than Yili, while China's first instant noodle manufacturer, Shanghai Yimin, is unknown to anyone.

2) During the growth stage of a category, find individuality based on commonalities

During the intensified competition phase of a category’s growth stage, in addition to pooling common resources across the category, it is also necessary to find individual characteristics based on gaps in mental needs. When we were working on a whole-house cabinet customization brand case, we drew a mental resource map of the cabinet category. Starting from the essential need of “storing items”, we looked for directions for category upgrades and ultimately discovered new category opportunities.

But in the process of searching for individuality, it is very easy to fall into the differentiation trap, that is, differentiation for the sake of differentiation. For example, there is a steak brand that says its differentiation is "thick steak". The meat in the middle of thick steak is not easy to be cooked, and is therefore more tender. This may work abroad, but it does not conform to the taste perception of Chinese people.

3. Brand signal strategy to amplify the core value of the category

The essence of creating a brand is to gather the core information of the category through representative products, discourse and visual systems, release the core value of the category, maximize the brand's initial signal, and let consumers receive information and choose the brand reflexively. We call this the brand signal strategy.

Brand signals are the carriers of core category information. The stronger the signal, the higher the brand recognition efficiency.

Since it is a signal, it means that some brand signals are strong and some brand signals are weak. We can compare the strength of the signals of the following two herbal tea brands.

Before Wanglaoji, herbal tea brands had always been talking about concepts such as "tradition, health preservation, and wellness". It was not until Wanglaoji controlled the core resource of the category "preventing getting angry" through signal strategy that the herbal tea category truly grew and Wanglaoji became the category leader.

Many business owners, especially some traditional businesses, basically skip the stage of building brand signals. They choose a brand name based on their subjective preferences, make a logo, and then start entering the channel. They neither research product categories nor use brand signal tools. The result is a waste of communication resources and channel resources, and extremely low customer recognition efficiency.

1) Product signal – represents the product

The representative product is the strongest signal of a brand, that is, the super product that best represents the brand positioning. Customers can feel it personally after buying it that this brand is indeed different.

Apple’s representative products are the iPhone and iPod, Ubras’ representative product is the size-free underwear endorsed by Ouyang Nana, and McDonald’s’ representative product is the Big Mac.

A strong representative product can help a brand stand out in category competition and become well-known to the public because it has the most concrete and direct contact with customers. Once we say that everything we have is good, all of them are representative products, and have N product advantages, customers' perception will become blurred.

2) Language Signals – Naming + Slogan + Social Content Architecture

Different from the traditional positioning language system, in order to adapt to the communication environment and the development stage of the new brand, in addition to the brand name + slogan, we will also develop a content structure that adapts to social media. The slogan is a one-way communication language with potential customers, but on social media it is a two-way communication, which is a fundamental difference.

The brand name is always the first asset of the brand. The book "Positioning" even says : "In the era of positioning, the only important decision you can make is to give your product a good name."

A good name doesn't necessarily guarantee success, but a bad name will definitely make it difficult to succeed. The first name of Coca-Cola when it came to China was “Tadpole Gnawing Wax”. Can you imagine that a brand with this name would be successful? The names mentioned above, such as Qia Qia and Mengniu, have made great contributions to the brand's gathering of core resources in product categories and its ultimate success.

A good name should not only be easy to remember and spread, but more importantly, it should have category associations . At first glance, one can roughly guess what the brand is or what characteristics it has, or at least not the opposite.

One case is South Beauty, which has now gone bankrupt. Many people, including me, once thought that it was Jiangsu and Zhejiang cuisine, but it is actually Sichuan cuisine. This undoubtedly makes many people who plan to go to the restaurant to eat Jiangsu and Zhejiang cuisine feel that they have come to the wrong place, while those who want to eat Sichuan cuisine automatically ignore it.

3) Visual signals – logo, IP

Visual signals are another super weapon for gathering category resources. Their fundamental purpose is to enhance brand recognition efficiency, attract customers' attention, and form long-term memory. The most important means of creating visual signals is symbolization.

Symbolization is to find cultural archetypes based on category culture. Cultural archetypes are things that most people recognize and are familiar with, such as high-quality letters, numbers, animals, etc., which can awaken the power at the physiological level.

Someone put the McDonald's and KFC logos together to measure their recognition efficiency. The result proved that McDonald's M has a higher recognition efficiency because it can be seen from 3 kilometers away, while KFC can only be seen from 1.5 kilometers away.

Of course, sound, smell, etc. can also be used as brand signals, but the above three categories are currently the most widely applicable. We will analyze them specifically for each project.

So far, the whole process of building a new brand has been basically outlined. The perspective of category positioning + signal strategy is not only a necessary perspective for entrepreneurs, but also can be used as a perspective for investors. Whether a project is good or not depends on how big and strong the mental capacity occupied by the category positioning is, and whether the brand has the ability to gather a large enough and strong enough mind.

Brand marketing theory in China is still in its early stages of growth with a hundred schools of thought but a mixture of good and bad. In the past, we have been learning from foreign methods, but we found that many of them were not well accepted in the Chinese market. The most important thing in this process is that we need to see the essence of things in business, summarize the laws and do things accordingly, rather than being led by traffic and various concepts.

In the next 10 years, my most important job will be to carry out brand practice while academicizing the results. This is something worth investing in.

Author: Lemon

Source: Lemon? (ID: bzcopy)