Perfect Diary’s Methodology for Explosive Products

Brands such as Perfect Diary , Hua Xizi, and Cha Yan Yue Se have entered the public eye through mobile Internet media. They seem to have no obvious brand positioning, but have also become phenomenal brands. The author does not agree with the view that "positioning theory is invalid". In this article, the author will analyze Perfect Diary to express his own views. Come and read it!

Some people believe that the positioning theory, which was born in 1969, has become invalid in the era of mobile Internet.

The reason is that the company's service positioning services, such as Guazi Used Cars, Robam High-Suction Range Hoods, Haval Motors, etc., did not enter the public eye from social media in the mobile Internet era (Xiaohongshu, Douyin, Bilibili and subscription accounts). They all use elevator ads and TV ads to bombard the brand, using a simple and crude way to spread their brand propositions.

Brands like Perfect Diary, Huaxizi, Sandunban, Zhong Xue Gao and Cha Yan Yue Se all entered the public eye through mobile Internet media. They don't seem to have a clear brand positioning, but they have also become phenomenal brands. So some people came to the conclusion that positioning theory has become invalid.

We don't agree.

First of all, the practice of positioning companies cannot be equal to the positioning theory itself. The fact that positioning companies do not serve new economic brands shows, on the one hand, that their theories are lagging behind the times, and on the other hand, that brand positioning has become the instinct of the new generation of entrepreneurs, and their knowledge reserves are more sufficient.

Secondly, the practice of the new generation of entrepreneurs is also part of the sinicization of positioning theory, or even a more important part. Brands such as Perfect Diary, Santonban, Tai Er Pickled Fish and Heytea are all brands that have achieved success through social media and have clear brand positioning.

In fact, theory will not lag behind the times, only the people who use the theory will lag behind.

1. Perfect Diary’s Methodology for Explosive Products

There are 6 steps in the methodology of creating popular online celebrity products: new technology, new brand, new category, new product item, new competitor and new scenario.

Perfect Diary has all the other four elements except the lack of new technology. In addition, this element she lacks is likely to become a bottleneck in development and a potential public relations crisis.

1. New Brand

Perfect Diary is a new brand in the domestic beauty and cosmetics category. This is the "newbie luck" of new brands. The brand names of new forces are all new, which is beneficial in influencing the cognition of potential customers.

If an already well-known brand enters the domestic beauty category, it will suffer a loss. For example, if the brand “Dabao” makes cosmetics, the brand feeling will be very strange.

2. New categories

Domestic beauty products. And Perfect Diary has a very clear brand positioning:

To build a new era, L'Oréal is committed to exploring European and American fashion trends. At the same time, based on the facial and skin characteristics of Asian women, it develops a series of "high-quality, finely designed" European and American fashion makeup products to realize young women's desire to "enjoy color, enjoy life."

The key point is: explore European and American fashion trends and develop cosmetics products based on the characteristics of Asian women. In simple terms, it is a beauty brand that is more suitable for Asian women.

This is a category that European and American brands cannot achieve, and even if they can actually do it, potential customers don't think they can do it. Just like we don’t believe that Nestlé and Abbott can produce milk powder that is more suitable for Chinese babies.

I think that at the right time, Perfect Diary will use this effective tactic to launch an offensive against L'Oreal and become the first choice of high-end beauty brands for Chinese women.

Of course, some people may think that Huaxizi and Juduo are also domestic beauty brands, and there is nothing special about Perfect Diary’s product category selection.

There are at least two points to understand the difference between them: Perfect Diary clearly regards European and American brands such as L'Oreal as its competitors , and secondly, Perfect Diary has invested enough ammunition in marketing expenses. The cognitive gap created by advanced brand concepts can increase Perfect Diary's success rate in becoming a domestic beauty brand.

3. New Items

Perfect Diary has many items with unique designs and names: small stilettos, white fat men, small gold diamonds, small black diamonds, and small wine tubes.

It is a consensus among beauty brands that unique design and naming can reduce the cognitive cost of potential customers. Such as the little black bottle, the little brown bottle, the little red bottle and so on.

Because no matter how big your business is, all potential customers can remember is your product, and their intuitive understanding of the brand is also the product.

Therefore, it is also recommended that Perfect Diary focus on one product to build its brand. The current situation is that too many products are launched at one time, and the communication efficiency is not high. You can refer to Xiaomi’s strategy, use Xiaomi mobile phones as traffic-generating products, and place other products in Xiaomi Home.

4. New scenes

Perfect Diary is a classic example of channel flanking warfare. She regards social media as a strategic focus and has invested heavily in Xiaohongshu, Douyin, Kuaishou, Weibo, and Bilibili.

In its prospectus, Perfect Diary's parent company Yatsen E-Commerce describes itself as "one of the earliest beauty platforms in China to use KOLs on a large scale across all major social platforms," ​​saying that the company has cooperated with nearly 15,000 KOLs of varying degrees of fame, including Li Jiaqi and Wei Ya, of which more than 800 have more than 1 million followers.

Southern Weekend reported that as of November 20, 2020, there were as many as 12,328 videos related to Perfect Diary on Bilibili. This number is not only 6 times that of another emerging domestic beauty brand Huaxizi and 1.5 times that of Juduo, but also higher than big brands such as Estee Lauder and Lancome.

Huang Jinfeng, one of the founders of Perfect Diary, worked as vice president of Yujiahui, the "first domestic facial mask stock", before starting his own business. Yujiahui's skin care brand Yunifang quickly rose to prominence by taking advantage of Taobao's express train.

We believe that the success of Yu Nifang has deeply inspired Perfect Diary. Supermarket channels and traditional e-commerce channels (Taobao, Tmall, and JD.com) are no longer suitable for emerging brands to obtain traffic. Emerging channels (Xiaohongshu, Douyin, and Kuaishou) have lower traffic costs and are more willing to cooperate with new brands.

So we see that Perfect Diary attaches more importance to emerging social channels than all other brands. This is the cognitive advantage that the Perfect Diary team has over its peers.

2. Perfect Diary’s hidden worries

The advantage has been mentioned. Compared with domestic brands, it has more investment. Compared with international brands, she has a more sensitive response and faster execution to emerging e-commerce channels.

Investing in emerging e-commerce channels is not only an innovation in marketing methods, but also an innovation in business models.

Southern Weekend reported:

This mode is called DTC (Direct To Consumer), which means direct-to-user mode. Different from the distribution agency model commonly used by traditional beauty companies, Yatsen E-Commerce adopts a direct sales model in which brands directly reach consumers, establishing direct stores on third-party e-commerce platforms such as Tmall, as well as online channels on social and content platforms such as WeChat and Xiaohongshu.

As of September 30, 2020, the various official accounts owned and operated by Yatsen E-Commerce on Chinese e-commerce and social platforms have a total of more than 48 million followers. Among them, the official account of "Perfect Diary" on Xiaohongshu has about 2 million followers, and all official channels on the WeChat platform have a total of 15 million followers.

This model has a name that is easier to understand: direct sales of beauty products. The brand is sold directly to customers, with no middlemen making a profit from the price difference. Traditional big-name beauty brands rely on offline stores and it is impossible for them to abandon distributors and quickly establish online channels in a short period of time.

This is precisely the weakness that high-end beauty brands find difficult to overcome, and it is also the starting point for Perfect Diary to launch its offensive. Other brands that use mobile Internet and social media as their strategy include Xiaoxiandun and Guazi Used Cars.

Perfect World’s hidden worries are also obvious: lack of investment in and marketing of “new technologies”.

Perfect Diary is positioned as a beauty brand that is more suitable for Asians, but we did not see sufficient investment in this regard in its prospectus and marketing promotions.

Some media reported that in Yatsen E-Commerce's prospectus, only a very small amount of space was devoted to the production, manufacturing, and research and development of cosmetics, and the entire "story" was about how to market.

We think this is a dangerous signal.

The corresponding risk of too much marketing trace is the lack of product spirit. They did not invest enough money in product research and development, nor did they demonstrate their product-first attitude in marketing. If Perfect Diary continues to ignore this factor, it is likely to become a point of attack for Hua Xizi and others. If only Hua Xizi could realize it.

The last brand to suffer losses in this regard was Dong-E E-Jiao. Especially when Perfect Diary launches an offensive against L'Oreal and others, its own products must be strong enough to withstand the attack. Insufficient investment in new technologies will definitely become a point of attack for competitors.

3. Is Perfect Diary’s current losses reasonable?

Perfect Diary is suffering from huge losses, but is still spending a lot of money on its marketing model. Can we understand this approach using the Internet's mindset of spending money to gain traffic? Referring to several money-burning industries on the Internet, the final outcomes are clearly polarized. Is the cosmetics industry suitable for this approach? What kind of judgment and understanding of the industry does Perfect Diary base its choice of this approach on?

If it is the cosmetics industry, I don’t think this approach is suitable.

If it is the cosmetics e-commerce industry, I think it is a very reasonable approach.

Ren Zhengfei once said that strategic resources should not be wasted on non-strategic opportunities. Once a strategic opportunity is discovered, troops must be deployed to attack regardless of cost.

Ren Zhengfei mentioned the "Van Fleet ammunition", which in military terms refers to the theory that firepower is the only way to win.

The term comes from an offensive operation planned by U.S. Army Commander General Van Fleet during the Korean War. He adopted the policy of "no limit on ammunition in the attack" and consumed about 360,000 artillery shells in the nine-day battle, five times the usual amount.

We believe that beauty e-commerce is a strategic opportunity, and Perfect Diary’s approach is very reasonable. In other words, we believe that Perfect Diary will engage in beauty e-commerce in the future, similar to Xiaomi’s model, and engage in the “roasted sweet potato business” in the beauty industry.

4. Perfect Diary’s high-end route

Judging from Perfect Diary’s spokespersons and commercials, Perfect Diary is benchmarking against the standards of international brands, but there is a gap between this and the market positioning of Perfect Diary products. How to interpret this sense of contradiction? Or will Perfect Diary gradually move towards a high-end route? Is the current high-end publicity too hasty?

Perfect Diary invites big-name stars to do advertisements in order to shape its brand image, which does not conflict with its current market positioning. Consumers are happy to buy products from big brands at lower prices than big brands.

Will Perfect Diary move towards high-end? Yes. Is it too hasty? No.

On the contrary, I think other brands are too conservative. As China is about to usher in the general trend of 400 million middle-class consumption upgrades, ambitious brands must launch a decisive battle as soon as possible to seize the top position in their category. If you miss this opportunity, no amount of money can make up for it.

5. Is Perfect Diary over-marketing?

It would be difficult for other brands in the industry to succeed if they simply copied Perfect Diary’s approach, just as Perfect Diary did not copy Yu Nifang’s approach.

Because the opportunity had passed, when Yu Nifang launched its product on Taobao, Taobao's traffic had not yet peaked and the cost was not high.

However, Perfect Diary saw that Yu Nifang’s channel approach was to invest in emerging channels, so it chose Xiaohongshu as a key emerging channel.

If other brands want to replicate Perfect Diary’s success, they must first attribute it correctly: the success was not due to the use of Xiaohongshu, but due to the choice of a new social media.

Secondly, we need to adopt a different product route. It is not okay to completely imitate Perfect Diary’s product launch method. Last but not least, don’t ignore Perfect Diary’s efforts before it became popular. Its founder postponed starting his own business for three years in order to truly understand the industry. He only founded Perfect Diary after he became a senior executive at Yunifang.

Beauty brands that want to learn from Perfect Diary can refer to the competitive strategies of Ctrip and Qunar.

Ctrip has been in the leading position since it pioneered the online travel category. This market is growing at a rate of 50% per year and the competition is very unstable.

Qunar did not completely copy Ctrip's model, but instead created a new category: a search engine for comparing air ticket and hotel prices online. Because the total number of air traffic and hotels is constant, once you take the lead, you will always be ahead. This is also something that Ctrip cannot take into account, because the market share of online travel is increasing and competitors are entering.

Qunar has chosen a valuable market that leading brands cannot currently take care of.

The "propaganda-only theory" should be viewed from two sides. When the product has defects and there are loopholes in brand awareness, it is very dangerous to invest heavily in publicity.

On the premise that the brand positioning is clear, the investment in publicity should exceed what is necessary.

This requires entrepreneurs to have a new understanding of brands. The investment required for brand channels is not consumption, but investment. It’s about storage, not trial and error.

After a brand crosses a certain critical point, potential customers buy the brand’s emotional value, and emotional value can only be established with “Van Fleet ammunition”.

In other words, what potential customers are buying is your advertising money. Of course, all of this must be based on accurate brand positioning.

6. What is Perfect Diary’s positioning?

The key to positioning is to let the brand occupy a word in the minds of customers, so that when customers have a need for this word, they will actively search for the brand.

For example, when Haidilao occupies the word hotpot, customers will take the initiative to go to shopping malls to look for Haidilao. The brand will become a company that brings its own traffic, and shopping malls will reduce or waive rent for Haidilao.

If Perfect Diary occupies a word in the minds of customers, then customers will actively search for it online when they think of this word. At this time, Perfect Diary can get rid of the traffic dilemma.

In the report "Perfect Diary's Traffic Dilemma", it is mentioned:

In Perfect Diary's prospectus, in-depth cooperation with KOL resources is regarded as the company's core competitiveness. It is KOL that has constituted the "source of traffic" for Perfect Diary since its establishment in 2017: through public channels (Xiaohongshu, Douyin, Bilibili, live broadcast) KOL's content marketing to acquire new users and realize initial monetization, and then introduce traffic into the private traffic pool based on the WeChat ecosystem, and then increase the repurchase rate of old customers and extend their life cycle through high-frequency community maintenance.

However, Perfect Diary’s traffic strategy has quickly been listed as a compulsory course by its peers. What followed was a sharp rise in the prices of KOLs and traffic. Information from the popular market research platform PARKLU showed that from 2018 to 2020, the average price increase of mid-level KOLs and top KOLs exceeded 18%, and in niche areas such as beauty, the increase was even much higher than that.

In real customer choices, Perfect Diary is: a domestic cosmetics brand that is comparable to big-name brands. Perfect Diary also deliberately mentioned this point in its public relations promotion, but deleted the information about the substitutes of big brands in more direct advertising.

Domestic cosmetics themselves do not have a strong positioning, so what if you are a domestic cosmetics brand? Customers certainly have enough patriotic enthusiasm, but to form continuous purchases, they still need to rely on real reasons to buy, such as beverages that can prevent getting angry, drinking water containing natural minerals, trading platforms without middlemen, safer travel methods, range hoods with stronger suction power, etc.

If Perfect Diary does not realize its true positioning, it will not be able to occupy a position in the minds of customers. Then it can only rely on purchasing traffic to achieve sales, and the cost of traffic will become higher and higher.

We believe that there are two important reasons for Perfect Diary’s success: one is the heavy investment in social media, and the other is its brand positioning as an alternative to big brands. At present, it seems that she has not been persistent in her positioning.

In short, positioning theory has not become invalid in the era of social media, and correct brand positioning and the application of social media can be combined. The practice of positioning companies is an important part of positioning theory, and the practice of the new generation of entrepreneurs is an even more important part.

Author: Zhang Zhiyu

Source: Zhiyu Brand Positioning (ID: zhiyupinpaidingwei)