Building brand competitiveness from a strategic perspective
Today, China’s GDP is 90 trillion, and the United States’ GDP is close to more than 120 trillion. Our growth rate is 6.6%, and the United States’ growth rate is 2.4%. What follows is a transformation of the competitive positions of the two countries. From a micro level, the competition between enterprises is a competition in the micro field. The same is true for ceramic enterprises, because the market share may roughly reach 200 billion. 300 billion, which includes consumers’ continuous improvement in living standards and housing, and this share will remain relatively stable. In the process of market competition, whether it is upstream manufacturers or distributors, they are still competing in the channel. Competition at the brand level is actually competition at the corporate strategic level, just like today's strategic competition between China and the United States between major countries. At the micro level, it is marketing competition, which can be regarded as a challenge of life and death.
In 2018, nearly 80 manufacturing companies in the ceramic industry closed last year. This data is very scary, and there are also companies with a scale of more than 2 billion in the ceramic industry. If you are very familiar with this industry, those with more than 2 billion can be ranked from 1 to 20. Therefore, the discussion of the micro level in this industry will still be in the process of very fierce competition and evolution in the future.
This is the competition faced by the entire circulation field of building materials in China. Taking the Beijing market as an example, some brands disappear inexplicably every year in the Beijing market. There are also many brands that have not entered the Beijing market because the Beijing market is a very big one. In a market operated by high-level executives, if a brand reaches RMB 100 million in the Beijing market, it is the only way to maintain capital. It is very difficult for a large number of upstream companies to break through 100 million in the Beijing market, and the talent, rent, and competition methods faced by Beijing are far more demanding than those in second- and third-tier cities.
Business competition must clearly understand the laws behind it. A brand and channel are a competition of corporate strategies, not a micro-level competition.
Between a brand and a channel, whether it is ceramic tiles or bathroom ware, or even customized home furnishings, especially the customization industry, China's home furnishing field has been lined up in large numbers, including in the ceramic industry, such as Marissa, Dongpeng, Marco Polo, etc. Gradually entering the capital market and becoming a top 20 company, they have built strong channel power in their competition. Take Marco Polo as an example. There are more than 3,000 specialty stores across the country, and all the channel resources of hundreds of millions of dealers are in it. It can be seen that TOP-level enterprises are active in the market, and their channel resources, dealers' own capabilities and quality, and the number of stores are all very impressive.
Walking along the Fourth Ring Road in Beijing, you can see that there are no more than ten Juran Home stores in each shopping mall that mainly use ceramic tiles. This is a very cruel statistic, and the same is true for bathroom products. And unexpectedly, Red Star will also make many commercial attempts, such as investing in many supermarkets and fitness centers. The logic behind this is that there are fewer and fewer high-quality brands and top-level brands, and many brands cannot enter such markets and commercial stores. Where did all that large commercial space go? So he needs other business operations. The logic behind Juranzhijia's retail business is actually a threshold requirement, and most ceramic brands cannot enter this door. On the one hand, enterprises are facing life and death, and on the other hand, for commercial space, they can only obtain returns through other business models. This is a very cruel strategic dimension.
From a strategic perspective, it is a matter of brand and strategy. At the strategic level, an enterprise's strategy, organization, and culture are the three core pillars of the entire enterprise's competition. There is a very clear concept in strategy, whether from the perspective of strategic competition or strategic value investment, including what Buffett said about considering strategic investment and price investment from the perspective of capital, all of which Brands and products return to a very clear, simple, and differentiated functional value of a product. Therefore, from this perspective, the concentration of brands in the ceramic industry will accelerate in the future, because for the ceramic industry, it can meet the needs of For two basic needs such as design and functionality, a few brands are enough. So, other brands have no chance? There is still a background for this opportunity. Whether it is strategic thinking, design dimension, or consumption dimension, there are still many channels and models that can be innovated. Of course, the traditional road is no longer feasible.
What are the changes and problems in today’s channels?
First, tradition fails.
From the perspective of the factory, the factory uses large-scale manufacturing, uses marketing methods to find dealers, and then supplies consumers through differentiated channels.
Nowadays, many decoration companies still choose TOP brands, and they are moving closer to resources and TOP brands. Many decoration companies tell us that the ceramic tiles they choose are this brand, and the bathroom ware they choose is this brand, such as the wooden door industry. It used to be a company with a weak brand name, but now there are not many well-known brands. The same is true for customization. There are only six brands that we can all count. Are there any others? Of course there are, but if you want to do it through traditional channels and marketing methods,It's very difficult. The differentiation of Chinese cities, the differentiation of eastern and western cities, including the differentiation of urban consumption, means that many brands still have a lot of room in the market, and some intermediate brands still have huge room for regional competition. For example, in a certain competitive area, Marco Polo may not necessarily be number one. The sales of many brands are far greater than it. It may be that the consumption difference in that place is different from that of Beijing, Shanghai, and Guangzhou. There is huge market space, but as The difference in consumers' understanding of brands and products will become smaller and smaller. Everyone will think that the difference in consumption will become smaller and smaller.
Just like the Internet solves the problem of information asymmetry, consumers will have a deeper and deeper understanding of brands and products in the future, so in terms of differentiation across cities, the brand industry will still be followed in the future Principles and trends in concentration.
Second, the fission of channels.
What changes will happen to channels in the future? In the field of e-commerce, you can see some brands that are often not seen at the market terminal, and there are already such market shares in some product segments. These are some of our traditional channels, and today our channels have undergone a lot of fission. Industry concentration is the ultimate trend of industrial competition. If you fail to enter the TOP, you will lose your opportunity.
What is the nature of these channel fission? Let's think about it together. What is the essence? From factories to marketing to distribution, everything actually revolves around one person - the consumer. Today's consumers have undergone fundamental changes compared to those in the past: consumers born in the 90s and 2000s do not want to buy products because they feel too tired. They can choose a variety of products through a mobile phone and a computer. He likes something like that, but the whole direction has changed. What he likes may be more niche and designer brands. Decorating a house is not like the traditional Chinese style of those born in the 60s and 70s, but a mix and match style. The entire consumption pattern has changed, the perception of consumption and the way of shopping have changed.
All sources of marketing are insights into consumers and influencing consumer decision-making in specific ways. This is the ultimate answer to channel fission and brand upgrade in the future. The answer is to understand consumers and guide trends, so where should marketing go? What kind of products need to be produced? What channels will compete with? This is the final answer. In the past, competition was about producing something and selling it to consumers? Do consumers need this? Not necessarily, so this is a setting for our entire strategic competition dimension.
As a channel dealer, how can we achieve common growth with these brands? How to deal with the whole assembly market? Nowadays, channels are fissioning. If we still cannot escape from the dimension of dealer channels, how can we escape from the dimension of naming our attributes as a dealer? We must also choose a new competitive landscape.
Facing the current situation, is there any chance of overtaking in corners?
First, as a strategic competition, the first issue is about products. Today’s TOP companies have an increasingly wider range of product designs. Similarly, there is also differentiated competition. The subdivision of product capabilities in this differentiated competition is still a channel that can be explored. . Nowadays, there are also real cases, such as subdivisions such as marble tiles. Is it possible that other small categories of ceramic tiles will be subdivided in the future? Or can there be niche products in the design field? And these are very big opportunities.
Second, the terminal level. This terminal is not a store in the building materials market in the traditional sense, but a virtual terminal that consumers can purchase whenever they have a relationship with them. For example, in today's building materials market, 20 people enter your store a day, and the transaction rate is 30%, which is considered to be six people. Imagine building a building materials market into Guomao? Of course, the rent in Guomao may be about three times more expensive than in the building materials market, but it is possible for 200 people to enter Guomao. What is the transaction rate for 200 people? For 60 people, building a store in the building materials market, 200 square meters is already considered small, but can we use new technological display methods to conduct virtual displays in China World Trade Center? The intelligent operation of the design software can realize a complete display of all product space in a store of 80 square meters. It can also be realized through marketing means. Whether it is online sales or small programs, the process of products to consumers can still be realized, so the terminal must escape the traditional terminal.
Third, in subdivided industries, for example, let’s talk about decoration. For example, Vanke’s supply chain. Everyone knows that decorating and building houses in real estate requires a lot of supply chain management. Specialized Our purchasing department is a very large system, and this is a very cumbersome matter. So is it possible to share Vanke’s product supply? Its construction is already very complete. Just share it. There is no need to build such a huge thing. Its positioning is very clear, and it is outside the TOP20. Country Garden wants to build it itself, so in this segment, the ceramic industry still has huge room for development. For example, OSNO's growth rate last year was very high. Last year it exceeded 1 billion. TenIn the ceramic industry, there are not many companies of this scale, but with one year's growth, OSNO has become a ceramic company. Focusing on one channel is the secret for many companies to achieve overtaking in corners in industrial channels.
Without innovation, there is no opportunity. China is now constantly talking about avoiding the income trap of middle-class countries. The core issue behind it is to create and cultivate the innovation ability of all people. With the support of innovation of ceramic companies, the vitality of ceramic brands can last long after the fission of terminal channels.
