How to grasp the essence of business and make the brand bigger, stronger and more beautiful

　　湛广是品牌6C理论创始人，著有品牌管理专著《品牌源动力》，现任爱尚鲜花股份有限公司董事、常务副总裁。

　　At the regular meeting of Laogao Crown Club, Zhan Guang shared three directions of e-commerce transformation: deep industrial chain, O2O, capital operation, and how to grasp the essence of business and make the brand bigger, stronger and more beautiful.

　　The following is a selection of full texts:

　　Today I want to talk about some macro things, I hope they will be helpful to everyone. The first thing we are going to talk about today is to look at the situation of the macro economy. There are many statements about the macro economy and there are many rumors, but I don’t know what it is.

　　What is China's economic environment?

　　There is a classic global economic cycle called the Kandratiev cycle. This is very classic because he has been using it for so many years, and from 1805 to the present, he has gone through four complete Kandratiev cycles. The first stage was from 1800 to 1860, marked by the use of steam engines and manual workshops. The second cycle was from 1860 to 1900, and the third cycle was from 1900 to 1950, marked by electrical, chemical and automobiles. The fourth cycle is characterized by the computer Internet. There is also biotechnology, which should reach the bottom in 2020. Now it is in a downward cycle, and the entire global economy should also be moving downward and should reach a trough in 2020. There is still some time left now.

　　Let’s take a look at the changes in China’s GDP government over the past 25 years. From 1990 to two thousand years, China's reform and opening up, national conditions reform, rapid development of the market economy, export trade and export foreign exchange earnings led the first rapid development of China's economy, and it went downhill after the Southeast Asian economic crisis. The second economic climax was brought about in the period from 2005 to 2015. This round was driven by real estate, stock markets, and export investment as the main characteristics. After the global economic crisis in 2008, the momentum later declined. The market is originally a regulatory role. When the market regulation is not effective, market forces will appear, and then government intervention will occur, and then government reforms will occur.

　　Now China is a middle-income country, which means that when our per capita income reaches a level of 3,000 to 10,000, economic development will stagnate in this process. Why will it stagnate? It's very simple. There are still some deep-seated contradictions in this country that have not been resolved. At this time, the political system has not changed economic development and has stagnated at this time. Because growth in the past was easy, it was actually very sensitive to government reform. I have been saying it, but it has not changed, so China will continue to hesitate among middle-income countries.

　　Let's look at the manufacturing index. In fact, the situation in many manufacturing industries is not optimistic now. Enterprises in the Pearl River Delta and the Yangtze River Delta are all going bankrupt. PMI is a procurement experience index. When it is above 50%, the economy expands and economic contraction is below 50%. Let’s take a look at the current economy. It has been going down in 1920 and 15 years, so our current situation is worse than the economic crisis in 2008. Let’s take a look at the comparison between China, the United States and Europe PMI. We can see that the development of the old imperialist economy in the United States is rising. Then this is Europe and Europe is also very good. The bottom is China. We can see that China's GDP ranks second.

　　Let's take a look at the three troikas. Export, fixed asset investment and consumption. These are the three magic weapons to drive economic growth. But now the three troikas have begun to fail, exports have failed, consumption has begun to decline, and fixed asset investment has declined even more seriously. They are actually related. We can see that the cost of e-commerce is no longer as low as before, and is even higher than that of online, which leads to the fact that export manufacturing has no advantages. Fixed asset investment is no longer invested in. The first thing every chief of the local government does after taking office is to build large-scale construction and carry out political construction. In this way, a lot of money will be spent on reinforced concrete. So where did such investment money come from? Borrowed from the bank. Local governments have no money to play and are heavily in debt. Because I can't afford to pay it back. In this case, fixed asset investment will become smaller and smaller, and in the end it will be useless, and the side effects will become greater and greater.

　　Entrepreneur economy

　　Let’s look at a new indicator called the Keqiang Index, and a word that often appears on the news broadcast is called the new normal. What is the new normal? That is to say, the economy is going down, which is a normal state. The trend of economic development is becoming weaker and weaker overall. There are three indicators on this, the first is the national railway transportation volume, which is declining, and the second is the power generation volume. The transportation of trains represents the circulation of goods, which means that both indexes are very important. This is the new normal. Then we can also see that there are still highlights under such economic conditions.

　　Everyone here is fortunate to serve as a highlight in the economy in our three lives. Because the Internet and e-commerce have become new driving forces for the economy. This is the only highlight. No matter how the economy stagnates, it still has value. This is what we are doing here. Because after Li Keqiang took office, he promoted mass entrepreneurship and innovation, which was to encourage everyone to go public. Why is this? Because first, you can pay taxes after listing. Once you go public, you must make up the tax you should teach in the past three years, which will allow you to collect a lot of taxes, and innovation calls for the entrepreneurial economy. Everyone is a shareholder, which means that the dividend of equity is still a future prospect, but the establishment of equity for venture capital is still a new highlight. In fact, there are many different voices in the market saying this. If you engage in national entrepreneurship and innovation, your risk is very high, and it is a life-and-death matter. If you want everyone to do this, it would be too unreasonable. But from an economic perspective, there is a reason for him to do this. There is a term called entrepreneur economy. After a large number of facts and data analysis, it finally came to the conclusion that an entrepreneur economy appeared in the United States.

　　It is precisely because of the entrepreneurial and innovative activities of countless entrepreneurs that the US economy flourished, which slowed down the pace of the economic recession. In the 1970s and 1980s, the United States also broke the Kandratiev cycle. Between 1965 and 1985, his labor force increased by 40%, and his employed population increased by 50%, which means more than 4,000 economic jobs. The United States followed the Kondratiev cycle and the labor force decreased by 400 to 500. How should we explain it? It is also because they created an entrepreneurial economy, and a large number of entrepreneur-led entrepreneurial entrepreneurial economy is an economic form of a boom. At the same time, Japan and Germany rose rapidly from the ruins of World War II, relying on the entrepreneurial economy. Everyone here, you are entrepreneurs because we are all starting businesses and innovating, which is the driving force for China's economic growth.

　　Economic downturn gives e-commerce opportunities

　　We can also see that the economy is very bad now, and companies and Internet companies are also going bankrupt. This is a money-burning model. We can see the list of Internet casualties involving thousands of companies in sixteen industries. The winter of the Internet and e-commerce is coming, but we can also see another scene: the capital market continues to be booming. In the third quarter of 2015, the total investment in the Internet was US$6 billion, an increase of 64% from the second quarter, and an increase of 11 times compared with the third quarter of 2014. In other words, you are still spending money now. The amount of money you invested has increased, but the number of cases has decreased. This proves that all invested in large companies, that is, small and micro enterprises will be very sad, but large enterprises are still living very well.

　　O2O is still divided into the e-commerce field, and lacks some online and offline communication. What happened to a startup O2O company? The money-burning model deviates from two business laws. In the early stages of Internet entrepreneurship, many companies did not consider traditional value laws:

　　First, capital must be implemented as brand loyalty. You need to turn new customers into old customers and make repeated purchases. Then the second time your promotion fee is almost zero. On the Internet, capital investment is used to spend money to subsidize users, expand market share, cause huge losses, and then continue to lose money. There is another link called brand operation, conducting money-burning promotion, brand building, customer experience, product and service innovation, and increase brand loyalty, then expand scale and expand marginal costs. Then generate profits, which is the virtuous cycle.

　　The second is marginal income ≥marginal costs and expenses. Many people may not pay attention to this.

　　One of the vicious circles: The gross profit margin of the product is always too low.

　　The second of the vicious circle: The marginal cost is always too high.

　　Vicious circle 3: riO is always too low.

　　The economic cost of the Circle 4 is always high.

　　So what we need to do is to shift from scale to profit. Many e-commerce companies have failed due to the economic recession and the downward movement of consumption. The opportunities for e-commerce lies in the downward movement of consumption and the lipstick effect. Due to the recession of the economic environment, consumption cannot be stimulated, but due to the lipstick effect, e-commerce has been able to rise. During the economic crisis, lipsticks sell very well because you can’t afford luxury goods, so buy a lipstick and bring yourself a good mood. Therefore, good-quality and low-priced products will continue to sell well.

　　The development of e-commerce in recent years is actually due to the economic decline, and then a habit was formed, and the penetration rate exceeded 18% in 2017. It may be evenly matched in the future. This is unstoppable development of e-commerce. So how do e-commerce make profits? Some companies are very expensive, but why do they burn money?

　　Two directions of profitability between e-commerce and O2O

　　Their logic of making money is different. For many companies, what we earn is customer money and market money. The essence is the impact of the brand, which is healthy and lasting. He is a corporate production centered on increasing revenue and reducing expenditure. To ensure the development of a company, a lot of money earned from the capital market is mostly unprofitable. Overall, the form is not optimistic and will not last long. In the long run, we still need to make money from the market.

　　We want to return to traditional values. Profits, cash flow and prisoner's dilemma. I think the concept of e-commerce should not exist. It is just a channel. I think there can only be platform merchants and brand merchants. The platform must win in scale competition. Weibo, such as No. 1 Store and Dangdang.com, Vanke Eslite, missed the opportunity and did not make a comprehensive super platform like JD.com and Tmall, so there was no opportunity. The vast majority of people are brand owners, and brands must win in their ability to compete.

　　No brand without bargaining can ever have a prisoner's dilemma. Many times, e-commerce companies want to cut their losses and maintain market rankings, but they have to absorb profits. Now in the post-e-commerce era, we need to return to traditional values:

　　First, we must focus on our own brand, be loyal, focus on innovation in products, quality, and service, and deposit new customers into old customers. This is the key;

　　The second is to earn money, make more money, and concentrate limited resources on the extreme surface;

　　Third, strictly control all costs, decisively cut losses, maintain cash flow, maintain profits in the next two years, and deal with uncertainty in the future team.

　　Transformation: Industrial Deepening/O2O/Capital Operation

　　One of the directions of e-commerce transformation is the Schengen industrial chain. The second direction is O2O. The third direction of transformation is capital operation.

　　Turning point: From structural optimization to quality innovation.

　　There are two names here, one is structural optimization and the other is quality innovation. What is structural optimization? Change business models or supply chains. What is structural optimization? Change the industrial structure. What is quality innovation? New technologies, new products, new tools and methods. A use of all kinds of new things.

　　So what has e-commerce changed? I think our vision should be a long-term focus and should not be just about ranking. If e-commerce is popular now, e-commerce will no longer be prosperous in the future.

　　Brand competition, be the first and be the only

　　The impetuous era needs more precipitation, and the Internet era generally seeks to be big and fast. Big fish eat small fish, fast fish eat slow fish, and forget the precipitation of the brand. In the end, no solid barrier was established. Many Internet companies were like Genghis Khan's former herds cart. Although they quickly had a large area of ​​territory at home, they immediately went to the land again, which was a flash in the pan and was ineffective.

　　Running a business is a long-term run. Over the past few decades, many traditional companies have experienced the following crazes. If they have not been eliminated, then congratulations.

　　With so many trends, as long as you seize one of them, you can ensure the glory of the company. Building a business is a long-term run, and opportunities will only be left to those who are prepared. As long as you are alive, you will have opportunities. New and beautiful, strong and beautiful, be the first, be the only one, have the future, and have the world.

　　Q: How to make customers have a better experience.

　　Answer: I think your offline model should continue to expand. You must stick to the past model. If your scope is wide enough, you can consider using the O2O model. Your products are impulsive consumption, and you can choose more ways to promote your products.

　　Q: How do you manage your employees?

　　Answer: I and they have an assessment, and there will be an assessment once a month. If you are particularly bad, you will be eliminated. You won't stay here.

　　Q: How can we let customers choose our big-name products?

　　Answer: You can have many ways to cover various channels, and then sell these products offline to let more customers choose. You need to position your customer base and build your own website for promotion. This is a great challenge. You can choose Juhuasuan. You can do some calculations.

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