Failure cases of local brands

Author: Zeng Zhaohui
Publisher:
Publish Date: 2005-04-01
Features: Zeng Zhaohui's practical theory; The Necklace Theory: All brand communication and promotion must revolve around a core theme. Because a brand's individual advertising, promotions, PR, sponsorships, and other activities, if not tied together by a unified theme, are at best just pearls. Only by threading all communication efforts with a single main thread can a shiny necklace be formed. The value of pearls and necklaces is incomparable. The Fruit Tree Theory: If a brand is likened to a fruit tree, products are the fruits on the tree. If a consumer picks a sweet fruit from a brand tree, they will believe that other fruits on the tree are also sweet. Therefore, companies must focus on building their brands. Once the brand succeeds, new products can be launched as long as they are labeled with the brand. The Flowing Water Theory: As the saying goes, "Iron camps, flowing soldiers." Here, the iron camps refer to brands, and the flowing soldiers are products. Products must constantly flow for a brand to remain vibrant. The Brand Personification Theory: A brand is a person, and a person is a brand. Viewing a brand as a person is the simplest way to understand it. People have personalities, brands have character; people have personalities, brands have individuality; people have thoughts, brands have depth; people have faces, brands have images; people get sick, brands face crises, and they also need regular check-ups. The Button Theory: Conducting brand diagnosis and research is like buttoning a shirt—button one wrong, and the rest will follow. This book, with substantial evidence, comprehensively and meticulously analyzes the subjective and objective reasons for the failures of famous brands such as "Wanjiale," "Lehua," "Xiaoya," "Shangwutong," and "Sanjiu," offering profound insights for domestic brand operators. Since the implementation of the market economy, the Chinese market has gone through two eras: the Advertising Power Era and the Marketing Power Era. In the Advertising Power Era, advertising was the most important and effective means of communication. According to the "Bucket" theory, as the market was in its developmental stage, companies did not need every plank to be long—just a long plank in advertising was enough to dominate the world. In fact, many companies became "household names overnight" with a single outstanding advertisement, such as Kongfu Home Liquor. In 1993, the Kongfu Group invited Wang Ji to shoot an advertisement—"Kongfu Home Liquor, Makes You Miss Home"—which was broadcast on CCTV. After its release, Kongfu Home Liquor quickly rose to prominence, selling nationwide, with distributors often queuing to pick up goods. In the Marketing Power Era, as the market gradually matured, the role of advertising was no longer glorified. Advertising became a routine tool, working alongside channels, pricing, PR, promotions, and other means to contribute to the company's integrated marketing. With international brands joining the Chinese market competition, Chinese companies witnessed world-class brands like Coca-Cola and McDonald's sweeping the market with their brand strength, as if entering a vacuum. In awe and reflection, some insightful individuals took up the weapon of brands to compete against them. The era of brand power has arrived! The word "brand" originates from the ancient Norwegian word "brandr," which means "branding." In Chinese, its meaning is "" (). At that time, Western nomadic tribes branded their property on horses to distinguish between different tribes, with the inscription: "Do not move, it is mine," accompanied by tribal markings. This should be the earliest brand (brand) and slogan. From this, we can infer the original meaning of a brand: first, to distinguish products; second, to leave a brand mark in people's minds through specific slogans. In the modern sense, a brand refers to the entire experience between consumers and products. It includes not only material experiences but also spiritual experiences, conveying a lifestyle to consumers. When consuming a product, people are given symbolic meaning and ultimately change their attitudes and perspectives on life. People switch brands more often based on emotional responses rather than physical attributes of products. Products are cold, but brands are alive, with flesh, soul, and emotions; products can become outdated, imitated by competitors, while brands remain unique. In the West, brands are called the "atom bomb of the economy," considered the most valuable, even monopolistic investments. Some international brand assets are worth billions of dollars, rivaling nations in wealth. For example, in 2003, Coca-Cola's brand assets reached $704.5 billion. As brands continue to appreciate in value, they also generate continuous profits from the market. The general rule in international markets is: 20% of strong brands occupy 80% of the market. This principle also applies to China. The future trend of the Chinese market will be: the weak become weaker, and the strong become stronger. Even the most beautiful factory will not make consumers visit it before buying a product; even the most advanced technology will not prompt consumers to delve deeper—they rely solely on their perception of the brand. Therefore, for companies, the most important thing is not what you think of your product but what consumers think of it. During a brand psychology test for a beer brand, we conducted an interesting experiment: we filled an empty bottle of the beer with Budweiser beer, then filled an empty Budweiser bottle with the beer, and asked passersby on Wangfujing Street to taste it for free. First, we asked them to taste the Budweiser beer in the beer bottle. Most said it was not good, the taste was unnatural, and one even vomited, complaining, "What is this taste? It's so awful." Then, we asked them to taste the beer in the Budweiser bottle. Everyone said it was delicious, the taste was right. We asked if they had ever tried Budweiser beer, and they all said yes. One even mentioned, "I just had a bottle at lunchtime, and it tastes just like this." This was both amusing and absurd. Next, we removed the labels from the bottles and had people taste them again. The tasters were confused, saying one was good and the other was good alternately. Coincidentally, at a beer conference in the U.S., organizers placed 30 types of beer in identical bottles, removed all the labels, and asked the owners of 30 breweries to taste and identify their own beer. Not a single one could distinguish it. This shows that in an era of increasingly homogenized products, the physical attributes of products are nearly identical—only brands provide psychological cues, meeting consumers' emotional and spiritual needs. For consumers, a brand is an experience. In today's material-rich society, with dozens, hundreds, or even thousands of similar products, consumers cannot possibly investigate each one—they rely on their own or others' experiences. Because they believe that if one fruit from a tree is sweet, the others on the tree will also be sweet. This is the "fruit tree effect" of brands. A brand is also a guarantee. Consumers are reluctant to take risks on unfamiliar things, and they prefer branded products over non-branded ones, giving them confidence and assurance. For example, if Diego Maradona (Diego Armando Maradona) appears in a soccer match, we are more willing to watch because we believe that with Maradona on the field, the match will be exciting. Here, Maradona is the brand, the confidence, and the guarantee. A brand is also a reflection of individuality and a symbol of identity. People who wear Sheraton are completely different from those who wear Zara; those who drink XO are different from those who drink Erguotou; those who ride Ferraris are different from those who ride Cherys. The brands people use basically indicate what kind of people they are. The same denim jacket—wearing Marlboro denim shows a masculine personality, while wearing Levi's denim shows a free, rebellious, and individualistic personality. For competitors, a brand is a constraint. In certain fields, the market has already been settled, with strong brands in place, leaving very little room for newcomers. In areas without strong brands, competitors face great market opportunities with relatively fewer constraints, sometimes "dominating the world" with minimal effort. For the brand itself, a brand is a covenant. However, this covenant is not written on paper but exists in people's hearts. Brands promise the world: "I am excellent, I am trustworthy, choosing me means choosing peace of mind." But if a brand ever breaks its promise, it is as if it has defaulted in people's minds, leading to feelings of betrayal and a loss of trust. Driven by international brands, today's market competition has divided into two levels: one is product competition, which is extremely fierce, with thousands of products vying for limited market space. To survive, some products resort to price wars, harming both opponents and themselves; the other is brand competition, which is healthy and positive. In this realm, there are established rules that all brands (zìjué shǒuyóu - consciously follow), such as frequent price wars, which would be self-deprecating. In reality, some brands have already entered a non-competitive area in their niche markets, becoming the ultimate winners. Products can be quickly imitated or surpassed by competitors, but brands remain unique, so sustained competitive advantages often come from strong brands. It can be said that whoever controls the brand controls the initiative in the future market. Tsingtao Beer fully utilized its brand resources, sparking a large-scale acquisition war in the Chinese beer market. Wuliangye Group used its brand assets as a guarantee to launch sub-brands like Liuyanghe, Jinliufu, and Jingjiu, achieving great success. McDonald's and KFC's brand expansion in China is even more remarkable, reaching 560 and 1,000 stores respectively by early 2004. In 2003 alone, KFC opened 231 stores, averaging one every 1.5 days. More international brands are leveraging their brand advantages to acquire promising national brands, stifling them in their infancy. The experiences of brands like Qipilang, Dahongying, Shengxiang, and Nike tell us that brand management can be completely separated from production. Nike outsources the production of a pair of shoes for just a few dozen yuan, but once branded with Nike, they become worth hundreds and are highly sought after. Without Nike's mark, those same shoes might go unnoticed. In the domestic market, a pair of 100-yuan jeans is already considered good, but with the "Levi's" brand, the same quality is priced at 300 to 400 yuan. Hangzhou's silk clothing has a strong international market. With their own brand, each piece sells for over 20 U.S. dollars, but when resold by foreign companies with their own brands, the price rises to over 200 U.S. dollars. Sony outsources the production of high-quality recorders to a factory in Shanghai for less than 40 yuan per unit, but once branded with Sony, the price rises to over 500 yuan. The future market trend is that unbranded companies will become contract manufacturers for strong brands, while strong brands will become the command centers for contract manufacturers. Factories need a large number of equipment and workers, but this command center will only require a few people, even a dozen, which is not far-fetched. The Doha conference officially declared China's entry into the WTO, meaning the future market will no longer distinguish between domestic and international markets—the domestic market will be the international market, and Chinese companies will compete with a host of world-class brands. As Sun Tzu said in "The Art of War": "He who calculates more wins; he who calculates less loses; and he who calculates nothing is doomed to fail." Chinese companies, are you ready? Zeng Zhaohui March 1, 2005