How the double-edged sword of differentiation can cut yourself

Differentiation is the form,

Market demand is the content. Overemphasizing and blindly pursuing differentiation is tantamount to seeking a sword in a desperate situation

The author once worked for a nationally renowned beverage group and personally experienced a case where the demands for differentiation from competing products resulted in a loss of hundreds of millions of dollars. In the end, The tragedy of the entire army being wiped out.

Once the leading product of Huihuang Group was a kind of steamed tea. To be precise, it is a carbonated drink containing tea. In the 1990s, domestic beverage products were still very monotonous. There were no similar products on the market and there were few brands. Competition was far less fierce than it is today. Therefore, when the group started its business, it easily achieved success by relying on this differentiated product. At its peak, in 1998, sales reached 2 billion yuan. The CEO of the group has great glory, and various honors come one after another: National People's Congress representative, outstanding entrepreneur, and outstanding Communist Party member. When he holds meetings with his subordinates, he always mentions the three major strategies commonly used in marketing: differentiation strategy, centralized strategy, and low-cost strategy. He is especially fond of differentiation strategy.

However, in the subsequent development, the group leaders fell into a serious quagmire of being stubborn and stubborn and unable to extricate themselves. It is manifested in being divorced from the reality of the market, taking modern marketing out of context, losing its way in product development and brand extension, and making repeated mistakes: in order to imitate the multi-brand strategy of the Coca-Cola Company, the ××Jihao fruity soda series was developed, but due to its shoddy production, it could not be compared with the Sprite, Fanta, Suzhou, etc. competed; and on a whim, they developed × tea red wine, blindly realizing the cross-industry extension of the brand. This kind of grafted product, which is neither a donkey nor a horse, does not conform to people's consumption habits, and also ended in failure. A lot of money was spent, but it never occurred to us that the most important thing to develop was to enrich the product line of tea beverage series. As a result, it gave opponents an opportunity to take advantage of it.

The group’s brilliant performance in 1998 gave its rival Master Kong an important revelation: Mainland China has a population of more than one billion, and Chinese people have had tea-drinking habits for thousands of years, so China’s tea beverage market has huge potential. This rival, which has firmly established itself as the No. 1 instant noodle brand, discovered the group’s mistake: it has never developed a pure tea drink! So in 1999, Master Kong took the lead in launching a series of hot-fill pure tea beverages, and gave them unique product appeals: green tea: green and good mood; iced black tea: full of ice power.

It should be said that hot-filled tea is more in line with people's tea drinking habits from technology to content. Especially suitable for people who don't like carbonated drinks. At that time, Master Kong was not an instant hit, but went through a period of transition in recognition that any brand must go through when it expands. Take the first half of 1999 as an example. We and Master Kong were conducting promotions at the same time in front of hypermarkets in various cities. The group’s advertising umbrella was crowded with consumers, but Master Kong was deserted. In the minds of consumers, Master Kong and Master Kong were Instant noodles have become almost synonymous, and Master Kong's tea drink suddenly appeared. For a while, people couldn't turn around, let alone buy it enthusiastically. However, developing high-quality products is Master Kong's purpose, and operating retail terminals is its strength. In a short period of time, Master Kong's tea beverages have achieved high distribution rates, product mix rates, and uniform terminal display images in retail stores. After more than half a year of publicity and awareness, even though the retail price is 50% higher than ours, we still opened up sales with the taste and quality favored by consumers.

Blind Innovation At this time, if the group can seize the opportunity, catch up, and launch a series of hot-filling pure tea drinks, relying on the strong brand advantage of holding the No. 1 × beverage brand at that time, it can withstand Master Kong’s attack. At least we are sure of being on an equal footing with Master Kong, but unfortunately, in order to demand differentiation, the group boss got into trouble: Now that Master Kong has launched hot filling, there is no point in us following behind. We must launch products that are different from it. !

Ever since, after more than a year of hard work, the group’s differentiated products finally appeared: changed ××. This kind of drink looks like a bottle of pure water from the outside. What is different is that there is a stopper at the mouth of the bottle, and inside the stopper are tea powder and saccharin.

When consumers drink, they need to unscrew the lid, press the stopper, wait until the tea powder and saccharin leak into the water, then screw the lid back on, shake the bottle vigorously to dissolve the tea powder and saccharin, and then open the lid to drink.

The idea is: enjoy the fun of the self-operation process.

This so-called differentiated product developed behind closed doors has four major weaknesses compared with competing products:

The main function of beverages is to quench thirst. People buy them when the weather is hot and thirsty. The instinctive response to a drink is to drink it immediately to satisfy the need to quench your thirst. The pleasure of enjoying the self-operation process is purely subjective and does not conform to public consumption habits;

Competitor hot-filled tea drinks contain sugar and honey, and the taste is definitely better than those made with saccharin. Weirdly sweet;

It is not suitable to be chilled because the tea powder is easy to clump and difficult to dissolve after chilling, which is contrary to people's habit of drinking iced drinks in summer;

The difference

In response to these problems, we promptly summarized and reported them in writing to the group headquarters. But the boss was unmoved. On the one hand, he firmly believes that his differentiation strategy is correct; on the other hand, he emphasizes that drinks are not high-tech, but typical impulse purchases, and their main function is to quench thirst. Quality is not the main factor. The advertisement above and the display below are the most important.

But no one can understand the commercial, and no one likes it. Even if it is differentiation, the advertising must show the differentiated selling points to the public, such as how to press the stopper, shake to dissolve, what are the advantages over hot-filled tea, etc., these are not available. The commercial for Changing ×× is really like magic: a man holds the product in his hand, flipping it up and down, and murmurs: I want to change, change! Change! Change! The result was like Sun Wukong's golden cudgel. Everyone was confused and Monk Zhang Er was confused. But the boss likes it alone. The advertisement has been running for more than half a year, but some consumers still don't know how to drink it after buying it, so they pull out the stopper and throw it away and drink it as water.

The group also spent a lot of money to publish soft articles in local newspapers, attacking the many shortcomings of hot-filled tea drinks such as the loss of nutrients. However, consumers still did not buy this account, and it was still about which brand tasted better. Which brand to buy.

In order to carry out the differentiation to the end, the boss made a desperate move. Every time a box of ×× was purchased in the retail store, he would give away a box of medium-sized × tea. The slogan was: buy as much as you want, get free. How much, I’ll give it all to you with interest! This gambler-like distribution of goods still failed to save the situation. After struggling for more than half a year, the group lost more than 100 million on this differentiated product. In 2001, the group had to face reality and develop and produce hot-filled tea drinks. But at this time, the situation was over, and the banks stopped credit support. Faced with the market failure, the group was unable to recover and suffered a complete defeat.

In fact, differentiation is the form, and market demand is the content. Overemphasizing and blindly pursuing differentiation is tantamount to seeking a sword in a desperate situation. Mengniu has segmented breakfast milk and its sales are promising. As a result, various brands of breakfast milk have appeared one after another. Mengniu's sour yogurt entertainment marketing is in full swing, and various sour yogurts have followed closely, including many well-known national brands, but no one has Not kidding anyone. As soon as the big bone noodles mentioned above came on the market, they were followed by a group of bone soup noodles, bone soup spring noodles... etc. It seems that pork bones and instant noodles have an indissoluble bond in the past two years; Hebei Xiaoyangren Company took the lead in the country It developed the Miaolian Fruit Milk Drink with milk and juice and achieved good sales results. Wahaha noticed this and immediately followed up on Nutrition Express. And relying on its strong brand strength, it surpasses the former in terms of advertising and marketing operations. It is a foregone conclusion that Nutrition Express’s sales will surpass Miaolian this year. Everyone in the industry knows that Wahaha, as a giant in the food industry, has always had few innovative products, and most of them are follow-up products, but they still operate very well.

Interpretation: Differentiation strategy is undoubtedly like a shot in the arm in a market with serious homogeneity, which can make the originally calm market suddenly add some ups and downs. Of course, the more important thing is that those companies that implement differentiation strategies also deeply influence their competitors while gaining short-term or even long-term market benefits. It cannot be ignored that the differentiation strategy itself is also a double-edged sword. Especially for markets with lack of differentiated needs and companies that lack the ability to innovate and implement strategies, not only will it be difficult for them to increase their profits, but they may lose their original market share.

From the actual situation, we found that some companies did not adapt themselves well to the implementation requirements of the differentiation strategy and hastily introduced it, but just out of a kind of blind obedience or following the trend, they changed the originally implemented good strategic means. Yi Zhe.