The main brand competitive strategy research center of Xu Zhanhai Consulting has accumulated rich theoretical knowledge and practical experience, based on in-depth research on more than 500 well-known companies around the world and the actual practice of more than 100 corporate consulting projects. We are honored to have the opportunity to share the results of these in-depth studies with entrepreneurs, strategic researchers and readers.
Xu Zhanhai Consulting found that the main brand competition strategy plays a vital role in the development of many successful companies. By strengthening the main brand, enterprises can advance steadily in the rapidly changing market environment, and maximize their internal resources and advantages to enhance market competitiveness. At the same time, a strong main brand can also provide a solid foundation for the company to expand in new markets and product lines.
Four Brand Models under the Framework of Main Brand Competitive Strategy
Under the main brand competition strategy framework , we identified four brand models: category-focused strategy, cross-category strategy, diversification strategy and industry chain strategy . Enterprises need to conduct a comprehensive analysis based on their own competitive environment, resources and skills to choose the most suitable strategic model for their long-term development, and then determine the direction of brand competition that is in line with their long-term competitive advantages.
If a brand cannot follow the changes in the competition stage and choose a brand model that suits the main brand's competition strategy, it may be marginalized. Therefore, enterprises need to accurately judge the basic brand model that should be adopted at a certain stage, and correctly identify the core competition tasks under the main brand competition strategy at this stage, so as to maintain a continuous advantage in market competition.
Category Focus Strategy
Category focus strategy is a competitive strategy for brands to gain competitive advantage by focusing on a certain category.
What competitive advantages can the implementation of the category focus strategy bring to the brand?
(1) It is conducive to the formation of a clear brand recognition advantage, quickly creating a label or imprinting a brand in the minds of customers
(2) A large-scale cost advantage can be formed in the mass market
(3) It can form the advantage of specialized experts in market segments
Gree obtained the brand recognition advantage of air-conditioning experts by focusing on air-conditioning, and Moutai achieved the status of national liquor through the category-focused strategy. 3M focused on the field of tapes and adhesives in the early days. Through the category focus strategy, 3M has gained technological advantages, brand advantages and market share advantages in the field of tapes and adhesives, creating sustainable competitive advantages for the company.
However, not all brands can create competitive results through category-focused strategies. For example, Duowei women’s mobile phones are over-focused, and Nice is focused on men’s and women’s toothpaste. However, none of them can achieve real industry standard leadership and competitive advantages, nor can they achieve customer choice advantages. If a brand cannot choose a competitive strategy suitable for the current stage according to the changes in the competition stage, it will be marginalized by the competition.
Cross category strategy
The cross-category strategy means that the brand deploys two or more categories in the industry to consolidate the existing competitive advantage and broaden the boundary of competitive advantage. The cross-category strategy is conducive to attracting new customers with new categories and promoting the re-consumption of existing customers.
What brand competitive advantages can a cross-category strategy gain?
(1) The cross-category strategy can enhance the main brand's ability to resist marginalization
Brands such as Dyson and Toyota keep pace with the times by implementing cross-category strategies; Apple promotes brand rejuvenation by launching the music player ipod across categories; Oriental Yuhong extends its product business from building waterproofing to civil building materials and building repairs through cross-category strategies , architectural decorative coatings, architectural powders, etc., to expand its leading position in the market.
(2) The cross-category strategy is conducive to establishing advantages in channels, reducing channel marginal costs, and improving overall channel competition efficiency
Benefiting from its product and business portfolio, Wuling has successfully surpassed mini-car brands such as Jinbei, Changan Star, and Dongfeng Xiaokang through its cross-category strategy.
(3) The correct cross-category strategy is conducive to improving the main brand awareness
Brands such as Siemens, ABB, and Bull have improved brand awareness through cross-category strategies. Nestlé far exceeds the brand recognition of most dairy competitors through its cross-category strategy, and Apple uses a cross-category strategy to block opponents' attacks, rejuvenate the brand, and enhance brand recognition.
Diversification Strategy
The diversification strategy enables enterprises to straddle their main industries and realize cross-industry operations. Different from the cross-category strategy, the diversification strategy involves a wider range of business areas to achieve cross-industry competition; while the cross-category strategy focuses on competition among different categories within the same large industry. The core purpose of both is to gain a competitive advantage at a specific stage of competition, not just to expand the scope of business.
For example, Volkswagen and Toyota produce trucks, cars, SUVs, off-road vehicles and commercial vehicles, which is a cross-category strategy. However, when they are involved in the financial business, they turn to a diversification strategy to enhance their competitive advantage. Conversely, if Volkswagen, Toyota and GM do not set foot in the auto finance field, it may weaken their competitive advantage.
Industrial chain strategy
The industrial chain strategy is to build industrial chain control. The industrial chain strategy is a high-level competitive strategy, which puts forward higher capability requirements for enterprises. The competitive advantage of the industrial chain strategy comes from control and integration.
What competitive advantages can the industrial chain strategy bring?
Master key components and process technology capabilities
Although the United States implements an outsourcing strategy, and the production and assembly links in the clothing, electronics, home appliances, machinery and even military industry chains have achieved global layout, American companies have a strong industrial foundation in key components, key materials, key processes, and key software. In terms of capabilities, it is still world-class, mastering the R&D and manufacturing technologies of key components and processes in the fields of machinery and electronics, and even controlling the layout of the entire industrial chain in some areas by virtue of its control of key components and processes. Play the role of "chain maker".
Establish industrial chain barriers through technology and standards
The direction and rhythm of technological progress are dominated and controlled from the source through standard rules, and then the development of the industrial chain is controlled. The United States is very good at embedding patents into standards, that is, patent standardization, so that the technical barriers formed will be stronger, and the technology licensing and certification licensing will have a very large scale effect.
As early as 2007, Qualcomm had deployed more than 6,000 patents in the 4G field through self-research and acquisitions. The most important thing is that these patents have achieved standardization. The smartphones we use every day have to pay at least 2.275% of the patent fee to Qualcomm. If a 5G mobile phone is priced at 5,000 yuan, the patent licensing fee that needs to be paid to Qualcomm is nearly 115 yuan; Licensing and royalties accounted for 38.8 percent, or $9.66 billion, of revenue ($24.27 billion).
Establish competitive advantages in cost structure, customer awareness, and technology leadership through industrial chain collaboration
Relying on the accumulation and innovation of core technologies such as batteries, motors, and electronic controls, BYD has created the Ocean and Dynasty series of new energy vehicle products, forming a synergy effect in the industrial chain, and achieving a strong competitive advantage for BYD's new energy vehicles. BYD's cumulative sales in 2022 will be 1.863 million vehicles, a year-on-year increase of 152.5%, and it will become a Fortune 500 company like Tesla.
Grand Strategy vs Small Strategy
For a company with a grand strategy, each brand model stage is the only way to go. At each stage, it is thinking about the corporate strategy for the next stage. If it is not entangled or nostalgic, it will not lie on the previous short-term victory fruits and stagnate, and finally develop. Become a super conglomerate.
The real growth strategies of large companies are all long-term growth strategies, and they are all growth strategies that can cope with cross-cycle competition. They look at problems with the end in mind. From the very beginning, they must have the main brand competition strategic thinking and use the future to define Today, local advantages are defined by global advantages, and stage advantages are defined by long-term advantages .
On the contrary, companies with small strategies blindly solve the "urgent" strategy within a single category cycle, and the growth brought to the company is always limited and short-term. This is because the validity period of the strategy is inevitably limited by the cycle of a single category. When the category iterates, the strategy will also iterate accordingly. In the coherent development of enterprises, such incoherent strategic adjustments will not only face a higher risk of failure, but also make it difficult to make full use of existing resources, resulting in unnecessary waste, which runs counter to the high-quality development advocated in the new era.
The following is a case of Alibaba to illustrate how Alibaba adopted a "big strategy" and defeated competitors' "small strategies" at different times
1. Category focus strategy
From 1999 to 2003, Alibaba's main strategy was to focus on the B2B e-commerce market, distinguishing it from other e-commerce platforms with its unique online business catalog and trading market. This strategy enables Alibaba to gain a professional advantage in the SME market and form a clear brand recognition advantage. At this stage, Alibaba's competitors Global Sources and Made-in-China were unable to compete with Alibaba's diverse product line due to their over-reliance on specific product categories.
2. Cross-category strategy
In 2003, Alibaba began to expand its business scope, launching Taobao and Alipay. This shift has allowed Alibaba to attract a new segment of consumers and strengthen its brand position. The cross-category strategy enables Alibaba to resist the marginalization of the market, and at the same time, it also establishes advantages in the channel, reduces the marginal cost of the channel, and improves the overall competitive efficiency of the channel. At this stage, Alibaba's main competitors include eBay and PayPal. eBay, once the leader of online shopping sites in China, was gradually replaced by Taobao due to its failure to adapt to the changes in the Chinese market.
3. Diversification strategy
In 2008, Alibaba changed its strategy again, and entered cloud computing, big data, logistics and other fields by acquiring or investing in multiple companies, thereby further realizing cross-industry operations. This shift has allowed Alibaba to occupy an important position in the global IT industry. At this stage, Alibaba's main competitors include Amazon and Microsoft. Because these two companies failed to adapt to the particularities of the Chinese market, they eventually fell behind in the competition in the Chinese market.
4. Industrial chain strategy
In recent years, Alibaba has further broadened its business areas, entering new retail businesses (such as Hema Fresh, Taobao Supermarket, etc.) and digital entertainment (such as Youku, Ali Music, etc.). In addition, Alibaba has also established a leading position in the cloud computing market through its wholly-owned subsidiary Alibaba Cloud, allowing it to better control the performance and quality of its services. This strategy enables Alibaba to control key technologies and services, establish industrial chain barriers through technology and standards, and establish competitive advantages in cost structure, customer awareness, and technological leadership through industrial chain collaboration. This strategy has helped Alibaba further consolidate its market position and improve its competitive advantage.
Chain master brand: the ultimate competitive strategy in the service industry
With its main brand as the carrier, Alibaba has successfully established a strong competitive advantage on a global scale. It not only occupies a dominant position in B2B e-commerce, C2C e-commerce, payment, cloud computing and other categories, but also has made important breakthroughs in emerging fields such as new retail and digital entertainment. In addition, Alibaba also has its own core technology in the field of cloud computing. These factors together make Alibaba a leading brand in the Internet service industry chain.
As a main chain brand, Alibaba has a strong brand recognition potential and can easily beat the original brand leader when entering related businesses. For example, after Alibaba launched Aliyun, it quickly occupied a dominant position on a global scale, squeezing the original cloud service industry leader. This is because the potential of Alibaba's main brand has made consumers have high expectations for new products and are willing to try these new products.
Therefore, whether it is for a country or an enterprise, once it can control a certain industrial chain and become the main brand of the chain, it can have the ability to reduce the dimensionality of the entire industrial chain-related businesses, just like having an almighty sword of God . That's why becoming the main chain brand is the ultimate competitive strategy for companies in the service industry.
Alibaba has adopted a grand strategy that has gone through four stages of development and has risen rapidly. In September 2014, Alibaba was listed on the New York Stock Exchange, becoming the largest IPO in history. In December 2020, its market value reached US$610 billion, making it the Internet company with the highest market value in the world.
So what is a small strategy ? Let's look at what the companies and brands eliminated by Alibaba have in common.
Yihaodian: Yihaodian initially sold food and daily necessities and is one of the earliest online supermarkets in China. Because it has been sticking to this field, it failed to develop and adjust its business model in time to adapt to market changes. On the other hand, Alibaba's Taobao and Tmall have continuously expanded their product categories and service scope, and finally gained an advantage in the diversified competition. In 2015, Yihaodian was acquired by Alibaba.
Yixun.com: Yixun.com was originally an e-commerce website mainly selling electronic products, and has a relatively high market share in China's electronic product retail market. However, due to the lack of timely adjustment of business strategy and the lack of diversified development like Alibaba, it failed to effectively respond to the competition in the e-commerce market. In 2013, Yixun.com was acquired by Tencent, but its market position is still surpassed by Alibaba's e-commerce platform.
Fancl Eslite: Fancl Eslite is an e-commerce platform focusing on clothing sales. At first, it achieved some success in the market with its high quality and excellent after-sales service. However, due to being too focused on clothing sales, it failed to expand the range of goods and services like Alibaba, and failed to grasp the trend of diversification in the e-commerce market, and eventually lost its market advantage in the competition with Alibaba.
These four companies that were defeated by Alibaba at different times have one thing in common: First, they all adopt "small strategies" and stick to category thinking. Although the companies have the best product categories, their strategic thinking stays at the first stage of category focus. Ultimately going bankrupt or being acquired is an important challenge that Chinese companies are currently facing.
Most of the existing growth strategies are only aimed at the first stage to solve the problem, or the strategic thinking of the first stage is still used in the second and third stages of the brand, only to solve the urgent need, lack of overall thinking, this kind of short-sightedness and limitations may affect the future of the enterprise Development entails a series of strategic risks:
Lack of innovation and adaptability: The market environment and consumer needs are constantly changing. If the company still insists on using the initial strategy, it may lose the flexibility and sensitivity to adapt to market changes, resulting in products and services losing competitiveness and a large increase in sales. decline, gradually abandoned by consumers.
Waste of resources: At each stage of brand development, a business' resource needs may vary. If you still stick to the initial strategy, you may not be able to achieve the most effective use of resources, resulting in a waste of resources. Many Chinese companies are affected by the old positioning and spend hundreds of millions or even billions of dollars in advertising costs every year, but their sales do not increase but decline.
Lack of long-term planning: If the enterprise only solves the immediate problems without long-term planning and goals, it may lose its direction in the future competition and cannot develop continuously and stably. The aging of products, services, personnel, and strategies will eventually lead to aging. As a result, enterprises are aging and gradually eliminated by the times.
Opportunity cost: Excessive focus on short-term issues may cause the company to miss long-term growth opportunities. This opportunity cost may affect the future development of the company and miss the dividends of the times.
The risk of blind expansion: In the absence of a global perspective, enterprises may fall into the trap of blind expansion, which may not only lead to the dispersion of resources, but also may neglect the core business due to over-expansion.
Regardless of the commonality of the industry from the perspective of international companies or domestic companies, they must adopt the correct growth model at different stages of competition, take advantage of competitive growth, and compete with competitive advantages. All business activities should help strengthen their competitive advantages. The competitive environment and competitive advantages are driven by competition, not purely business-driven.
The only correct competitive strategy in the new era: main brand competitive strategy
In the new era, the main brand's competitive strategy is planned from a macro perspective, which is the so-called grand strategy. This kind of strategy requires us to go beyond a single category cycle, think globally from a higher dimension, and systematically create a set of continuous and comprehensive brand competition strategies, so as to ensure lasting strategic effects in this ever-changing era.
Realize global advantages: The main brand competition strategy emphasizes overall layout and long-term planning, which can help enterprises transform local advantages into global advantages and realize all-round competitive advantages.
Conducive to sustainable growth: The main brand competition strategy can help enterprises go beyond the cycle of a single category, think globally from a higher dimension, and realize a continuous and comprehensive brand competition strategy, thereby promoting the sustainable growth of the enterprise.
Cross-cycle competition: By taking into account the cyclical changes in categories, the main brand competition strategy can enable enterprises to better cope with competition at different stages, grasp the rhythm of market changes, and gain advantages in cross-cycle competition.
Improve long-term competitiveness: Through the main brand competition strategy, enterprises can develop staged advantages into long-term advantages, so as to maintain a leading position in the fierce market competition.
Unified enterprise strategy: Based on the strategy of the main brand, the enterprise can carry out strategic deployment in an orderly manner to ensure that various brands operate collaboratively under a unified framework and improve overall efficiency.
Optimizing resource allocation: Adopting the main brand competition strategy can make the future determine the present, global advantages determine local advantages, and long-term advantages determine stage advantages, so that enterprises can better optimize resource allocation and improve resource utilization efficiency.
Prevent strategic short-sightedness: The main brand competition strategy encourages enterprises to carry out strategic planning from a long-term perspective, avoid strategic short-sightedness due to excessive focus on immediate interests, and better adapt to and lead market changes.
The main brand competition strategy provides a strong theoretical support and practical guide for the long-term development of the enterprise. By transforming overall advantages, enhancing long-term competitiveness, unifying corporate strategies, achieving sustainable growth, optimizing resource allocation, and preventing strategic short-sightedness, companies can better grasp future development trends and cope with increasingly fierce market competition.
In this ever-changing and ever-changing era, no matter what kind of challenges and opportunities they face, an enterprise with a competitive strategy of the main brand can always maintain a clear sense of direction and firm determination, actively lead the market trend, and strive to achieve the sustainable development and success of the enterprise. Prosperity.
On the road ahead, we expect more companies to realize the importance of the main brand's competitive strategy, use this as a guide, build their own strategic planning, determine local advantages with overall advantages, determine stage advantages with long-term advantages, and promote The overall development of the enterprise, to achieve higher enterprise value.