In the modern business environment, the formulation and execution of corporate strategy is crucial to the long-term development of the enterprise. However, without a scientific brand competition strategy, companies are likely to fall into a series of strategic misunderstandings, such as ineffective innovation, disorderly diversification, brand aging, ignoring competitive growth and overall growth, etc. All of these may hinder the sustainable development of the enterprise and become a stumbling block on the road to success.
Strategic Misunderstanding 1: Blind innovation leads to ineffective innovation
In the ever-changing business world, innovation is undoubtedly one of the key factors for business survival and success. However, while innovation is critical, pursuing it alone is not always the best strategy. In some cases, excessive pursuit of innovation may lead to "ineffective innovation" and make the investment results of enterprises very little.
Sony's MiniDisc (MD) player is a technological breakthrough that can replace CDs. However, even though the technology was innovative, it was not fully embraced by consumers. And with the rise of MP3, MD player ultimately failed. It can be said that Sony pursues technological innovation too much, but ignores the needs of consumers and market trends. Coincidentally, although Google Glass received a lot of attention when it was released, it was not widely accepted by consumers due to its high price, unattractive design, limited usage scenarios, and privacy concerns. It can be seen that only technological innovation is not enough, we also need to consider the practicability and acceptability of products. The same goes for the Segway electric two-wheeler, which, while hailed as a revolutionary form of personal transportation when it was released, ultimately failed to gain widespread acceptance due to issues such as high price, difficulty in driving, and strict regulations. These cases illustrate that even innovative products can fail if they do not meet the real needs of consumers.
So what kind of innovation is a strategic innovation that helps companies grow healthily?
The correct brand strategy should be to carry out restrained and strategic innovation based on the main brand. Such innovation can not only maximize the influence and reputation of the main brand, but also meet the new needs of consumers and enter new market areas.
Apple innovates products based on its main brands, such as iPad, Apple Watch, Apple Music, etc. These innovative products, which are closely related to Apple's main brand, also meet the new needs of consumers in fields such as mobile devices, entertainment, and health. Therefore, although Apple has innovated a lot, these innovations are restrained and based on the main brand strategy. It can be seen that for enterprises, it is very important to avoid invalid innovation and carry out innovation correctly.
Strategic Misunderstanding 2: Blind diversification leads to disordered diversification
In business development, diversification strategy is an important means for enterprises to pursue growth and market share. However, "blind innovation" that does not base itself on the main brand often leads to a disorderly and diverse situation. This disorderly diversification strategy will disperse the resources and energy of the enterprise, weaken the brand image and market competitiveness, and make it difficult for each product to succeed. Only based on a clear main brand competition strategy and adopting a diversification strategy of five major synergies (cognitive synergy, trend synergy, channel synergy, resource synergy, and technical synergy) can we achieve orderly and sustainable diversified development.
The herbal tea brand Wanglaoji once enjoyed great success in the market. However, due to the lack of a clear main brand competition strategy, after the success of herbal tea, Wanglaoji blindly launched a series of products that did not match the brand positioning, such as Wanglaoji ice cream, Wanglaoji moon cake, Wanglaoji preserved fruit, Wanglaoji Guiling jelly, Wanglaoji beer, Wanglaoji sour plum soup, Wanglaoji Walnut Lotion, Wanglaoji Lotus Root Juice, Wanglaoji Qingfei Drink, Wanglaoji Qingweile, Wanglaoji Po Chai Pills, Wanglaoji Throat Lozenges, Wanglaoji Loquat Candy, Wanglaoji Cola, Wanglaoji Toothpaste, etc. The sales of these products have been poor, and it is difficult to always succeed in the market.
Yiling Pharmaceutical is also facing similar problems. As early as 2014, Yiling Pharmaceutical launched the Lianhua Qingfei plant beverage, and then successively launched Yiling ginseng biscuits, Yiling ginseng tea solid beverage, Yiling Baihe yam barley powder, and Yiling American ginseng soft capsules. Up to now, the products of Yiling Pharmaceutical’s Tmall flagship store include Wanbi’an, Lianhua Qingwen Mask Pop Beads, Lianhua Herbal Air Sterilizing Gel, Lianhua Qingyan Antibacterial Spray, as well as edible oil, chestnut , braised eggs, effervescent tablets, Xinjiang jujube, taurine drink, toothpaste, Lianhua Qingfei drink and many other categories. Despite its rich product line, Yiling Pharmaceutical has not achieved significant success so far. Blind pursuit of diversification does not necessarily bring expected benefits, but may lead to disorderly diversification.
Enterprises should base themselves on the main brand competition strategy, carefully select business areas, and establish an orderly diversification strategy. This requires clarifying the main brand competition direction, determining the main brand positioning, establishing a product and business portfolio, following the main brand strategy, and establishing a competitive organization to ensure the rational allocation of resources and the coordinated development of the market. Only in this way can enterprises achieve sustainable success in diversified development.
Based on the main brand competition strategy, Nongfu Spring builds product and business portfolio around the "natural" positioning. The products of Nongfu Spring help to build the main brand of Nongfu Spring and consolidate the main brand awareness of Nongfu Spring's natural and healthy main brand.
Strategic Misunderstanding 3: Blindly sticking to categories leads to brand aging and limited development
The aging of the main brand caused by sticking to the category is mainly reflected in the following three aspects:
First of all, companies sticking to their original categories means lack of product updates and innovations. As the market changes and consumer needs continue to evolve, original products may gradually lose their appeal and fail to meet the needs of the new generation of consumers. If the enterprise is limited to the original category without product innovation and expansion, the competitiveness of the main brand will gradually decline.
Secondly, sticking to the category also means that the company has missed other potential market opportunities. The business environment is constantly changing and new market demands and trends are constantly emerging. If an enterprise only focuses on its areas of expertise and is unwilling to try new categories and markets, it will miss opportunities and fail to achieve comprehensive development. In a highly competitive market, companies need to have keen market insights and be brave enough to expand into new areas in order to maintain their competitive advantage and create more business opportunities.
Finally, the iterative speed of the life cycle of the category is accelerating. In the past, it was three to five years or even ten or eight years. Now the shortest time is only a few months. It is difficult to establish a competitive advantage of the main brand by sticking to one category. It will soon be eliminated by the times.
Kodak, a traditional film manufacturer, still insisted on not giving up the film market when digital photography technology was on the rise, which caused the company to miss the opportunity of digital photography and eventually went bankrupt. Nokia used to be the leader in the mobile phone market, but when smartphones emerged, they still stuck to the traditional feature phone market and failed to transform in time, resulting in a rapid decline in market position. Video rental company Blockbuster, which stuck to its brick-and-mortar rental model even as streaming technology took off, failed in the new market competition and eventually went bankrupt.
Enterprises must abandon the thinking of blindly sticking to categories, and think about the sustainable development of enterprises based on the main brand competition strategy.
The bloody lesson that sticking to the category leads to the aging of the main brand is admonishing countless enterprises: to survive and develop in the ever-changing market, enterprises must abandon the thinking of blindly sticking to the category, based on the main brand competition strategy, and continue to innovate and expand. Only by maintaining the vitality of the main brand and seizing market opportunities can the company achieve structural growth.
From the initial electric fan business, Midea has gradually expanded to air conditioners, refrigerators, washing machines, microwave ovens, dishwashers and other home appliance categories, forming the most complete home appliance industry chain in China. When Midea enters new categories, it also follows the principles of five major synergies: competition synergy (Midea’s main brand continues to grow stronger and its market competitiveness continues to strengthen), trend synergy (the home appliance industry has continued to grow since the 1990s), and channel synergy (Midea Group’s Constantly adjusting the channel consumption mode, the channel is constantly iterating with the changes of the times), resource synergy (with the most complete air-conditioning industry chain, refrigerator industry chain, washing machine industry chain, microwave oven industry chain and dishwasher industry chain in China), technology collaboration (Midea's external competition in every field and every stage is based on internal technical coordination). This can not only ensure the relevance and synergy between the new category and the main brand, but also ensure the differentiation and competitiveness of the new category. Midea does not represent any category. We can see from Midea's financial report that both Midea's operating income and net profit have continued to grow at a high rate. By 2021, the operating income has reached 343.361 billion.
It can be seen that in today's highly competitive business environment, enterprises should base themselves on the main brand competition strategy, always maintain a keen market insight, constantly look for new development opportunities, and flexibly adjust strategies to adapt to market needs and changes. At the same time, enterprises should also adopt five major synergies, namely cognitive synergy, trend synergy, channel synergy, resource synergy and technical synergy, to ensure the success of diversified development. This kind of diversification based on the main brand competition strategy will enable enterprises to make better use of brand influence, market channels and resource advantages when expanding new categories, achieve synergies and enhance competitiveness.
Strategic Misunderstanding 4: Only Emphasizing Scale Growth, Not Knowing How to Competitively Growth
Competitive growth lies in whether it can help enterprises establish competitive advantages, which cannot be brought to enterprises by scale growth, and the scale that cannot establish competitive advantages will only become a burden for enterprises in the end, and the pursuit of unlimited scale will drag enterprises into the abyss. There are three reasons:
First, enterprises may lose their competitive advantage in market competition. Enterprises are greedy for large-scale growth and only emphasize scale growth without starting from their own advantages. Even enterprises do not realize what their own advantages are. Enterprises blindly emphasize scale growth, and eventually lose their original competitive advantages and be surpassed by competitors.
Second, businesses may not be able to achieve long-term profitable growth. Simply relying on scale to increase sales does not guarantee profitable growth. Growth in scale can lead to bigger losses if the business cannot improve profit margins or control costs. Competitive growth emphasizes that enterprises improve profitability and win higher profits through innovation and differentiation.
In addition, businesses may miss out on market opportunities. Enterprises pursuing scale growth usually focus their resources on expanding and expanding production capacity, while ignoring changes in the market and the emergence of new opportunities. In the rapidly changing business environment, enterprises need to flexibly adjust their strategies and constantly look for new growth points and market opportunities.
Huishan Dairy is a typical case. Huishan Dairy made a fatal mistake in the process of pursuing scale growth. Huishan Dairy's strategic decision focused too much on scale growth and ignored the importance of competitive growth, which eventually led to its failure. Although Huishan Dairy adopts the whole industry chain model, it has invested a lot of money in the links from forage planting to dairy processing, and requires a lot of financial support for the construction of pastures, dairy farming, feed processing, etc., and the promotion of the whole industry chain model As a result, Huishan Dairy's debts continued to rise. Data show that from 2013 to 2016, the total liabilities of Huishan Dairy increased from 4.628 billion yuan to 17.087 billion yuan.
In addition, Huishan Dairy also made serious mistakes in its investment decisions. The major shareholder of the company even misappropriated 3 billion yuan of funds for real estate investment, which has attracted the attention of the industry. Huishan Dairy's inaccurate prediction of industry changes, blindly expanding scale investment, cross-border investment and other decisions led to a break in the capital chain and declared bankruptcy.
Evergrande Group, as a company with real estate as its main business, was once one of the largest real estate developers in China. However, after 2014, Evergrande began to get involved in many fields such as automobiles, ice springs, and football, and adopted an expansion model with high debt and high turnover. This kind of strategic decision only emphasizes scale growth while ignoring competitive growth, which ultimately leads to the company's plight.
With the implementation of China's real estate market regulation policies and increased financial pressure, Evergrande Group is facing a serious debt crisis in 2021, and even faces the risk of default and bankruptcy. This situation has aroused widespread concern in society and the market.
The mistake of Evergrande Group lies in excessive pursuit of scale growth, while ignoring the importance of competitive growth. By expanding into unrelated fields and implementing a high-debt and high-turnover operating model, Evergrande Group has achieved rapid growth in scale in a short period of time. However, due to the lack of in-depth research and grasp of competitive advantages and market demand, the expansion of enterprises in multiple fields did not bring competitive advantages, but increased risks and pressures.
Smartisan Technology was established during the most prosperous period of China's mobile phone market, but it neglected competitive growth. Too much pursuit of business growth failed to give the company an agency advantage in the competition, leading to blind expansion of business areas when the main mobile phone business was not yet stable. In just a few years, Hammer has been involved in many fields such as notebooks, purifiers, TNT, soft and hard ecology, and tried to compete with the giants. It can be said that Smartisan is pursuing scale growth, but has not established its own competitive advantages, and competes through advantages! Capital scale is not the core competitive advantage of Smartisan. Since its establishment in 2012, although it has conducted 8 financings, a total of 17 100 million yuan, but compared with other mobile phone giants, this is only an insignificant investment. Smartisan's businesses other than mobile phones require a lot of R&D investment in the initial stage, and the growth cycle needs at least 2 to 3 years, which consumes a lot of funds.
Since its establishment in 2012, it has been losing money for many years. In 2015, the company's revenue was 1.187 billion yuan, with a net loss of 247 million yuan; in 2016, the revenue was 809 million yuan, with a net loss of 427 million yuan, and the company's net assets were negative 240 million yuan.
Even in 2017, the Chengdu Municipal Government invested 1 billion yuan to become the leading investor, which slightly eased Smartisan's financial situation, but the company's operating difficulties have not changed. As of the third quarter of this year, Hammer Technology still lost 100 million yuan in total profit.
The Smartisan case proves once again that it is a dangerous corporate strategy to overemphasize scale growth while ignoring competitive growth. It is unsustainable to only pursue scale growth while ignoring competitive growth. Overexpansion and too broad a business domain can lead to trouble for a business. Smartisan pursued scale growth in an environment of fierce market competition, but it failed to establish a competitive advantage. Short-sighted decision-making and financial conditions failed to support its strategic expansion, which eventually led to aggravated difficulties.
There are countless similar cases, and these cases remind Chinese companies all the time that they should focus on the main brand competition strategy, focus on competitive growth, make correct strategic decisions based on competition, fully understand market demand and core competitiveness, and base themselves on trends and five synergies. Planned expansion of business.
Main brand competition strategy: focus on competitive growth and make correct strategic decisions based on competition
Judging whether the strategy is correct or not depends on whether the strategy can help the company or brand gain a competitive advantage. Any strategy that can help companies and brands gain a competitive advantage is correct, and any action that cannot help companies and brands gain a competitive advantage is wrong. Xu Zhanhai Consulting believes that competitive decision-making can only avoid strategic traps when the "three principles of decision-making" are met: (1) All business decisions must be based on competitive advantages; (2) All business decisions must be based on (3) All strategic decisions are based on enhancing brand potential and serving competition.
Based on the main brand competition strategy of BYD, every step from batteries, energy storage batteries, consumer electronics, cloud rails, cloud buses, and electric vehicles is a competitive growth. The strategic actions at each stage serve the construction of BYD's main brand and continue to build BYD competitive advantage.
Strategic Misunderstanding 5: Only consider local growth and ignore global growth, and be marginalized in competition
Going from 0 to 1 is of course very important, but going from 1000 to 1001 is even more important! A local advantage is just a bridge. If a local advantage cannot help a brand gain an overall and long-term advantage, this local advantage will eventually disappear. In the same way, local growth is only temporary growth, while global growth is long-term. Enterprises that pay too much attention to local growth and ignore global growth will also be marginalized in the competition. Dangdang failed to turn its local advantages into global advantages in time, and could not become China's Amazon. JD.com transformed its staged advantages into overall advantages in time during the competition process, becoming a Chinese e-commerce giant.
Local growth can lead to two false "strategic diseases". One is "strategic short-sightedness": only consider local growth and ignore global growth, and be marginalized in competition.
White Elephant has been marginalized in the competition in the beverage market. Although White Elephant has tried to launch a large number of new products in the beverage market, most of these products are either following the market trend or imitating other successful products, lacking a unique competitive strategy and market positioning. As a result, White Elephant's performance in the beverage market never matched its success in the instant noodle market.
In fact, for a food company seeking wider market acceptance, an inclusive product like bottled water can not only enhance the stickiness of the channel, but also expand its advantages in the channel, which can completely become the company's creation A powerful tool for market fundamentals. However, White Elephant only considered local growth but ignored the overall growth, and did not realize the importance of the beverage market to its overall competitive strategy, so it gradually became marginalized in the competition.
Comparing the sales of Baixiang and Jinmailang, we can clearly see the strategic shortcomings of the former. In 2011, White Elephant's sales were 4 billion, while Jinmailang's sales were 3 billion. However, ten years later, in 2021, Baixiang's sales will only increase to 5 billion, while Jinmailang's sales will have reached 21.849 billion in 2019. This data clearly shows that Baixiang, which lacks an overall growth strategy, has gradually lost in the competition of instant noodle companies.
Another "strategic disease" is "strategic autism": only considering local growth and ignoring overall growth makes it difficult to form synergy, and there is no competition and coordination.
In the past few years, Dali Food Group only focused on local growth but ignored the overall growth, resulting in the lack of competitive synergy and difficulty in forming a competitive force.
In 2002, Dali Food Group launched the pastry and baked food brand "Dali Garden"; in 2003, it launched the casual puffed food brand "Kopic", breaking the market structure of only imported products in the potato chips market; in 2013, self-developed The functional drink "Lehu" has become an emerging force in the health functional beverage market; in 2018, it launched the bakery short-term bread brand "Meibaichen". In addition, Dali's brands with a certain scale and strength also include "Haidedian" biscuits, "Heqizheng" herbal tea, "Daliyuan" peanut milk and "Doubendou" soybean milk, etc.
However, from 2018 to 2022, Dali's revenue for four consecutive years not only did not increase, but showed a downward trend. According to public information, according to the annual report of Dali Food Group Co., Ltd., the revenue in 2018 was 208.6 billion yuan, 213.75 billion yuan in 2019, 209.6 billion yuan in 2020, 222.94 billion yuan in 2021, and 2022. Revenue fell by 10.5% year-on-year to 199.57 billion yuan. The reason is mainly because Dali Food Group lacks a main brand competition strategy, and only focuses on local growth, ignoring overall growth. Each sub-brand is fighting independently, making it difficult to form a joint force and lack of competition and coordination.
Looking back at 2011, Jinmailang's sales were only 3 billion yuan, while Dali Foods' turnover had reached 108.12 billion yuan. The gap between the two is very obvious. However, by 2022, Jinmailang's overall revenue has climbed to 241.46 billion yuan, surpassing Dali Foods' 199.57 billion yuan in revenue. The key behind this amazing counterattack is the rising driving force of the main brand strategy.
After Master Kong gave up the 1 yuan water market in the north, Jinmailang softened water leapt up, valued 1 yuan water from a strategic height, and quickly filled the gap in the 1 yuan water market. This product strategy has fundamentally changed the tonnage and status of Jinmailang beverages, further consolidated the attributes of the national brand of Jinmailang, and strengthened the brand competitiveness of channels and channels. Relying on its strong main brand strategy, Jinmailang has realized the simultaneous development of food and beverages, the two-wheel drive of product brands and main brands, and successfully occupied a leading position in the industrial chain. They not only pay attention to local growth, but also pay more attention to overall growth, forming a joint force and realizing competitive synergy. On the surface, Jinmailang and Baixiang are fighting for instant noodles, but in fact, bottled water has profoundly affected the final competition pattern.
In addition, because the main brand of Dali Foods is not strong enough, it only focuses on local growth and ignores the overall growth, resulting in the inability to form synergy and lack of competitive synergy, which eventually leads to a year-on-year decline in sales. It can be said that the main brand strategy has become the key magic weapon for Jinmailang to counterattack and surpass Dali Food.
Jinmailang has achieved a comprehensive layout through cross-category development. They have created their own product brands in different categories, with the main brand as the core, forming a two-wheel drive. For example, in the field of instant noodles, there are "one and a half buckets" and "one and a half bags", in the field of instant soup, there are "egg drop soup", in the field of packaged water, there are "softened water" and "cool plain water", in the field of children's beverages, there are " "Little Rabbit Cong Cong", "Tianbao Taurine Functional Drink" and "Electrolyte Water" in the field of functional drinks, and "Munton Town" in the field of sparkling water. All these products are supported by the main brand of Jinmailang, realizing the common development of the product brand and the main brand.
The support of the main brand has consolidated Jinmailang's position in the market. Jinmailang has a strong main brand position in the market, providing strong support for various product brands, making these product brands more competitive and influential. This two-wheel drive strategy of main brand and product brand helps to consolidate and enhance Jinmailang's position in the market.
Companies need to pursue local growth without ignoring the importance of global growth. Only by transforming local advantages into global advantages and continuously focusing on global growth can enterprises maintain competitiveness in the competition and achieve long-term success.
When formulating strategies, enterprises should first learn the main brand competition strategy. If the main brand competition strategy is not adopted, it will face a series of problems and challenges. First, the blind pursuit of innovation may lead to ineffective innovation, that is, the creation of new products or services that cannot meet market needs or gain consumer acceptance. Secondly, the blind pursuit of diversification may lead to disorderly diversification. Enterprises invest too much resources in various fields or categories, but lack overall coordination and the formation of advantages. Third, blindly sticking to a certain category may lead to brand aging and limited development, unable to adapt to market changes and consumer needs. Fourth, if only focusing on scale growth and ignoring competitive growth, it will be difficult for enterprises to maintain a competitive advantage in a highly competitive market. Finally, if we only focus on local growth and ignore global growth, it will be difficult for enterprises to form synergy and lack the synergistic effect of competition.
Therefore, learning the master brand competition strategy is very important for large companies to formulate strategies. The main brand competition strategy can help enterprises achieve effective innovation, orderly diversified development, and the ability to adapt to market changes and consumer needs. It focuses on the overall development and synergistic effect of the brand, enabling enterprises to maintain competitiveness in the competition and achieve sustainable growth.
The main brand competition strategy can be used as an effective way to solve these problems. It emphasizes the overall development of the brand, pays attention to the orderly advancement of innovation and diversification, pays attention to market changes and consumer needs, and pays attention to competitive growth and overall growth . By implementing the main brand competition strategy, enterprises can maintain their competitiveness in the rapidly changing market environment and achieve sustainable development.
As an enterprise, we need to abandon overly simplistic ways of thinking and avoid falling into strategic misunderstandings. Instead, we should adopt a more comprehensive and forward-looking strategic tool. The main brand competition strategy allows us to maintain innovation and diversification while ensuring that our strategy can flexibly respond to market changes, meet consumer needs, and achieve competitive and overall growth. In this way, we can ensure that our enterprise remains invincible in the fierce market competition and achieves sustainable development and success.