If you are poor, you will change;
Many industries are now going through cycles of uncertainty, with slower growth becoming the norm. How to respond to changes through innovation and achieve long-termism has become a topic for all industries and enterprises.
Among many industries, there are more uncertain factors in the infant formula market: the total population of the society has declined, the rate of entry into offline maternal and child stores has decreased, the market growth rate has slowed down, and competition has become increasingly fierce... Brand How to switch to new kinetic energy and successfully cross the cycle during the decrement phase is particularly important.
When the direction of the tide changes, some "naked swimmers" cling to their old thinking and old patterns and gradually fall behind. Some "trend runners" are determined to forge ahead, have the courage to change, open up new directions through innovation, and always walk in the forefront of the team. From the perspective of the entire industry, Yili Gold's crown clearly belongs to the latter.
As of the first half of 2023, the growth rate of Yili infant formula powder will continue to rank first in the industry [1]. Immediately afterwards, on September 1, Yili Jinlingguan held the 4th Maternal and Infant Industry Summit of "Lingyinghui". At the summit, Jinlingguan not only launched its ultra-high-end large single product Zhenhu Platinum Cuisine, but also released a new digital channel cooperation model of Zhenhu Platinum Cuisine:
"The New Model of Global One-Tray (DTB)".
Simply put, under this model, Jinlingguan will work with dealers to better serve consumers by strengthening price control and optimizing operations.
For a long time, the milk powder industry has had two development drivers: continuous iteration of products and channel changes. Facing the current industry situation, channel reform is still critical.
Channel change is imminent
The essence of business is supply and demand.
Most of the audiences who demand milk powder are newborn babies. Recently, Qiao Jie, an academician of the Chinese Academy of Engineering, said that the number of newborns in my country has dropped by about 40% in the past five years. In 2022, the total number of births in the country will be 9.56 million, and the number of births in 2023 is expected to be about 7 million to more than 8 million.
The decline in the number of newborn babies and the decrease in demand have dragged down the growth rate of the entire milk powder market and the infant formula market. According to Euromonitor data, the growth rate of total retail sales of infant formula in China has continued to decline in recent years.
With the overall growth rate of the industry slowing down, there are fewer increments that can be tapped, which has given rise to some industry chaos, including brand momentum, random prices, inventory backlog, reduction in customer sources, vicious competition, etc. Brands such as Jinlingguan have also been coerced into this industry change. If the chaos is allowed to spread, it will ultimately affect the healthy development of the entire industry.
Action to break the situation is imperative.
Reviewing the development path of Chinese milk powder brands, we can see that product changes and channel changes are the two key driving forces. The two have helped Chinese milk powder brands break through barriers many times. On the one hand, they won the market occupied by foreign brands, and on the other hand, they broke through many chaos and promoted the healthy growth of the industry.
Because product changes are visible to the naked eye, ordinary consumers perceive them more clearly. In fact, channel change is the "invisible kinetic energy" of the brand.
Because, in the final analysis, retail business is a competition of efficiency. One of the ultimate goals of retailing is to maximize efficiency, whether it is human efficiency, square meter efficiency, product efficiency, turnover rate, or growth rate. The channel change not only affects the customer's consumption experience, but also affects the efficiency and cost of brand management, and ultimately enhances the potential of the brand.
It can be said that channel reform has always been a key part of promoting the orderly development of the milk powder industry. In recent years, digitalization has undoubtedly become the protagonist of channel changes in the milk powder industry.
As early as 2020, Jinlingguan focused on the strategic layout of market channels, jointly created the "Lingyinghui" club with the maternal and child system, and continued to build a platform for sharing brand and channel resources. The key point of this platform is that it can fully empower channel partners in multiple fields such as marketing, channels, operations, big data, and technology, so as to achieve a win-win situation for brands, channels, and consumers.
However, in the face of the pain points in the current infant formula market, it is not enough to rely solely on past channel changes.
A new round of channel reform is undoubtedly extremely urgent.
Multiple benefits, the way to break the situation
The ultimate form of brand competition is about model competition.
In order to completely reform the channel, we should not only focus on the connection between online and offline, process simplification and empowerment, etc., but also innovate on the underlying model. Model innovation requires an anchor point, and only with an anchor point can there be a direction and a more precise solution to pain points.
Judging from the current infant formula market, the anchor point of channel model change is "consumer-centric".
In 1935, Hayek, the Nobel laureate in economics, put forward the theory of "sovereignty of the consumer", that is, "consumer sovereignty". In the era of consumer sovereignty, the era of great material abundance, supply exceeds demand, and consumers are increasingly dominant. What and how much a brand produces should be determined by the wishes and preferences of consumers.
The entire infant formula industry has now entered the era of consumer sovereignty. The channel transformation of brands such as Yili Jinlingguan must focus on consumers.
In the past, some infant formula brands preferred the DTC channel model, that is, the brand direct-to-consumer model without going through intermediate channels. Under this model, consumers scan codes to place orders, manufacturers receive and dispatch orders in the background, and dealers and stores in the middle are more responsible for service and new functions, which is equivalent to a traffic platform.
This model seems to save intermediate costs and facilitate consumers, but there are also some shortcomings. For example, for dealers, under the DTC model, the brand directly contacts consumers, which is difficult to bring value enhancement to dealers, and is also not conducive to the accumulation of members in the maternal and child system and the store itself; product inventory and distribution costs will result in uneven distribution of benefits. Even, it will also affect the cooperation between brands and distributors.
For consumers, there are certain risks in after-sales service and guarantee under the DTC mode. Because terminal stores and dealers have concerns about returning all member information to manufacturers, they will have reservations about after-sales.
In contrast, Jinlingguan's new DTB model is more friendly to consumers and dealers.
The most special feature of this model is that the brand and channel distributors work together to serve consumers, and the cooperation between the two parties is closer.
Through the three key points of product control, store control and price control , Jinlingguan can understand user needs more efficiently and deeply, and improve consumer satisfaction to the greatest extent. After consumers place an order through the store, the manufacturer directly supplies the terminal, which can also improve the store's response speed and enhance the consumer's purchasing experience. On the one hand, it solves the problem of chaotic prices, and on the other hand, the double guarantee of service experience is undoubtedly more high-quality.
For dealers, after forming a closer connection with the brand, they will also achieve faster growth.
For example, through digital empowerment of stores, brands can improve store response speed, promote dealers to improve service quality, and magnify store channel advantages. In terms of member management, the brand continues to optimize the full-link closed-loop operation. On the one hand, it gives full play to the potential of the brand, and on the other hand, it promotes the efficiency of terminal stores through attracting traffic, attracting new customers, and transforming resources, and ultimately brings consumers a better consumption experience.
In short, Jinlingguan's new DTB model can bring better products, prices and services to consumers through empowering channels.
Win-win cooperation leads to the future
Looking ahead, the competition in the milk powder industry will become more intense.
This year is the year when the new national standard and secondary formula registration are officially implemented. Prior to this, some brands had withdrawn from the infant formula market. The launch of the new national standard has further accelerated the brand's exit.
Next, market concentration will increase again, and competition will further intensify. According to Nielsen data, the market share of the top ten milk powder brands in the industry is about 75%, and in the next five years, 75% of the market share may only come from 5 or 6 brands.
When brands are more competitive, it doesn't mean a "zero-sum game". In fact, in today's "competition era", competition and cooperation are inseparable. While promoting the progress of partners and the industry, the brand will also benefit itself.
Sometimes, the development of the industry has fallen into a slowdown because of the dislocation between the supply side and the demand side, which has led to the industry entering a deformed development stage. The new DTB model of Jinlingguan can clarify the market supply and demand more clearly, build a stable market environment on the one hand, and help the long-term and high-quality development of the maternal and child channel on the other hand.
In addition, Jinlingguan also adheres to the three core principles of leading by brand value, optimizing channel layout, and precise member operation, so as to provide each partner with more sufficient and broad development space.
Of course, the brand cannot talk about the model, but still needs the support of the product.
As early as 2003, Yili initiated breast milk research, extensively collected breast milk from healthy mothers across the country as research samples, established the first "breast milk composition research database" of a Chinese company, and obtained 5 core formula patents and 14 overseas patent authorization certifications.
In recent years, with the Chinese patent formula as the core, Jinlingguan has continuously promoted the upgrading of the quality of infant formula products and refreshed the new standard of good milk powder. With its strong product strength, Jinlingguan has won the trust of hundreds of millions of mothers[2]. In terms of performance, the growth rate of Yili infant formula powder has remained the first in the industry all year round. The Jinling Guanzhen Protecting Platinum Extract released this time, with fresh A2 milk source and extraordinary milk source formula, can protect babies like colostrum[3], and at the same time, it is bound to refresh the industry's ultra-high-end milk powder quality benchmark again.
The product power and brand power accumulated over the years also provide solid support for Jinlingguan to create a new DTB model.
From a longer-term perspective, in the process of creating a new DTB model, Jinlingguan is actually continuing to build a brand and channel resource sharing platform. This shared platform will help system partners to grow in an all-round way through marketing, channels, operations, big data and other fields for a long time, which sets a new template for win-win cooperation between brands and dealers in the industry.
Under the situation of everyone picking up firewood and making flames high, and all parties win-win, the ecology of the maternal and child industry will move towards a healthier, more open and prosperous direction.
There is only one moat in the world, which is to constantly create long-term value crazily.
How to create long-term value and achieve rapid growth? In essence, it still comes from innovation.
Schumpeter, who proposed the "Modern Innovation Theory", once said: No matter how many carriages are continuously added together, one train cannot be obtained. A tenfold increase can only be achieved when jumping from a carriage to a train. "
Jinlingguan is leading the industry on this innovation path at a high speed.
Notes:
*Chinese patent formula refers to the Chinese invention patent obtained by Jinlingguan Zhenhu series products, patent number: ZL201680013841.3 Invention name: Nucleotide composition and its application in food.
[1] Data source: 2023 mid-year report of Yili Co., Ltd.
[2] Data source: Shangpu Consulting Group; data statistics time: January 6, 2012-December 7, 2022; through research and statistics, the number of interested users of Jinlingguan Tmall, Jingdong, Douyin and other platforms and Jinlingguanai The number of registered members of the children's club, and the survey and statistics of the proportion of mothers among the above-mentioned numbers, are calculated: the number of mothers who trust Jinlingguan exceeds 100 million; from this, it can be concluded that Jinlingguan has been trusted by hundreds of millions of mothers; in 2022 The survey was completed in December.
[3] Bovine (colostrum) milk contains lactoferrin, oligosaccharides, sn-2 palmitic acid, and probiotics. Ayşenur Arslant et al, Determining Total Protein and Bioactive Protein Concentrations in Bovine Colostrum, (2021); Lan Hanglian et al, Research Progress on Qualitative and Quantitative Analysis of Oligosaccharides in 4 Kinds of Mammalian Milk, Food Science, 2022, Vol.43 , No.13; Guo Benheng. Dairy Chemistry [M]. Beijing China Light Industry Press, 2001: 247-267; Analysis of dairy cow colostrum flora and the effect of probiotic combination on calf growth and intestinal flora. Chen Bin. 2021.05.