According to a news report, Ali’s revenue last year was 50 billion baht and profits were as high as 20 billion yuan. Although Ali's revenue is inferior to Tencent, its profit exceeds 20% of Tencent. And, Ali Group's valuation may also be close to 200 billion US dollars. However, the news also pointed out that the promotion ROI (investment return rate) of Ali sellers is declining year by year.
The other side of this news also confirms the view that there is no "cheap" channel and that the distribution costs of all channels will eventually converge. At the time, both Ali and the manufacturer, Taobao was a low-cost channel to promote and understand.
This kind of cognition not only violates the basic principles of economics but also is unscientific in my 20 years of marketing experience. Our generation of marketers has witnessed the rise of modern retail channels in China. About 20 years ago, modern retail channels for consumer products (manufacturers later called K/A, Key Account) began to appear. Initially, their sales were very high. High, but the distribution costs are very low, there is no entry fee, no festival fees, and no display costs. But before long, they quickly evolved into a “demon king†who ate the bones without hesitation, and all kinds of expenses went up. The entry threshold for manufacturers was getting higher and higher, but it was not a dilemma. Modern retail channels gradually replaced traditional channels. The mainstream of sales. Being excluded from the mainstream means being marginalized, but entering the mainstream also means accepting the exploitation of modern retail channels.
The appearance of the home appliance industry K/A channel later Suning Gome is even more so. They have exhausted the power of capital to quickly complete the nationwide expansion and become the most important distribution channel for the home appliance industry. Similarly, like consumer goods K/A, they began to compete with manufacturers for the value chain, compete for profits, and between channels and vendors.
Today, the home industry is also facing the expansion of national stores such as Red Star Macalline, Home Furnishings, Moon Star, and Eurasia. From a strategic point of view, over time, they will become the mainstream channels for furniture sales in the country, just like the former consumer goods industry. K/A stores and home appliance industry Suning Gome. Ultimately, the traditional home market and regional stores will not exist. They will either disappear or be acquired by national sales outlets. It is difficult to have other roads to go. With the expansion of nationwide home stores, their ability to ask for prices will grow stronger. They will also repeat the path taken by the consumer goods and home appliance industries to compete for value chains with manufacturers. This year, Redstar Macalon has increased the cost of software-related strategic alliances to 10 million. This is a very important signal, which means that manufacturers or a brand entry threshold is higher.
There is no doubt that the trillion-dollar home consumer market will grow bigger and bigger, but does it mean that home-made manufacturers will grow more and more? The answer is no. The evolution of channels determines the trend of the future home industry is that the bigger the bigger, the smaller one disappears. This cup of home furnishing industry is divided among the strong ones.
In the game between manufacturers and channel providers (home industry is exactly the property side, but there is no essential difference), the only effective weapon for manufacturers is the brand, and the essence of value chain competition is who understands the value of consumers better. Who is the spokesperson for consumer interests? The brand has such appealing ability. It is the only chip that can be used in the process of bargaining with the channel.
Market competition is also subject to regularity. Whether it is consumer goods or home appliances, the result of market competition is that there are fewer and fewer brands on the market, and so will households. In a fully competitive category market, it will eventually be composed of two pole markets. 80% of the mass market and 20% of the super market segments, and the corresponding companies are competing for 80% of the market's mass-market products and compete for 20% of superfine products. There are few exceptions to this rule, which is divided into expert products and companies in the market.
In the mass market, there will eventually be three or so brands left. Leading brands will tend to stabilize around 35% of their market share. They will enjoy the highest profits in the industry, while the second brand will take up even less share and less profit. The three brands are often referred to as mire-type enterprises and are struggling on the edge of life and death. 20% of the super market segments are made up of expert companies. They may be designer brands. They may be products that meet the needs of niche people. Although their profit margins are rich, their qualities are not great.
The focus of the strategy should be the beginning, and the formation of the above market is the end of the strategy. We only understand this point in order to develop a brand strategy for our own business. Do you want to compete for the status of the king in the mass market, or to make a profit in the super segment market? This is the difference of strategy. Objectively speaking, there is still time in the home industry. Our competition is far from being sufficient, and Red America and our unsuspecting people are far from completing the country's strategic layout. This is precisely the brand's opportunity point.
The so-called “channel brand†speaker in the home industry is just a moment in the development of the brand. This time will not be long. It only shows the dividend period of the channel. Non-user and consumer-oriented companies will eventually be abandoned by channels. In the Internet era, user value is more important than ever before. It truly determines the future of a brand.
The “positioning theory†that originated more than ten years ago is not necessarily too serious. Positioning theory is one of the means to compete for the minds of consumers in a highly competitive market in the era of traditional media and has become obsolete in the Internet age. It is suspected that the positioning theory is essentially a traditional advertising technique for print and television media. It is not the Bible of the brand. The value of users and consumers is the essence of the Internet age. Brands do not have to set limits for themselves, and they are fixed at certain levels. One category competition. In the new era, almost every category of the home furnishing industry can be redefined, and the future overlord must be humbly listening to the voices of consumers and respond to the changes of the times.
The so-called de-branding and logo-making movement in the United States is also an increasingly critical issue for consumers. The fundamental reason is that consumers are no longer about brands, but have actively participated in the brand building. This is the 2.0 era of the brand.
But whether it is now or in the future, the brand will be the intensive trade force of the manufacturer's confrontation channel or the only weapon that appeals to consumers. Behind the brand is the values ​​and culture, even the belief, it will be to pull consumer currency votes and get The most important element of sustainable development is the soul of the company.
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