The new chain brand is one of the directions that I have focused on research. In recent years, Hongzhang has also invested in many companies in this area, and has accumulated some thoughts. So, take this scenario to talk to everyone: thinking about the operation of the new chain brand.
1. The business world is entering the era of weak links
The first thought is that the business world is entering the era of weak links.
When we look at the development of the entire chain business, it is actually divided into two parts: one is the flow operation on the scene side; the other is the supply chain.
In the past, the top-down, strong management and control, direct operation, and high operating cost model will actually encounter phased ceilings when it develops to a certain scale. Of course, it also depends on the size of the model, which determines your strategy.
However, in the evolutionary path of the entire Chinese society and business today, on the one hand, individual entrepreneurs have become increasingly capable of operating; on the other hand, the infrastructure of the entire Chinese business environment is getting better and better. Everyone is self-driving, self-motivating and developing, which makes strong control more difficult.
Therefore, we have proposed a new macro concept called: Business has begun to enter the era of “weak links”.
How to understand weak links? We are divided into two aspects: internal and external.
Internally, the partnership system, the amoeba miniaturization organization and management model, and the project system that have been frequently mentioned in the past five or six years belong to the category of weak links.
On the external level, taking community group buying as an example, it is essentially a weak link. This business model is not new at all. Essentially, it supplies small shop models. This is a large wholesale business that has been in business for countless years.
Then why did this model suddenly run up today? The first is the digital drive on the traffic side; the second is on the model side, where you have to empower others and sell categories that it did not originally have. This forms a weak link relationship.
In general, we can see that in many models that have run out of scale today, their commercial core, internally and externally, have actually entered a weak link state.
For example, why everyone thinks about adopting a partnership system. In short, it means that it can’t be managed or managed, so everyone has become a partner.
In essence, the business top-level design is to create a powerful collaboration system, and those excellent companies can grow and thrive in this process. Once an entrepreneur understands the rules and principles of the collaboration system, he has the ability to decode it and control it.
Therefore, we believe that the future direction of business evolution is not strong management and control, but collaboration, individualization, platformization, and weak management and control.
2. The business world has entered the era of weak branding
The second thought is that the business world has entered an era of weak branding.
In recent years, we have seen the continuous emergence of many new brands. Whether it is a new format or a new product brand.
Everyone is doing it, which shows that getting started is relatively easy rather than difficult. Since it is an emerging state, it means that the barriers to branding are actually lowered.
There are actually several reasons behind this: First, China’s overall supply chain system has solved the problem on the product side.
Second, the operation of the e-commerce traffic end has become a highly efficient and high-start traffic form. When brands were looking for traffic dividends in the early days, e-commerce operations helped the rise of many new brands.
Third, today’s many high-potential shopping malls provide a physical foundation for chain brands to create Internet celebrity effects and super traffic.
In general, we can see that more and more consumers are willing to try new products and new categories, and their loyalty to the brand is declining.
From this point of view, consumers are becoming more and more likely to be driven by their appearance and rely more and more on online evaluations.
Therefore, we can see that a lot of advertising and traffic operations in catering today are in the comments section, such as brushing word of mouth, cultivating a sense of topic, and community operations.
The overall effect of strong cognition building in the brand era is getting worse and worse. In the past, the state of the three major commercial factors was that the media and flow were very concentrated, and the supply chain was very scattered.
Today, the media and traffic are very fragmented, but the high-quality supply chain is becoming more and more concentrated, and the operation of the brand depends more on the traffic operation, and the product and efficiency are unified.
Therefore, as a new brand, you must also create your own “design” and grasp the overall brand tone.
In the end, a one-sentence summary of a good brand is that it is more expensive to focus, to be a product, to be better than a difference, to be easy to spread, and to finally have a reputation.
3. The business world is weakly linked internally and externally
In general, the business world is weakly linked internally and externally. The growth process of an enterprise is a process of value exchange, both internally and externally.
The internal salary system is a kind of internal value exchange. The external value exchange includes links, interactions, gains, pays, etc. The accumulated value is consumed and supplemented. This is a process of dynamic balance.
And no matter what kind of business you start in business, cash flow is the core and profit is only the second place. Whether this event can be achieved in the end is highly related to its operational rhythm.
Because resources are limited, in the limited resources, which cards you play first and which cards you play later determine your final result. Therefore, empowerment is often a more mainstream path for business success today.
So how do we look at the store in the business world? The store is a scene where I communicate with consumers, and is an important way for us to build a brand at low cost.
But in the end, this business can stabilize, in fact, it is often still making money in the supply chain. Based on this, in the past year, a large number of catering companies have increased their investment in the supply chain.
Just a joke, we say that many catering companies today have transformed into “condiment” companies.
Because they found that the scene is uncontrollable. If there is no traffic, you will lose a lot. It is your differentiated supply chain that can be more stable and have high gross profit.
Therefore, a business model that we like very much today is to make a scene with a shipment of goods. The scene is what we like very much. We like chains that have a supply chain and can be replicated, that is, you have to differentiate on the supply chain and allow more people to expand the chain with you.
We call this model S2B2C.
Opening more than a thousand stores is a brand, because you are interacting with a large number of consumers. With a thousand stores, I can quickly sell my hot items and use brand empowerment to sell them again in all channels online and offline.
This is a big business, and we pay special attention to the branded things that can be run out of the chain first.
Fourth, the management philosophy of the brand chain: find the appropriate intermediate “degree”
We have been thinking about chain operations for many years, and we have also spent a lot of thought on this field. So, let me give you some thoughts on different perspectives of brand chain operations.
This whole set of things is basically divided into these parts: essential thinking, large and small business formats, scale boundaries and growth rhythms, chain scene brands and product brands, standardization and non-standardization, etc. I will pick a few key points here.
On the one hand, you need to have fireworks when you make the scene, and on the other hand, you need to be able to standardize on the operation side. Therefore, for standards and non-standards, the final step is to find a stage between the two.
Including fashion and basics, people often ask: What category and format do your investors like? We actually prefer basic categories, which have long-term attributes, and are somewhat worried about popular categories.
Finally, Wandian Gene, we have been thinking about a question recently:
1. What are the characteristics of Wandian Gene?
Later we discovered some of their characteristics:
First, there are no major regional differences.
Some businesses are regional word-of-mouth things, have local characteristics, and are stable but not big. What we like is the business that can run across the country.
Second, the addictiveness of heavy flavors.
For the product form, if it is food, heavy taste addiction is the main thread. For example, the track of Luowei basically still makes spicy things. Like several large companies, the masters in this area are all in Changsha, Wuhan, Chengdu and other places.
This thing follows human nature. For business to have a scale, it still has to follow human nature. This is the case with emphasis on taste.
Third, high cost performance under the premise of product upgrades.
Quite simply, today’s entrepreneurial opportunities and brand opportunities are all upgrading. Because there is no bottom line for a brand to do it down. Only performing more advanced is the future.
But at the same time, you have to show your price/performance ratio, so that everyone can clearly feel that it is worthwhile. This is also very important, but the two are naturally contradictory.
Including today, we see that VCs are investing in beef noodles. This is essentially an upgrade. Beef noodles is a super basic category that does not require any education.
If it is a catering business, a question everyone has to think about is: What are you essentially competing for? What you are competing for is actually a “price band”.
Each price band within the difference of 10 to 15 yuan is a different business. For the same category, 30 yuan and 45 yuan customer orders are two businesses.
When you are designing a business, you can think about your price band within this range of differences, and you will know who you are competing with.
Fourth, store operations are minimalist, category-based basic anti-cycle, and street-side location selection accounts for a high proportion.
Store operations must be minimalist. Can you keep a little pyrotechnic atmosphere and differentiation behind the minimalism to show consumers: this is what you made on the spot. But behind this must be the supply chain, it must be the work of the system.
Regarding category basis, what do you need to know is big business? Businesses with category-based foundations are big business. Popular and niche businesses are small businesses and do not have the level of 10,000 stores.
Moreover, although it is difficult to do on the street, it is often established with a relatively high proportion of street locations, and it is more likely to reach the 10,000-dian level.
Because shopping centers are always limited, depending on the location of shopping centers will become very “involved.” Everyone knows how hard it takes to get a position after a place is hot.
Fifth, the supply chain and brand have certain barriers.
Product development is a particularly complicated matter. Therefore, your supply chain and brand must have certain barriers and make certain differences in products.
If it is easy to make or can be solved by foundry, it is difficult to reach the ten thousand store level. You can’t just perform, and in the end it will fall on the efficiency of the supply chain and product differentiation.
Finally, your single-store model should be good and the payback period should be short, so that more people will be willing to do it with you.
2. Speculation of Big Business and Small Business
Just talked about the issue of size, size means the difference in traffic structure. Large scenes tend to attract current, while small scenes are borrowed.
It is very difficult for consumers to find the past specifically for a certain taste or consumption desire. Generally speaking, it is still a problem of traffic entry.
Looking at a business today, you have to figure out whether you are borrowing traffic or creating traffic, and then look down at the whole process. On the whole, there will be two ends.
At one end is a huge shopping mall. Another development direction is small, the single-store model is particularly healthy, and can have sustained profitability.
“Large” aggregate traffic, poor reproducibility, and slow development. “Small” is highly offensive, but easy to be diverted. Including many current O2O models, such as Meituan and Ele.me, the traffic patterns are further fragmented.
Therefore, the single-store model is easy to break. This also depends on the cyclicality of the category. Street shops are particularly difficult and highly liquid.
To sum up, large and small formats have their own benefits, but at the same time they will all have their own limitations. Therefore, everyone has to find the degree to design a business for the target group.
The same is true for retail. What kind of business, what kind of urban environment and demographic structure determine its model. Whether it is a convenience store model, or community fresh food, standard supermarkets, and general supermarkets, they all have their own suitability.
3. Product brand and scene brand
Falling to the brand itself, the difference between the product brand and the scene brand also has a lot of connotations.
Generally speaking, many product-type items, such as fast-moving consumer goods, are themselves a one-time consumption by consumers, and they can experience them immediately.
But the scene is not. It takes a long time to construct scene recognition, but the trust is deep.
Once the consumer trusts this scene, he will have a deep degree of trust, and even give him the trust of the opposite product based on the trust of this scene.
After the scene brand is strong to a certain stage, it will create its own product brand and empower explosive products. For example, Starbucks’ product brands are also selling well.
One of the strengths of product brands lies in simplicity and directness, focusing on consumer product needs to innovate. Many positioning theories talk about product brands, but in fact they cannot cover many scene brands today.
The positioning of the scene brand is very scattered. There are multiple logics in it, such as convenience, orientation, and the creation of service experience. There are still many differences between it and the product brand.
4. Look at brand cyclicality from the catering industry
In addition, let’s look at the cyclicality of the brand from the catering industry. In fact, the more basic things are not easy to do, the less easy things to do, the more you can make a big company.
Like the Wandian gene just mentioned, there are often things that we usually don’t look up to but have done extremely well.
For example, chicken and duck in ingredients are big business. Whether it’s lo-mei or Zhengxin chicken chops like chicken chops, they can also be made into super large chains.
Including when we started a business, one thing is very important, that is, the upstream stability of the core category you choose.
When you get the single-store model right and start copying, you will quickly discover how important the stability of upstream prices is.
If the upstream price is highly volatile, you will be in a miserable situation, and you may also face issues such as breeding, scale, and so on.
The same is true for long and short cycles. Some forms have not changed, and what has not changed is big business. For example, steamed bun is a particularly inconspicuous thing, but if it is run well, it is also a big business.
Therefore, catering is often a “Wudaokou” business, including breakfast, lunch, afternoon tea, dinner, and supper. It depends on how much money you can earn from consumers in Wudaokou. This is our thinking on the length of the category.
Of course, there is also price band competition. QSR is actually fast food, which can be cut into two pieces, one is called fast leisure, the subject is leisure, but faster, the price ranges between 55-60.
The other is called leisure fast, which is a fast food but has been upgraded and cut to a new price band competition. In fact, the whole chain is basically price band competition.
5. The core of the franchise model is the S2B2C model
Finally, quickly talk about the core of the franchise model. In fact, it is 2B and 2C, but there must be data dimensions.
We saw some people who joined the brand today said: I have a thousand stores, but I only supply very few ingredients and materials. why is that? Because the rules were not set at the beginning.
Everyone tends to do things that are easy to do and want to make quick money, but the other side of quick money is unstable and not long-lasting. If you want to revert to the original model for control and operation, the difficulty is very high.
Therefore, at the beginning of your design, genes such as the intensity of control and digitization must be determined. Your genes determine what you will eventually look like. However, changing it does not work in the past.
In fact, I have never seen a weak control franchise that can be established for a long time. S2B2C is also a strong control franchise, but it can be weakly linked, which means there is no need to manage it like copying and directing.
There are three core elements of franchise: franchisee profile, asset management complexity and income distribution.
Therefore, to do this well, to put it simply is to achieve a balance of three things.
First of all, how do you quickly attract investment and quickly acquire customers? The improper practice here has actually harmed a lot of people, and the leeks in history have been cropped one after another.
The second piece is the complexity of asset management. Some business franchisees can’t do it. It is too difficult for them to complete a complicated action.
The third piece is the question of how to divide the money. When playing this kind of weak link system, profit distribution is the core. At the level of your values, you must let others make money first, and finally you can make money.
Briefly summarize our thinking about brand chain. Overall, we believe that business has begun to evolve into an era of weak links.
And there are multiple factors in chain operations, including brand dimensions, single store model dimensions, supply chain dimensions, and business format selection dimensions, and so on.
Finally, we believe that a brand that can survive for a long time and form brand power, its business model is often weakly controlled and weakly linked.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-to-run-a-successful-chain-brand/
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