Chapter 39 3. The classic marketing "war of attrition"

Until now, we have only floated on the surface of facts.We have described Robust's growth and its competition with Wahaha, but we haven't actually touched on what factors lead to their two completely different business destinies.A very shocking fact is: before 1997, the competition between Wahaha and Robust was almost in a stalemate. In the two battlefields of fruit milk and purified water, both sides showed passion and wonderful performances together. A classic marketing battle started.However, since this year, Robust’s progress seems to have suddenly stagnated. Its sales have been fluctuating at more than 1 billion yuan, and the gap with Wahaha has widened, from 1/2 to 1/3, to 2001 At the end of the year, it was only 1/4 of that of Wahaha.

Where did Robust fail? We interviewed dozens of relevant people, among them are senior personnel of both companies, distributors, retailers, media reporters and marketing experts who are closely related to the companies, and so on.We found that Robust did not make a mistake in a certain advertising campaign or marketing plan, nor did it fall behind because of the gains and losses of a certain regional market or a certain product.Surprisingly, it was defeated in a protracted "marketing war of attrition". We can analyze it from five aspects: market layout, advertising strategy, marketing system, new product development and production base construction.

In terms of market layout, Wahaha and Robust have very different ideas.The former focuses on urban markets, while the latter focuses on central cities.Robust has obvious advantages in central cities such as Shanghai and Beijing. In these markets where marketing costs are extremely high and labor costs are high, it is fighting hand-to-hand with multinational beverage brands. The results are gratifying, but it is also exhausted.On the contrary, Zong Qinghou always believes that the "meat" of China's beverage market lies in towns, while the "bones" lie in big cities. Therefore, Wahaha adopts the strategy of "eating meat first and then gnawing bones", rooting in cities and towns, planting widely and earning little.The effects obtained by these two different strategies are very different. Robust's sales and reputation in central cities are very high, and it often wins in the market share survey of hundreds of shopping malls across the country.

Wahaha, on the other hand, has a layout in all directions, using siege instead of attack, and proceeds step by step, accumulating momentum for several years. Different market layouts naturally require different advertising strategies.Robust's consumer groups are highly rational and its competitors are strong, so its advertisements are often concentrated in some central cities, and TV and store promotions are carried out in parallel, and its advertising effects are mostly eliminated in the competition with competitors offset.In the market where it exerts its strength, it can be said to be overwhelming, making it difficult for opponents to breathe, but when it is out of the "siege", it may be silent and "no grass will grow."Wahaha relies more on TV media in its advertising mix. Zong Qinghou believes that compared with urban and rural consumers with high sensitivity, the most influential media is undoubtedly "24-hour free" TV, so he will use a high proportion The commercials of the company focus on TV, especially CCTV.An unnoticed fact is that since 1997, Wahaha's annual advertisements on CCTV have been incomparable. It's just that Zong Qinghou is reluctant to wear the crown of "Biao Wang". After 2001, with the solid foundation of the urban market, Wahaha has increased its advertising on provincial satellite TVs in various places, and its complex advertising coverage has become more and more irresistible.

In terms of marketing system construction, Wahaha's joint sales model is obviously better than Robust.Wahaha is following the highly centralized "national game of chess" at the headquarters, while Robust mainly relies on each regional market to do its own thing.In the provincial and district-level markets, Wahaha implements an office system without actual financial power, while Robust has always adopted a branch system. In some respects, Robust’s provincial managers have greater authority and decision-making flexibility than Wahaha’s Manager, but in terms of the overall marketing operation, Robust seems to be relatively messy, and problems such as uneven regional market development and serious counterfeit goods have always plagued the decision-making layer.He Boquan has imitated Wahaha several times in setting up a joint marketing system, but he has never been able to truly establish this system. After 1998, after Wahaha completed the layout of the national market, it concentrated its elite troops to carry out repeated advertisements and price shocks in provincial markets where Robust’s sales were better. He Boquan was tired of recruiting and gradually fell into a disadvantage.In this sense, Wahaha's victory over Robust can be regarded as a victory for the marketing model.

In terms of new product development, both Robust and Wahaha are inactive, but they have different benefit results due to different understandings of the market and timing.He Boquan reflected on it in the future: "What I regret the most is that I missed the good opportunity for new products to occupy the market. Wahaha launched Very Coke in 1998, and now Wahaha's Very Coke has become a pillar product of the company and a major source of profit contribution for the company. At that time, Robust was also preparing to launch a carbonated beverage project, and even thought of the name of the product, called "Today's Cola", but unfortunately, Robust finally gave up on it and chose tea drinks. It is a pity that Robust's tea drinks did not become an instant success as expected."

In the book "Great Changes", Qin Shuo described in detail the whole process of Robust's failure in developing jelly: In 1997, Xizhilang jelly became popular in the market, and He Boquan decided to take a share of it. In August, Robust jelly was launched, and the market responded enthusiastically. One month later, the supply exceeded demand, and middlemen speculated on Robust jelly like original stocks. At the hottest time, only one batch could be resold to make money, and the sales channels were in a hurry. Call: Want goods!Want goods!Around the Spring Festival in 1998, the market seemed to be at its peak of madness, and dozens of wagons in a province often demanded goods. He Boquan immediately expanded his production capacity, increasing the production line from 2 to 4, and then to 6. Up to 8, the production plan was adjusted from the initial annual production and sales of 280 million yuan, and finally fixed to 1.2 billion yuan.

Since there are more than 60 varieties of jelly, and the printing of trademarks also has a certain cycle, when all 8 production lines and 48 machines are installed and put into production, the jelly suddenly becomes unsalable, and the original products are all crowded in the channels and have not reached consumers.The bigger problem is that due to the fast production, "the radish is too fast to wash the mud", some jelly has quality problems.At this time, Xi Zhilang had also reacted, and launched a battle for every inch of land with Robust on the terminal, and Robust quickly fell into a sweet "jelly vortex".At the same time, Wahaha took the opportunity to intensify promotional efforts on fruit milk and purified water. Robust suffered from many enemies, and it was difficult to care for each other. The jelly market shrank rapidly.He Boquan later admitted that the direct loss of jelly alone exceeded 100 million yuan.He told Qin Shuo about his mistakes: The two biggest strategic problems of Chinese companies are: first, they are hot-headed; , why don't I take a share of the pie?"

Compared with He Boquan's "enthusiasm and impatience", Zong Qinghou is more mature in new product development.Since purified water, Wahaha has achieved good market performance in the series of carbonated beverages, tea beverages and fruit juice beverages.During the development of each new product, Zong Qinghou pays great attention to the timing and strategy of promotion. The overall model allows it to advance and retreat freely in the control of wholesale and retail prices. In the construction of the production base, Zong Qinghou went two or three years earlier than He Boquan. Zong Qinghou soon realized that the decisive battle in the future beverage market will be a struggle of scale and cost.Since he went to the Three Gorges Reservoir Area to set up factories, he planned to implement the plan to set up production bases across regions. According to his vision, Wahaha needs to set up its own production bases in more than 90% of the provinces in the country. In half a year, Wahaha has set up factories in more than 20 provinces across the country, with a total of 100 production lines.Such an investment layout has greatly reduced transportation costs and put the company in a very favorable strategic position in terms of price competition.Although Robust has successively set up production bases in Ningxia, Heilongjiang, Hubei, Sichuan, Jiangsu and Hebei provinces, they are not comparable to Wahaha in terms of total investment and production capacity.

The consequence of all-round strategic lag is that marketing is always passive.As early as around 1998, when Zong Qinghou talked about the competition with Robust, he expressed his opinion to his subordinates: "Unless a fatal mistake is made, it is impossible for Wahaha or Robust to beat the opponent with one punch. Knockdown, the final winner is likely to win by 'points'. This will be a war of attrition and a tug-of-war. Let's see who has the strength, the ability to resist, and the toughness." But the facts seem to be exactly as Zong Qinghou expected , as Wahaha gradually completes its joint marketing model, new product development, and production base layout, its marketing advantage is getting bigger and bigger compared to Robust.

Chen Yu, deputy general manager of Wahaha Sales Company, once talked vividly about Wahaha’s competitive strategy against Robust: “Before 1997, the two sides fought for marketing creativity and brand promotion, but after 1997, they fought for marketing models and scale strength. Relying on the advantages of scale and variety, Wahaha first held down the opponent with my left hand, and competed head-to-head with Robust in the two products of purified water and fruit milk; Beverages and tea beverages impact its wholesale network. Wahaha’s product chain is longer than Robust’s, so there is bound to be more room for maneuvering in marketing, and the cost of sales is lower. The strength of the opponents, after more than a dozen back and forth, the initiative in the market and the centripetal force of the dealers gradually favored Wahaha." Wu Wenxiong, general manager of Wahaha Northeast Region, who has fought fiercely with Robust in the Northeast market for nearly 10 years, interpreted the war of attrition from another angle: "When faced with challenges from Robust, Wahaha rarely faced the challenge directly, and often Hold your breath, avoid the edge, and switch to promotion of other products. Wait until the opponent's energy is exhausted, and then suddenly implement a price war, and the opponent will collapse in one battle. However, Robust's top executives seem to have no mentality in the competition. They are always comparing the length of the moment and competing for the place. The product development is completely homogeneous. "