2019.05.10 / Viewpoint

Two ways to have a profitable business, make products and make brands

A customer came to us and said he wanted to "make a brand". We asked him why you wanted to "make a brand." He said: Because I have been working in the factory for more than 10 years. I have manufactured products for multiple brand. I made good products. I ended up just earning a little. Others just have to put a logo on the product, and they can immediately make a few times of the profit I made. So why not I build a brand too.

But in fact, Is this ‘creating a brand’? Just adding a logo... NO, NO, NO ....

This is completely wrong. After so many years of experience, to be honest, if a company's business model relies on products to make a profit, then the only way to win is to "pursue efficiency" and "reduce costs". In other words, if you earn profits by selling goods, you have to keep pursuing a faster and cheaper way of manufacturing than other competitors to achieve commercial success. For example, relying on technology, optimization of management, establishment of channels, formation of scales, etc. will ultimately achieve cost reduction and maximize profit. Companies such as Galanz, Walmart, IKEA, etc. are all leaders of such example.

"Making products" is about goods,

"Branding" is about people

"Making products" is about goods, and "making brands" is about people. These two concepts and things are completely different. The profitable way of operating a brand requires the company to have strong marketing and pricing power. Most of the luxury brands take this route. Put all your thoughts on "people" to discover what consumers want and which are their hidden and unmet needs, and then repeatedly brainwash them. Such a profit model actually sells a brand. The brand itself is an independent product, and the product is only a promoter of the brand.

So a business owner who has been making products for more than 10 or 20 years said that the ability and experience of "making products" are his advantages in branding. This is often counterproductive, because his mind is already full of goods. It is impossible to switch to the logic of selling brands at once. According to past examples, people who are used to making products have not only no advantages but instead face the opposite. If you want to invest in brand management, it is often the case that the second generation of the company will be relatively easier to succeed than the founder, because they do not have rigid cost thinking and burden, and they understand the importance and essence of "brand management". Of course, this premise is that the parents(founders) can really support and let the young people take charge.

So what is the brand essence?

A few days ago, I saw a targeted poverty alleviation program on TV. The guests traveled thousands of miles to XinJiang in a hope to persuade and help local melon farmers to turn their grown melons into brand melons. In this way, their melons can be sold at a low price. Some village farmers received counseling, increased necessary investment, and their incomes improved. However, when they arrived in other villages, they were treated coldly and rejected directly. The reason why the farmers refused was that they thought it would be better to plant melons according to the traditional methods than to invest extra costs. They did not see that this was an investment in future profits. In this short view, brand is regarded as cost, not only for farmers, but also for the first tier cities every day. Many people think that spending money on brand is a cost, which is a fundamental cognitive error.

Because the brand

Is an investment,

Is an investment,

Is an investment,

(repeat 3 times because of it’s importance ~).

So back to the melon just mentioned, it turns out that after the systematic improvement of the brand, the farmers have increased their annual income from more than 400 yuan to 4000 yuan per mu, with overall income increase more than 10 times.