How can you become a star without money?

Chapter 233 'duangduang' Good Brother
"You two should know about the Coca-Cola controversy in India in 03, right?" Wang Yao asked rhetorically.

"I learned about it recently from a post on Ms." Cheng Qiyuan nodded.

"This is actually a typical home-field defense strategy that started in the 1980s. At that time, India used this method to influence local consumers' perception of the Coca-Cola brand. Back then, the internet was not well-developed, and the public could only obtain information through television media and newspapers. Therefore, India's strategy was very successful. Even now, the combined market share of Coca-Cola and Pepsi in India is less than 10%."

However, Coca-Cola acquired the local brand Thums Up Cola, and by employing a multi-pronged approach, it still maintains a 60% market share in India. Their core strategy is to control offline sales channels.
"But that was almost a decade or more ago. Now it's the internet age, and the speed and sources of information dissemination, as well as sales channels, are completely different. Their chances of succeeding by repeating the same tricks have significantly decreased," Wang Yao explained.

After listening, Cheng Qiyuan and his wife exchanged a glance. They naturally understood that Wang Yao was emphasizing the importance of online marketing and e-commerce channels. But to be honest, traditional companies that started out in retail and wholesale were somewhat resistant to these new sales networks.

"Does Mr. Wang mean that we can use online marketing to dismantle their attacks and slanders, and then develop new online channels to seize the market?" Cheng Qiyuan said seriously.

"The general direction is correct. Online marketing is the trend. In Q2, our online revenue at Tianhuo approached 1 million yuan. This is mainly from small and medium-sized channels, but they have all delivered good results. In the future, we will cooperate with many big brands."
New media online marketing is like celebrity endorsements ten years ago. Bawang's success is inseparable from its big brother's endorsement, which Mr. Cheng should be well aware of. Coca-Cola's success is also inseparable from the soft influence strategy of various global spokespeople. "Wang Yao laughed, flattering Cheng Long.

“That’s true, and we are indeed planning to try some online advertising.” Wan Yu nodded.

"This is the trend. If we don't do it now, we'll have to later. But those who dare to be the first to try something new always get a pleasant surprise," Wang Yao said with a smile.

"Mr. Wang is an expert in e-commerce. Would you recommend that we develop e-commerce channels? To be honest, this incident will indeed have a significant impact on our offline channels, and I have a feeling that competition in offline channels will become increasingly fierce in the future."

"Last year we increased the commission rebates to suppliers by 3%, but we still lost a lot of channels because companies like Lianli extended their payment terms to nine months. This is one of the reasons why we are in a hurry to go public and raise funds, to have more cash reserves to alleviate the pressure of payment terms." Cheng Qiyuan sighed.

Competition in offline channels is already very real, with only two factors at play: commissions and payment terms.

Moreover, most of the time, distributors value payment terms more than commissions, but the longer the payment term, the greater the pressure on manufacturers, because there are many cases of manufacturers running away with bad debts.

However, if payment terms are not granted, distributors will choose to cooperate with others, and their own products will directly lose market share. After all, most consumers do not have 'brand loyalty'; they will buy whichever product is placed in front of them on the shelf and whichever is cheaper.

The giants use payment terms to dominate the market, squeeze out their competitors, and then leave only them as the sole supplier of best-selling products. They then turn around and exploit the distributors. This is why 'strategic losses' are so popular now.

With BaWang's stock price collapsing and its financing strategy failing, its competitors will inevitably poach all its distributors, leaving BaWang unable to sell its products and eventually wearing it down.

This applies to all industries related to capital: the battle for market share is a battle for the right to speak. If you fall behind in one step, you'll fall behind in every step.

"However, given the impact of this incident involving BaWang, my view is actually relatively pessimistic. This is not only due to the distribution channels, but also because BaWang's product line is too narrow. While it's true that the Chinese herbal medicine market is a blue ocean,..."

But Japan has even more advanced technology. If they use other similar products as a roundabout strategy to seize the market, then Ba Wang will still face many unknown risks. Wang Yao shook his head.

Upon hearing this, Cheng Qiyuan and his wife frowned.

"Does Mr. Wang have any other news?" Cheng Qiyuan asked in a deep voice. Otherwise, why would he suddenly mention the Japanese side?

The field of cosmeceuticals/supplements/herbal daily chemical products is undoubtedly the most developed in Japan, but there has been no news of them entering the domestic market.

"No, it's just that I recently went to Japan and found that their market for cosmeceuticals/supplements/traditional Chinese medicine products is very well developed, almost reaching the global market. In contrast, China accounts for 60% of the global export share of herbal medicines, but we only have one related brand, BaWang. It's a bit of a pity," Wang Yao said with a smile and a shake of his head.

"Mr. Wang is young and didn't experience the golden age of health products in the 1980s. The Japanese concept of cosmetics/supplements/traditional Chinese medicine daily chemical products is something we've already mastered."

"It's just that making money in China back then was too fast and too aggressive, and we neglected technological iteration. In the end, we missed the opportunity in the cosmeceutical/supplement/traditional Chinese medicine daily chemical industry. Now, if we want to catch up, the R&D costs will be at least tens or hundreds of times higher." Wan Yu sighed softly.

As someone working in this field, she naturally has a deeper understanding of this than others.

Moreover, BaWang itself benefited from being among the first to develop patents, which is why it has grown so rapidly.

“As long as the market is big enough, cost will not be a problem. Human technological progress is very fast. If we don’t invest a lot of money in research and development in the future, it’s only a matter of time before we are eliminated.” Wang Yao shook his head.

"Is Mr. Wang interested in the cosmeceutical/supplement/traditional Chinese medicine daily chemical industry?" Cheng Qiyuan narrowed his eyes.

In fact, he had long noticed the crisis facing BaWang. Relying on a single core product would make it difficult to withstand the encirclement and suppression by giants. Therefore, in the past two years, he has also invested in other fields, such as tea drinks, herbal tea, and cosmeceuticals, but due to the small scale, the results have been minimal.

“I’m interested in anything that makes money.” Wang Yao smiled. “I have a suggestion. The disruption that e-commerce has brought to Chinese consumer habits is irreversible. In the future, at least 70% of consumers will get used to online shopping. This is an app from another company of mine. Let me show you both.”

Wang Yao demonstrated the online shopping process on the Mulan Street mobile app.

The entire process from discovering the product to placing an order and making payment was completed in less than 2 minutes, a speed that amazed Cheng Qiyuan and his wife.

They were all highly educated returnees from overseas and naturally had some exposure to the internet industry, but their understanding of online shopping was still limited to the complicated process of inserting a USB security token into a PC. However, the overseas version of Mulan Street that Wang Yao demonstrated had a completely smooth process because it directly integrated online payment functionality.

"But if I need it urgently, I'll still choose to buy it offline." Cheng Qiyuan was both amazed and somewhat stubborn.

“In the future, daily necessities that are urgently needed can also be delivered directly to your door through group buying and food delivery services. Even the small shops near your home will gradually disappear and be transformed into ‘e-commerce delivery stations’ that serve the same city, just like the logistics warehouses of JD.com.” Wang Yao shook his head.

"This, can all be done with a small tablet or phone?" Wan Yu's eyes lit up with surprise.

"Once people get used to home delivery, how many will still be willing to come downstairs themselves? And it might even lead to another lifestyle habit: stockpiling. Mr. Cheng just mentioned needing it urgently, and that's certainly a situation we're in."

You two both know about Taobao's Double 11 discount festival, right? But if most people choose to take advantage of these discount festivals to stock up on daily necessities for six months or even a year, wouldn't that be equivalent to taking away a year's worth of offline market sales in just one day?" Wang Yao curled his lips and threw out a terrifying idea.

Upon hearing this, Cheng Qiyuan and his wife's expressions changed drastically.

What are daily chemical products?

It covers all products used in daily household life, including cosmetics, detergents, oral hygiene products, fragrances, insect repellents and pest control products, and other categories.

The characteristic of these products is that they are consumed daily and can be purchased as needed.

However, if, as Wang Yao suggests, consumers accustomed to e-commerce develop a need to 'stock up', it would be disastrous for the entire industry.

Because at that time, the role of distribution channels will disappear, since consumers will be directly quantified.

Previously, it was necessary to estimate monthly consumption through distribution channels to determine production volume. Now, it is only necessary to calculate the annual consumption per person. For manufacturers, this transforms production from unpredictable and volatile to controllable.

Costs and risks have decreased relatively, but competition has become extremely fierce. This is because the focus has shifted from serving large distributors to directly serving a precise customer base; whoever can attract more consumers can directly monopolize that consumer's annual revenue!

The difference between serving thousands of distributors and serving tens or even hundreds of millions of consumers is enormous.

"However, you two don't need to worry. As long as humanity remains in a society based on personal relationships, the intermediary industry will not disappear. It will simply transform from traditional offline channels into online channels. However, the internet age will bring great convenience and opportunities to brands that sell directly from manufacturers," Wang Yao said with a smile.

Cheng Qiyuan breathed a sigh of relief upon hearing this.

"In other words, there might be a new market for family-sized daily chemical products?" Wan Yu suddenly discovered a new track amidst the crisis of transformation.

Wang Yao raised an eyebrow slightly and looked at the kind-faced, Buddha-like woman with some appreciation: "President Wan has great insight."

There are rumors that Ba Wang's real rise to power was due to Wan Yu, and it seems the rumors are true.

"Mr. Wang, is investing in BaWang in the hope of working together with BaWang to develop e-commerce channels?" Cheng Qiyuan asked bluntly.

“I do have that idea, but I don’t want Ba Wang.” Wang Yao nodded.

Mr. and Mrs. Cheng Qiyuan were taken aback.

“BaWang’s product line is limited and there will definitely be new products to replace it in the future. But at least BaWang currently has some patented technologies. Moreover, I suggest that BaWang take advantage of this incident to establish itself as a benchmark enterprise.”

He led the organization to integrate some small and medium-sized peers, forming a Chinese herbal medicine alliance, and jointly established research and development centers with major universities, focusing on some special local herbs or ancient prescriptions, covering various fields, and promoting the standardization of the Chinese herbal medicine extraction market.

"In this way, if other foreign products want to enter our market in the future, the first hurdle will be meeting our standards. If Ba Wang only focuses on the products, even if he overcomes this difficulty, there will be another one," Wang Yao said solemnly.

Upon hearing this, Cheng Qiyuan and his wife fell into deep thought. They had naturally considered this direction, but the cost was exceptionally high. Japan invests billions of dollars in research and development every year, so how much could they possibly invest?
"That's beside the point. Let's talk about our follow-up strategy." Wang Yao saw through their concerns and smiled as he changed the subject: "This incident will definitely have a significant impact on Ba Wang. I see that your sales in the first half of the year were close to 10 billion, with a profit margin of 15%. It's very likely that you'll suffer losses in the second half."

My strategy is to stop betting on a single product and instead establish several similar sub-brands through online e-commerce channels. I'm using e-commerce to open up new revenue streams, which will allow BaWang to avoid the risks and costs of competing with traditional channel distributors.

Furthermore, it allows for rapid capital recovery through e-commerce channels, and most importantly, it provides multiple avenues for survival, preventing the entire company from being negatively impacted by a single product attack.

"President Wang's suggestion is exactly what I was thinking." Cheng Qiyuan's face lit up with joy upon hearing this.

This storm truly made him realize that while single-target penetration is effective quickly, it also carries significant risks.

“I want 40% equity in the new brand and 20% commission,” Wang Yao continued.

The Cheng Qiyuan couple were taken aback. This meant that Wang Yao alone took 60% of the brand's profits. If you calculate it this way, Wang Yao is about the same as those first-tier distributors. The manufacturers pay the production costs upfront, and in the end, their net profit is still only about 15%.

"Will the new brand squeeze out BaWang's market share?" Cheng Qiyuan asked, frowning.

“There will be competition, but we will try our best not to affect BaWang’s product line.” Wang Yao shook his head.

"Once the sub-brand takes off, will BaWang's influence be diverted in the future?" Wan Yu raised another question.

BaWang is a brand they've cultivated for over a decade, and she doesn't want Wang Yao to be like those foreign companies, using this kind of usurpation to sideline them.

"No, because the target audience is different. However, the brand influence of BaWang still depends on the marketing methods." Wang Yao smiled slightly.

"How does Mr. Wang plan to help Ba Wang get out of this mess?" Cheng Qiyuan asked in return.

"The core of Ba Wang's problem is a crisis of trust, which needs a new support to address. I need to first increase Ba Wang's popularity, and this requires your cooperation, brother."
I will make a batch of parody videos, and once they spread to a certain extent and become memes, my brother will repost them as his spokesperson, which will probably generate at least a billion views.

Once the exposure and circulation are sufficient, I need President Cheng's cooperation to conduct a sales and marketing campaign called 'Cancer One to Ten Compensation'." Wang Yao curled the corners of his mouth.

"What is the 'one cancer, ten compensation' policy?" Cheng Qiyuan felt a chill run down his spine whenever he heard that word.

“If you’ve used BaWang and really gotten infected, all users who have purchased this batch of products can get ten times the compensation by showing their online receipt. If you bought one bottle, you get ten times the compensation; if you bought ten bottles, you get a hundred times the compensation,” Wang Yao chuckled.

"Huh? I sell at least tens of millions of bottles a year, wouldn't that mean I'd lose tens of billions?" Cheng Qiyuan exclaimed.

“Our products won’t actually cause illness, what are you afraid of?” Wan Yu smiled and patted her husband’s shoulder.

"Furthermore, based on dosage calculations, one would need to use the product for at least a decade to be infected, right? Besides, there are so many standards for defining and evaluating cancer. As long as your product is legitimate, this is just a marketing gimmick."

I want to transform BaWang shampoo into a meme-worthy product with 'financial + social attributes'. By leveraging this trend, regardless of sales figures, at least everyone's perception of BaWang will change.

"A product that dares to promise 'tenfold compensation for cancer' definitely adds another layer of trust," Wang Yao said with a smile.

"A very avant-garde and highly newsworthy marketing event," Wan Yu said with admiration.

"Mr. Wang's thinking as a young man is indeed ingenious." Cheng Qiyuan also snapped out of his daze, his expression complicated.

Wang Yao's marketing strategy of combining memes with financial attributes was not unheard of; in fact, it was quite common in their traditional Chinese medicine industry, such as the famous Angong Niuhuang Wan and those who stir-fry tea cakes.

But he really didn't expect that a daily chemical product could take this route.

“Ah Yuan, times have changed, and you need to be baptized by the new era.” Cheng Long found Cheng Qiyuan’s expression quite amusing.

"Big brother, you're crucial to this marketing plan. I can't guarantee anything else, but at least it might help you achieve over 100 million followers across the entire internet," Wang Yao said to Cheng Long with a smile.

Upon hearing this, Cheng Long's eyes lit up, and he shook his fluffy hair, full of anticipation.

"Oh? I knew my brother wouldn't treat me unfairly."

(End of this chapter)