In an interview with WARC, Yu Zihuan, general manager of China Resources Sanjiu Market, shared the adaptability of digital transformation of pharmaceutical companies. In the new media platform ecology, when will opportunities for such companies appear? How to make good use of the thinking of large single products and personalized product combinations, in today’s era where consumers’ independent decision-making is greatly reduced, and interactive decision-making and passive decision-making are increasing, it can not only keep up with the trend to ensure ROI, but also occupy the market share for a long time.
WARC: Under the influence of economic downturn, epidemic and de-globalization factors, many traditional enterprises are facing challenges to varying degrees. Where are the opportunities and challenges for pharmaceutical companies?
Yu Zihuan: In terms of opportunities, the first is the direction of pure technology, such as the development of new drugs against viruses, or now we use antigens to detect viruses, and there may be more new technology detection methods in the future. As time goes by, the industry should have new results. The second is preventive and symptomatic drugs. At this stage, the competition is basically about production capacity. Whoever can produce them quickly will have a certain advantage.
In terms of challenges, I think it comes from the new channel battlefield. Because the pharmaceutical industry has always been relatively backward, whether it is B2C or O2O, compared with fast-moving consumer goods, the proportion is very low. Together, it may be a little more than 10%, and many fast-moving brands can reach 30%~40%, or even 50%. %. Most of the traditional pharmaceutical brands are offline. At this time, if someone can seize the opportunity online, it will be a challenge for the old brands in this industry.
Traditional pharmaceutical products are not suitable for digital platforms, nor have they developed consumers' online purchasing habits. For example, our 999 Ganmao Ling may sell for 15 yuan in pharmacies, but our supply price is 13 yuan. There is no difference between the selling price and the retail price, unlike other industries that have a fixed multiple. Relatively speaking, if the offline supply price of the cosmetics industry is 20 yuan, the offline retail price may reach 100 yuan, because the offline cost is high, but if there is 40% of the online traffic cost, then the online pricing can It is 20 yuan + 40 yuan, and if you sell it for 60 yuan, you will directly harvest offline users and let consumers develop the habit of going online to buy.
This is not the case in the pharmaceutical industry. Big brands have always been traffic products for the operation of pharmacies, just like selling eggs in supermarkets, and the profits are not high. Coupled with the large number of offline pharmacies, it is very convenient for consumers to buy medicines, and pharmacies will use the drugs of big brands that sell well as traffic products to compete at low prices. Therefore, the pharmaceutical industry has not been very adaptable to online, and these products themselves lack the profit margins of online harvesting. When the old product categories are sold out, it means that there will be other new opportunities in the future, just like the recent sale of Lianhua Qingwen to 100 yuan a box. When there is a new product, a suitable price space, and suitable for online operations, the opportunity will come.
WARC: In 2021, China Resources Sanjiu established a digital center. In fact, many traditional enterprises and market decision-makers may find it very difficult to implement digital transformation, but they have to do it. This is what you observed. ?
Yu Zihuan: Actually it is. For example, most marketers see "marketing content" and think it is easier to understand, but in reality, they need to think about a certain product that is not suitable for the Douyin ecology or Taobao ecology, and what kind of product he should sell. These are not everyone. I will think about it.
For example, when Dr. Guo Zhenyu, the founder of Winona, was making over-the-counter medicines at Dianhong Kangwang, he would consider what kind of products would be suitable in the new digital ecology in the future, instead of saying that the digital ecology must be used. Come and sell Dianhong Kangwang. The first step for corporate decision-makers to consider is product replacement. Old products may not be able to adapt to the new ecology; in other words, digitalization is an overall change. Don’t always think that it is just a change in marketing technology. It actually requires you change yourself. (bold)
We have to adapt to the new environment and new ecology ourselves, instead of doing nothing ourselves. The pharmaceutical industry is likely to have this kind of thinking, thinking that they have studied and figured out that this is what consumers should look like. Looking at it over a longer period of time, we find that there are fewer and fewer problems solved by medicines. Just like cooling oil, it was definitely the number one skin medicine in the 1980s, but with the improvement of everyone’s living conditions, Its share is very small now, and the various cosmetics that replace it have sold no one knows how much.
When an enterprise creates new content, it needs to think about whether it has new products to provide to users. Of course, this depends on how much data it can get. "What do I have" is of course still important, but not a benchmark, as new stakeholders (emerging platforms) define new groups of people.
Logically speaking, in the past, we always thought about our core competitiveness first, then how to communicate with consumers on the basis of core competitiveness, then how to build a brand, and how to allocate budget to stakeholders to build brand. Now it should be reversed, first think about who the stakeholders are (such as Douyin), and then what new needs consumers have on the stakeholders. Don't think about how to build a brand and how to build a core competitiveness. This is the logic of changing oneself, and adapting oneself from the outside.
For China Resources Sanjiu, we have a lot of traditional businesses after all. On the whole, the whole company has re-adapted to the new digital ecology, which has brought about many integrated changes. The digital center of each company is different in the end, and it is difficult to learn from others. In the end, it depends on how to get out of your own way, because each company has different advantages and different logics. In the end, it depends on which way you run out. Then magnify the advantage. The biggest advantage of China Resources Sanjiu is that many consumers are buying our products. Let's see if we can use this advantage in digitalization.
WARC: You have a deep understanding of "marketing content", and proposed to use personalized products, services and standardized brands to achieve the maximum satisfaction of consumer needs. This requires companies to produce a lot of content to satisfy consumers in different scenarios, and at the same time continuously introduce new categories and products. How to say it specifically?
Yu Zihuan: Enterprises with the ability to "market content" may win the future in the new battlefield. Many fast-moving consumer brands have already started to do it. For example, they used to produce a TVC, and now they put thousands of content on Douyin; People come out of stages with different footage. Of course, this is not entirely for sales conversion, but also for brand building. In other words, in the traditional era, a large single product was matched with a brand, and it was enough to use a brand’s advertisements to integrate and launch; now, the brand is still the same brand, but it may be targeted at different groups of people according to the popular products one by one. Push, one of these explosions may become a big item. But there is another point that enterprises must keep up with the speed of the industry's new products, otherwise it is easy to be robbed of a market. Twenty years ago, the number one brand of cold medicine was Contac, and now there are other brands such as 999 Ganmaoling. With the advent of the epidemic, Lianhua Qingwen has caught up, and its products are always moving forward. Digitalization, changes in the media, and changes in stakeholders will also bring about brand changes.
In the face of digital scene interaction that makes consumers have a strong impulse to buy, the traditional work of only doing brands becomes very inefficient. However, on a digital platform like Douyin, brands can’t use all promotional and price reduction materials just because of the effect and ROI. This is not good for brand building. The content itself represents different people. We still have to go back to the logic of thousands of people and different faces. We don’t need to cut prices. How can we make consumers buy my products and build the uniqueness of the brand at the same time.
WARC: Many CMOs have suggested that the country should return to the long-term principle of brand building, and focus on brand building, but in fact the goal of conversion is still very important. In your opinion, in the work of content marketing, how should enterprises coordinate brand building and transformation?
Yu Zihuan: We can divide the decision-making modes of consumers into three types. The first is active decision-making that we are familiar with; the second is passive decision-making. For example, if a company finds a celebrity endorsement, the product can sell 20 million immediately, and the doctor can prescribe medicine to ensure the sales of the medicine. Then the consumer’s decision-making is to be influenced by traffic stars. or determined by doctors; the third is interactive decision-making, that is, consumers produce different decision-making results when faced with different materials on the online platform.
When purchasing offline, consumers originally wanted to buy a product of a certain brand, but because of the recommendation of a promoter, they may buy another brand they have never heard of; digitalization has led to a lot of people making interactive and passive decisions. Everyone is talking about long-termism and brand building, but the fact is that consumers are less likely to make independent decisions about brands. Originally, 90% of people made their own decisions, but now it may have dropped to 70%, and 30% of people complete their purchases in passive and interactive decision-making.
Usually, it is not easy for traditional brands to do private domain. If long-termism does not fall into the private domain, but still falls into the brand, then you need to consider that when you are competing with a large number of small brands with new hot styles on digital platforms, in the competition between interactive decision-making and passive decision-making, How to let go of the lofty attitude of traditional brands and truly provide the personalized products they need from the perspective of the opposite consumers is a bit like the logic of explosive models.
Now your brand is no longer a brand of a big single product, it may be a brand of a combination of a big single product and a lot of explosive products. These explosive products need to help brands gather new marketing concepts on digital platforms. For example, in the skin care category, the big single product is a moisturizing mask, but if someone else has made a bubble mask, you should also make one. It’s not necessary Let someone else have it all. That is, for all these new concepts, the brand must be able to keep up, not necessarily be the leader, or develop independently, but must be able to keep up. Therefore, the role of large single products is actually to identify and endorse popular models.
It must be that the more personalized, the higher the ROI. If you are a new shampoo brand and launch an anti-dandruff shampoo, but you will definitely not be able to win Head & Shoulders in the short term, so you will develop a lot of new concepts to ensure ROI. But if you really want to build a brand, like making anti-dandruff products, which may bring you a very stable share and become one of the best brands in this field, then you must cut into the core needs, and you cannot always make some new ones. Something to walk around. In other words, what you want to build is brand uniqueness, not differentiation.
I feel more that big brands are following up with many new explosions. The new brand will be more uncomfortable than the original, because they think that it will be more effective to make a lot of hits, and then use the private domain to circle around. It doesn't have to be a brand, or it doesn't have to fall to the level of independent decision-making . But you have to imagine that consumers may be very interested in a category at the beginning, but after a period of time, they feel that it is nothing to care about, and it is over after buying a brand, so the participation rate will drop.
There are still many people who have made a lot of hits, but have never thought about how to make their own big single products, or rely too much on interactive decision-making for promotion, and have never thought about how to accumulate a brand and the uniqueness of the brand. In fact, there are two situations: some people are immersed in the success of digitalization and forget to be a brand; some people are immersed in the success of past brands and forget to deal with digitalization.
Therefore, the real long-termism of the brand, I think, is to look at how to provide the people on this platform with the value they most recognize from the perspective of stakeholders and digital platforms.
WARC: Make personalized new products in addition to large single products, but this new product may not exist for a long time due to market changes, but the brand still needs to invest. Will this investment be a drag on the brand as a whole?
Yu Zihuan: This requires companies to choose between satisfying consumers or maximizing their own profits. Brands such as Procter & Gamble and L'Oreal, the products they create have high profits because they have accumulated over a long period of time. However, if a new product is created from a digital perspective, it may not be able to create high profits, because consumers are willing to pay higher prices for personalized products and lower prices for standardized products. If it can adapt to the individual needs of consumers, the value of a single consumer can be high.
If you want to satisfy consumers on the new digital platform, you can’t just sell big single products, but you need to make some personalized hits and follow up users’ new demands and concepts. I don't know what consumers will look like in the future, but at least we must follow the trend and move forward. Of course, whether you can quickly produce newly popular items also involves the capabilities of the supply chain.
WARC: Will these online platforms have general performance targets? For example, what percentage of the overall performance can online channels account for?
Yu Zihuan: There will be corresponding performance goals, but the goal of online ratio is not necessarily scientific. Because for a product like Ganmaoling, the logic to follow is that new people under the influence of technology are still using your old product, so this logic is not really suitable for the digital ecology. . So, the online ratio is actually a false proposition.
As I just said, even if you are a traditional big single-product brand, when digital interaction becomes stronger and many consumers are taken away by other digital brands, you have to rethink how to communicate with consumers , what products are offered. More often than not, when companies want to change their products, it is not as simple as changing their marketing model. Even if all the money is invested in Douyin, the problem will not be solved.
WARC: Consumers have their own trusted pharmaceutical brands, so how can brands continue to seize the market or create personalized value under this inherent cognition?
Yu Zihuan: A brand with consumer trust like this has brand equity, but it is divorced from current consumers, just like the status of Ericsson or Nokia today; it’s just that the Chinese market is too big, and there are a group of old customers. Still using them. Products such as cooling oil and Golden Throat Lozenges, because the domestic market is huge, may still have a market worth hundreds of millions. But in fact, the overall consumers have moved to another battlefield. Even if they go to a pharmacy to buy, they are more likely to buy Nin Jiom's throat lozenges or By-Health's candies. They have switched to these new brands. However, the share of brand sugar such as By-health is actually not large. It is just a hot product, and it may not be as strong as the mind possessed by Golden Throat, so old brands need to upgrade to continue to occupy the share.
WARC: The China Resources Sanjiu brand has many sub-brands and star products, such as 999 Ganmaoling, which used to focus on consumers’ minds by making commercials and cross-border activities, etc., and accumulated rich brand assets. So in terms of new retail, how does China Resources Sanjiu's public and private domain layout conform to the trend of "marketing content" to reach consumers?
Yu Zihuan: There is a big difference between a brand like 999 Ganmaoling and a chronic disease brand, the difference between low-frequency consumption and high-frequency consumption. Therefore, different brands play different ways on digital platforms. 999 Ganmaoling prefers fast-selling products. We will do cross-border marketing in the industry and make various eye-catching gameplays, which are relatively low in professionalism. Chronic disease brands, such as the "Easy Fu" liver protection drug that we cooperate with Sanofi Consumer Health Pharmaceuticals, will go in a professional direction. In general, separate management, each according to its own characteristics, can better adapt to future changes and ecology.
On the online platform, we will pay more attention to Douyin, and private domains are also doing it. However, for products with a relatively low frequency such as over-the-counter drugs, the effect of private domains is average, and the effect of private domains for chronic diseases is better.
WARC: In the past two years, "sustainable development" has become a hot topic around the world. Consumers are more willing to choose responsible companies when they consume rationally. Does China Resources Sanjiu have unique practices?
Yu Zihuan: At China Resources Sanjiu, we have increased our research and development budget. Enterprises that really care about consumers need to have strong research and development capabilities. This is a long-term technical and scientific route. In recent years, our R&D investment has been increasing, which is an investment for sustainable development.
In addition, the pharmaceutical industry has to consider people's livelihood issues, and the enterprise value it may create is not high, but it is guaranteed. For example, the centralized bidding and procurement system is a measure to protect people's livelihood, so China Resources Sanjiu will actively participate in such matters as centralized bidding and procurement, and protect people's livelihood at the level that is in line with national policies.
Again, sustainable development means not being egotistical. Sometimes enterprises attach importance to research and development and think that consumers should be like this. In fact, consumers have changed. For example, they now hope to have a better life. Then when these new digital platforms appear and consumers change, companies should also change themselves. Don’t think that I have mastered the so-called medical technology or medical technology, and consumers should listen to me. It should be reversed, we have to adapt to consumers, so that we can have the opportunity to continue to create value. This belongs to the level of consumption upgrade, which creates higher value for consumers. In addition to common value, it also has emotional value.