This interview is part of WARC's Marketer's Toolkit 2022, launching soon. Click here to register your interest.
- National brands are better able to develop the market, with Chinese consumers expecting them to provide higher quality products through increased R&D and investment.
- A traditional company’s brand marketing budget should be divided into three parts: offline; marketing costs for traditional media; and digital marketing costs for content creation.
- Livestreaming allows brands to reach more consumers but examples abound of many products sold quickly and cheaply without doing much in terms of cultivating the brand.
How do you position yourself in a market where international brands and local brands coexist? What are your strategies and expansion plans?
Thanks to the efforts of Vivo Optics over the years, we are now positioned relatively close to the top of the market. Currently, our main aim is not to fall too far away from second place. Our main issue is that the industry isn’t developed enough yet and is still too small. We want to help the whole industry grow, so that even if the market share of Vivo Optics lenses stays the same, its actual business will be much bigger.
Our previous strategies have been focused on emphasising the importance of eyewear, especially lenses, to consumers’ visual health. We’ve also promoted new products and tried to link them to major national events, which was aimed at driving the industry forward and making it more accessible to and accepted by consumers. For us to become the market leader, we need consumers to understand the benefits of lenses. If they do that, the market will grow and so will we.
We’re confident of our longevity and future expansion in a Chinese market where foreign and Chinese brands co-exist for two reasons.
Firstly, the Chinese demand for lens products is somewhat different from that of foreign countries. Anatomically speaking, the eye axis of Asians is about one cm longer than that of Europeans and Americans, and the longer the eye axis, the more likely you are to be nearsighted, while the shorter the eye axis, the more likely you are to be farsighted. This difference is why China has been emphasising the prevention of nearsightedness among young people for a few years now, while Europeans and Americans have been putting little emphasis on it. Of course, this also has to do with their living environment, where they can often see the sun and the greenery every day.
Secondly, we have national pride in our favour. These days, Chinese people are increasingly happy to use a domestic brand over established Western names.
It’s for these two reasons that we think we’re in a position to make the lens industry bigger and ensure that Vivo Optics lenses have a competitive advantage over our competitors, foreign or domestic.
What is the biggest challenge Vivo Optics is facing right now?
At the moment, it’s consumer perceptions of the product.
As a company, we see four different levels of vision. Seeing, seeing clearly, seeing healthily and seeing beautifully. The vast majority of consumers still put glasses in the “seeing” category and view them as a vision correction tool for those who have vision impairments. Beyond that, wearing glasses has solved the problem of "seeing clearly" but not "seeing healthily". For example, using a pair of glasses for many years can have serious effects on your eyes because when the lenses are worn out, they won’t function the same and the change in the way they refract light can damage your retinas. Also, lenses can reduce UV damage to a certain extent, thus preventing people from developing cataracts, macular degeneration, etc. However, lenses can turn yellow when they are exposed to UV damage and we do not recommend that users wear them anymore when they reach a certain level of discolouration.
Because of this gap in understanding, we need to go further to share information to make Chinese consumers more aware of how important lenses are. Once we’ve done that, we can help consumers to choose different lenses to provide different protection according to different occasions and scenarios.
Do national brands have a better chance of developing the market?
Certainly and that’s been true for some time. China’s strength is growing and domestic companies are competing against, and sometimes beating, the best that the rest of the world has to offer. Given the increasing national pride mentioned, we’re at a real advantage in terms of Chinese customers, especially now that our products are viewed as matching in quality. At the same time, we know we can’t just rely on that reputation alone because if our quality slips, so will we.
In fact, consumers are under the impression that national brands should provide better quality products through increased research and development and investment. Consumers' expectations are already high and we have to match them by offering better products. It is very important for Chinese brands to evolve and match consumer expectations.
In addition, when consumers feel that you are a very good brand, a very responsible brand, then you have to do your part in both brand communication and social responsibility in order to meet greater consumer expectations.
How do you develop your lenses to meet the needs of different people and scenarios? What are the main drivers for R&D and innovation in following changing market needs?
We’ve been open publicly about increasing our R&D budget to further develop our products but a good lens is not just about design. We split it into four dimensions: raw materials, coating, function and visual effect.
In terms of raw materials, consumers want to wear the thinnest lenses. The thickness of the lenses is related to the refractive index and there is no end to the thinness required. One cm is considered thin and one mm is also considered thin. The consumer’s demand for thinness will just continue to grow. We are one of the few companies in the industry that can produce its own refractive index materials for optical lenses and we have also set up partnerships with KOC in Korea and Mitsui in Japan to manufacture the materials. For example, our 1.71 series of lenses is something we created that we think solves both the clarity and thickness issues.
We’re innovating with film layers to give the lenses different properties. Through this innovation, we can achieve an almost infinite reduction of reflections through different coatings. We can also make a metallic coating for resin lenses, making them resistant to scratches, even water and oil, etc. And if coated with another layer of material, they can also be anti-fog, so that the glasses do not fog up when you eat hotpot.
In terms of lens functionality, we have also made our products more suitable for the Chinese living environment. For example, in Germany, passengers read books on the underground, while in China, passengers use their mobile phones. So, because Chinese people are more easily exposed to electronic devices, we have launched anti-blue light products that are more effective than their competitors. In addition, for users who often have outdoor and indoor activities at the same time and do not want to bring an extra pair of glasses, we have launched a colour-changing product which acts as sunglasses outside and optical glasses indoors.
In terms of innovation in visual effects, the Chinese eye is different from the European and American eye, so we have invested heavily in developing and designing for the Chinese eye. To do this, we have been working with Zhuang Songlin, an optics expert and chief scientist of China Aerospace, who leads our visual design team and develops and researches lens designs suitable for the Chinese eye.
In these four areas, Vivo Optics has been working hard. We’ve looked into the needs of the Chinese people and launched a whole range of products to suit everyone, taking into account the threats and the damage that their eyes might be susceptible to. But we have no plans to stand still; we continue to gain insights into the different demands of our consumers and invest heavily in continuous R&D to utilise this new knowledge.
At first, Vivo Optics did not manufacture a “star product” like other brands do. Was that because you wanted to let the market tell you where the gaps were?
Right. It took us until 2017 to start identifying some of our lenses as “star products”. We let the market show us where the greatest product growth was and then homed in on that. That’s how we identified our current “star products”, such as the 1.71 series and the anti-blue light series. The seriousness of the need for nearsightedness prevention can be seen in the fact that over 90% of high school students and over 50% of primary school students suffer from nearsightendess. It has reached a level that threatens our national security. For example, there are many cases of under-enlistment of skilled soldiers during military recruitment. Because of this, we are also developing nearsightedness control lenses for the Chinese market in order to prevent the eye axis from getting longer and longer, and therefore curbing the rate of this problematic issue.
So our R&D focus in recent years has been on gaining insights into changes to consumer requirements and then developing products suited to China’s specific situation and suitable for Chinese people.
Can you tell us about the "10,000 Stores Plan" for Vivo Optics and how does it reflect the alignment between distributors and your own shop channels? How do you create different experiences and services for your customers in your partner shops and in your own shops?
That’s a good question. When consumers get glasses in traditional optical shops, they don't even see the lenses, they don't experience them, they don't feel involved and they don't necessarily feel safe. They don't know if the lenses they buy are worth it or if they do the right job. This is due to a number of factors, one of which is the fragmented nature of the optical industry and the lack of a "leader". In comparison, the mobile phone industry has foreign brands as benchmarks. Apple has an experience shop, followed by Huawei, OPPO and Vivo. In our industry, we can also say that foreign brands in the past did not do their due diligence and made the industry too primitive. So when it comes to solving this problem, we need to allow consumers to experience the product and today's technology when they buy lenses. Currently it’s like selling a car without giving the customer the opportunity to take it out for a test drive – you have no idea what you’re really buying!
We have been promoting the "10,000 Stores Plan" for several years and have developed many standards, tools and processes for the lens experience, all of which we hand out to our partners for free. Out of the 30,000-plus shops we have partnered with, we have selected more than 10,000 based on a specific selection mechanism. If they work with us and can follow our standards, we will provide them with experience tools, standards, demonstration processes, etc. free of charge. We also iterate and upgrade all of these processes and items because the set of standards developed three years ago may not be suitable for consumers five years from now. We can also keep it fresh for the customer by doing this. We don’t want them feeling like they’ve seen it all.
We’re very particular in terms of the shops we partner with and that is reflected in the selection process. The first batch of shops is chosen based on their willingness to change. We support these shops that are willing to change and which provide better service to consumers for free. The second batch is chosen on the same criteria but they have had time to see the benefits that the first batch has enjoyed. These shops will want to join the second and third batches when they see the increase in consumer satisfaction for the shops that have partnered with us.
Other businesses have already recreated the "10,000 Stores Plan”, including foreign and domestic brands which have also started to promote their own experiences. We’re really happy about this because it helps expand the industry to a point where consumers will be able to better understand lenses and even be willing to wear more lenses or to wear different lenses for different occasions. If we upgrade 10,000 shops and another company can upgrade 5,000 while a third upgrades 3,000, then it will add up to a huge amount. And that will promote the development of the whole optical industry in China.
You mentioned that Vivo Optics is investing heavily in digital marketing. Can you share the adjustments in your marketing budget for the coming year?
A traditional company’s brand marketing budget should be divided into three parts. Firstly, if offline is an option, then that should be allocated part of the budget. For us, that’s the "10,000 Stores Plan" I just mentioned, which costs a lot in retail terminals and channels, including decor, ground activities, promotion, sales promotion, etc.
Secondly, there are the marketing costs for things like traditional media, such as TV commercials, shop media advertising, etc.
Thirdly, there are the digital marketing costs for content creation.
The majority of our costs was spent on brand communication, including spokespersons, online and offline advertising, high speed rail media, airport media, road media and so on, in addition to over 10,000 shops and partner shops. In the past few years, as our annual sales have grown, so has our advertising and brand marketing spend, with the main channel of growth being digital media.
The growth in digital spend has doubled every year, a much higher rate than other channels because consumers are consistently exposed to digital, whether young or old. On our recent Olympics project with CCTV, CCTV used our sponsored glasses as a prize for answering questions in a competition. The theoretical target audience was 20- to 30-year-olds but a large proportion of those who ended up with the prizes were middle-aged and older people because they had nothing to do and watched all the games, and the accuracy rate of their answers was high.
To be honest, the age group of the digital marketing audience as we traditionally understand it does not really exist. The whole country is exposed to and influenced by digital marketing, so in the future, digital marketing will account for a growing proportion of our budget.
You chose Chen Daoming as a company spokesperson because he fits the company image as a “big brother” figure. What do you think is a good celebrity partnership strategy for the brand in the long run?
The brand-spokesperson partnership is a two-way relationship and, on our end, we focus on two things: endorsement and sound bites. There is a difference in degree between the two. My understanding of endorsement is it is the agent who speaks, who makes a statement and whatever it is the brand wants to say. Whatever message it wants to convey, the agent helps the brand by saying it or expressing it through the image of the endorser or their point of fit with the brand.
So, our choice of Chen Daoming is certainly based on the need for endorsement, hoping that our brand status and aspirations match his image, that he is speaking sincerely on behalf of the brand. And now we see a lot of young brands choosing some online stars with high follower numbers. Some meet the requirements of endorsement and some don't, purely on the basis of the popularity of the star. So, my understanding is that this kind of endorsement or high-traffic star actually only plays the role of a go-between, in the same way that we used to spend money on a WeChat public account that covered as many followers as possible. It's not about the endorsement to a certain extent but about the sound bite, and what the brand values is the fan base behind this popular star.
Vivo Optics is currently looking more at endorsements and not looking so much at exposure or traffic. To address exposure, we are more likely to use a more cost-effective approach. But there is no denying that it is wrong to pay too much attention to traffic volume and I may also look for more appropriate high-traffic channels for promotion on top of endorsements.
Given that spokespeople are tied to brands and vice versa, there is a certain level of reputational risk involved for both parties. What is your risk assessment process like?
We have a relatively good evaluation system. We want to be the number one lens brand in China and we want to be a very reliable "big brother" figure. So when we choose a spokesperson, we have to first evaluate whether they can represent a "number one" and whether they have the desired "big brother" image. Secondly, we also take steps to assess what potential risks the spokesperson may pose, including their character, ethics and lifestyle. Once we’re satisfied they meet or exceed our criteria, then we can make the selection.
What are the greatest benefits you see for brands in terms of livestreaming e-commerce? Now that livestreaming is the "standard" form of digital marketing in China, what do you think are the important points to bear in mind when shifting to using it as a long-term strategy?
The emphasis of livestreaming is on "broadcasting" and allowing brands to reach more consumers, whereas selling is more about directly "selling" and not as much to do with the brand. There are a lot of examples where livestreaming has been done to sell a massive amount of products quickly and cheaply but does little to nothing in terms of cultivating the brand. A typical example was Perfect Diary, which was hot in early 2020.
But we can't dismiss livestreaming just because of one case like Perfect Diary. In our experience, it appears that livestreaming is a very good and low-cost way to spread your brand. So we do quite a few live broadcasts, mostly self-broadcasts, supplemented by external KOLs.
I think we’ve learned two main principles.
Firstly, if we want to be a quality brand, we must look after the brand image. What we say, what products we use and what kind of host anchors we use to do livestreaming broadcasts must be controlled from the brand perspective.
Secondly, for products, we don't attach a great deal of importance to the act of selling goods at ultra-low prices because that only guarantees profits under the premise of ultra-low prices. That can lead to a reduction in product quality and harm the overall brand. I think it is better to be responsible to consumers in the long run, just like Huawei which, with cellphones priced at 4,000–5,000 RMB, does not have to launch a 999 RMB product to quickly acquire a wave of traffic. That, in the long run, is not good for consumers.
When it comes to maintaining the brand on livestreaming, aside from having particular scripts, how does the marketing team give the hosts freedom without jeopardising the brand image?
Whether it's livestreaming, Weibo, or marketing on other platforms, we have a script library. That library covers all kinds of scenarios but aside from that, the main thing we do is agree on what not to do and build from there.
In business, whether it's a strategy or something specific, it's often important to define what "can't be done", which is actually more effective than telling someone exactly what to do. So, if we want to attract attention, it’s easy for us to say that there is something shady going on in the eyewear industry and that other companies are doing something bad. But in the long run, that’s not good for the industry. We could end up with supplier difficulties and it’s the consumer that would lose out. We can't rule out the possibility that there may be some flaws or bad parts of the industry but overall, it is in the best interests of everyone to keep it positive and educational.
There is a high degree of consensus within the company about what not to do, including how to view a price war. We were the first to jump out of the price war, with the chairman announcing directly and openly at the launch that we had no interest in taking part in such a thing.
Based on this approach, we are very liberal with how the team can interpret the product. We give the young people a lot of latitude. It's just a lens but it also has different presentation dimensions. So we don't pay too much attention to how our colleagues are going to explain the product, as long as it's good for the consumer and good for the direction of our communication.
Lastly, we also have a performance-oriented team, which we think is very, very crucial. However, this team isn’t just about sales but also about the number of live views, interactions or completion rates we get. Livestreaming or digital marketing is something that we can quantify but for this quantification, we don't just use it to measure ROI but more to measure which staff are doing the best job or which video, which content is performing well, and then to recognise it. In addition, we have to review the best operational direction and content, so that everyone can optimise in that direction. It’s crucial to establish a performance-oriented team atmosphere.
In 2015, Vivo Optics set up its international business headquarters in Singapore. Why was that the right time? What is your current overseas marketing structure?
The person in charge of our international business headquarters is actually a very senior person in the industry, so we already had a lot of international orders coming in. In terms of communication and global business layout, many multinational companies have their international operations in Singapore, so it just made sense. The original Chinese brand name "Bright Moon Lenses" is mainly used to serve Chinese consumers, so we use the brand name Vivo Optics in foreign countries, which has been developing positively over the past few years. In the last one or two years, the epidemic has had a knock-on effect on Singapore but overall, it is still healthy and growing quite fast.
Our focus is still on this country, where the DNA of Vivo Optics is located. We have an internal saying: We have to become Chinese before becoming global. Only by developing lenses for the Chinese eye structure and serving Chinese consumers well can we finally become global. And the first step for the Chinese eye structure can also apply to the whole Asian population. The first step is to do well in one's own territory and only afterwards can one do well in others.