BCG: Two Big Innovations to Create Enterprise Competence

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Written by:Zhang Yue, Xu Jialu

Edited by:Wilbur Zhu(WeChat ID: aotokuer), Anna HU, Luc Yang

On the plenary meeting of FBIF2017, Veronique Yang, the Partner & Managing Director of Boston Consulting Group made her address from conference chairman. Mrs. Yang mentioned that the overall slowdown has been happening to domestic economy in the recent years. Especially for the past two years, most consumer goods companies have had a difficult time, and few companies can get double-digit growth. So, in the beginning of the conference this year, she first told us what the challenges of the market are.­

Over the past few years, the amount of growth in consumer market has been very limited. The reason why the market is still increasing, I think, is the growth of value, or in other words, consumption upgrade. From the growth of category, we can see that some traditional categories grow very slowly. Because their permeabilities have already been very high, or they didn’t conform to customer expectation of consumption upgrade, or they didn’t provide consumers with additional excitement.

From a viewpoint of channel, different channels develop in different ways. In recent years, the big retailers, emporiums and supermarkets have been squeezed a lot. They just got little growth for only five percent. That is partly because the crush of E-Business, and partly because the growing public demand for convenience. Today, most consumers are unwilling to walk a long distance for saving one or two yuan. The emporiums and supermarkets once were the key channels for many companies and there were some specialized staffs who serve them. However, in the situation of slow-growth, what should we do to optimize the existing enterprise-marketing mode and find new growth points for sales channels? Those are both challenges.

So, the key point is how to dealing with those challenges?Mrs. Yang figured out that we should start with two innovations.

Product and Marketing Innovation

The most important point of product and marketing innovation is to understand consumers. Because consumer demand is constantly changing and the products and services they need are changing too. So it needs us to focus more on the changes of consumer groups and their demands of specific consumption space when we are designing products.

Mrs. Yang thinks that the appearance of new consumer groups, such as single people and retired people, provide a good opportunity to serve the groups and develop ourselves. As you can see from the consumer behavior, there appears to be some new consumer groups coming out from the pursuit of fashion and healthy green living. The digitalization also brings its impact on consumer groups. These new consumer groups as well as consumers who spend lots of time on virtual reality and society invest most of their emotions and consumptions on the Internet.

Besides, it is also very important to make some differences from our competitors by figuring out the specific demands in specific consumption space. For example, we need to figure out why a specific consumer buys a specific product in a specific occasion. Only by realizing this can we determine our position accurately.

Sales Model Innovation

Sales model should be transformed from the traditional way of raising incomes for the company to improving the efficiency of the whole sales team, squeezing money to find some new sources and opportunity of growth. To improve the efficiency of sales, we need to refine the management first. For now, there is a certain gap in fine management between China and foreign countries. In China, most companies can react quickly to the pace of market by regulating prices, managing market spending and optimizing sales model. It is an advantage but also causes the dependency on people’s intuition instead of an operating system. So, what should we do to regulate prices, manage market spending and optimize sales model? It will become a problem when the pace of market slows down.

Structure innovation of sales model is the second. Mrs. Yang put forward some new suggestions about sales model innovation:

Make the distribution channels flat and use different sales models in different situations; Improve the efficiency by using technology; Guide the behavior of the sales team by managing data; Rebuild the sales team in different dimensions(such as channel dimension).

In the end, Mrs. Yang concluded that we should be more confident in the development of consumer market in the future. The growth might be slow, but there would still be more and more opportunities of sales model innovation because we are gradually stepping into the development model of a mature market.

Through Veronique’s speech, we learned that only by understanding consumers, promoting product and sales model innovation can we find a way to opportunities and accelerate the development of a mature market in the process of consumption upgrade.