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From “category leadership” to “overall value leadership”

The father of modern marketing, Philip Kotler, and the world-renowned management guru, Herman Simon, have both studied multi-brand strategy in their books. With the changing market environment and consumer demands, different companies are also accumulating new experiences, but it is not an easy question to realize the close linkage and mutual addition of parent and sub-brands. Why has Yili been able to build a strong “Yili” parent brand and many well-known sub-brands in just a few decades? How has Yili’s multi-brand strategy been implemented in an orderly and efficient manner?

Brand clusters create a multi-category growth curve

For large enterprises, multi-brand strategy can ensure the consistency of brand proposition, brand tone, values and development vision through the parent brand, and can also tap into the niche market more precisely and fully through sub-brands, establish closer and more effective communication with niche consumers, and accurately acquire customers, thus creating a multi-pendant growth curve and achieving diversified and strong development of the enterprise.

When it comes to multi-brand strategy, L’Oréal Group, a global leader in the beauty industry, is a veteran player. Founded in 1907, L’Oréal operates in more than 130 countries and regions around the world. The former president of L’Oréal China, Paul Gay, once said that the secret of the smooth operation of L’Oréal’s brands over the past century lies in the Group’s clear multi-brand philosophy. Thanks to the multi-brand strategy, L’Oréal has successfully survived several crises.

In China, it is not uncommon to see companies with a strong multi-brand strategy. In the dairy industry, for example, Yili has developed to cover liquid milk, as well as low-temperature milk, yogurt, milk powder, cold drinks, cheese and other sub-categories of the market. It can be said that from the dinner table, to the office, to the social scene, from children to adults, there is always a Yili growing up with. For example, the launch of Golden Classics was based on Yili’s insight into the trend of consumer upgrading in the Chinese market, meeting the needs of more upgraded users; the launch of Anmushi in 2013, through insight into the trend of consumer upgrading and globalization, entered the room temperature yogurt with the positioning of “Greek yogurt” and quickly occupied the market; as for QQ Star, it revolves around The brand positioning of “children’s exclusive, children’s nutrition experts” is to meet the needs of consumers (children’s parents and family members) for healthy growth of children ……

It is easy to see that Yili is around different consumer groups, full of sub-brands matrix. These sub-brands are also the driving force behind Yili’s rapid growth. For example, Golden Dawn and Amoxic are known in the industry as Yili’s phenomenal $10 billion products. Public data show that Golden Dawn exceeded 10 billion yuan in sales in 2018; while Amushi sold 700 million yuan in 2014, in its first year on the market, and at the end of December 2019, the market share was as high as 60%, with sales breaking 20 billion yuan.

Financial data show that in the first three quarters of 2021, Goldenseal Organic Milk, Amushi and Smooth Light all topped the market share list in their segments. Among them, the market share of Amushi reached 65.1%, the growth rate of Golden Classic continued to maintain at more than 20%, and the growth rate of Golden Classic Organic Milk was more than 50%. As you can see, the advancement of brand strategy is bringing Yili richer growth themes, challenging the traditional “category brand” business model and building a second and third growth curve.

Breaking down Yili’s multi-brand strategy methodology

Over the years, Yili Group has developed an “independent” brand strategy methodology. This methodology can be broken down into three major steps and one underlying capability.

First, companies need to dismantle their strategic objectives and implement them into specific market share growth and brand power growth. Each segment has its own growth cycle. In the categories that Yili cultivates, categories such as low-temperature milk are in a window of high growth and will be an important driver of Yili’s overall brand growth. In the multi-brand strategy, the company will further split the growth target, each segment has its own role to play, together with the overall growth.

The second is to make good use of the “brand growth driver” thinking, in the context of the new consumer economy, consumer behavior continues to diversify and fragment, to explore the growth opportunities of different market segments, so as to form a forward-looking consumer insight and maximize the overall brand value. This “brand growth driver” can be understood as the nerve network of communication, interaction and connection between enterprises and consumers. The parent brand is the main chakra that ensures effective communication with the widest range of target consumers in terms of brand proposition, values and vision, maintaining consistency in brand tone and capturing the audience’s basic mental perception. The sub-brands are like the branches of the main chakra, responsible for reaching target consumers in different market segments, and through more accurate sub-brand stories, culture and tone, occupying the deeper minds of target consumers and influencing their consumption choices. On the whole, the parent brand and its sub-brands can either be linked together or developed independently, empowering each other and giving each other strength. From Yili’s experience, there are two keys to building this “brand growth engine”.

First, we need to start from the underlying motivation and find the source of power through the cycle. The full integration of various types of consumer behavior and attitudes, the use of big data analysis, penetrating the “demand fog”, to find the underlying motivation of consumers to choose in the face of the full range of scenarios, all categories of demand, beyond the constraints of traditional demand analysis to the limitations of the category, and truly open up a new space for brand positioning for the future.

Secondly, we should look at the brand growth path from multiple perspectives and break the limitation of “category main demand” positioning, so as to effectively avoid the traditional brand positioning method, one-way definition of category demand, positioning “one size fits all” problem. From different dimensions and levels of consumer life, we can precisely define differentiated brand growth paths and flexibly adjust to market innovation trends.

The third is to focus on the core strategy of the enterprise, establish the overall brand management plan, and realize the management of the brand life cycle through brand classification and stratification. Yili insists on identifying and managing the strategic roles and tasks of brands from two perspectives: long-term brand value and short-term performance. Through big data analysis of multi-level consumer demand and diversified growth paths, it precisely distinguishes the drivers of long-term brand value and short-term business value, thus achieving a good balance of goals and risks for the brand at different stages of development.

Ultimately, all of the above strategic actions need to be supported by organizational capabilities. For example, in order to promote the implementation of the group’s brand strategy goals, Yili has built a set of Yili’s own brand management organization system. That is, from insight leading, professional empowerment, decision-making mechanism, organizational culture and other levels of brand management organizational capacity building, the formation of business units to undertake the specific positioning and operation of the brand. This organizational support provides directional guidance and freedom for the development of sub-brands, and inadvertently creates a competitive atmosphere for internal multi-brand development and promotes the running development of multi-brands.

From consumer value leadership to overall value leadership

Pan Gang, Chairman and President of Yili Group, has publicly stated, “In the digital era, consumers are the core of people, goods and fields, and we must continue to meet the diversified needs of consumers of all ages, circles and scenes in terms of products, services and brand image.” Pan Gang put “achieving consumer value leadership” at the top of Yili’s “four value leadership” (consumer value leadership, social value leadership, employee value leadership, corporate value leadership), and it has also become the origin of Yili’s multi-brand strategy.

With consumer value as the starting point, Yili provides products to meet the needs of different consumer groups by introducing new products in different market segments. At the same time, contemporary consumers are demanding not only quality products, but also socially responsible and trustworthy companies. Yili has also incorporated sustainability into its development strategy and is promoting “social value leadership” through a variety of initiatives.

Further, when a company creates great value for consumers and society, the company itself is bound to gain the continued trust and recognition of consumers and society, and in the process, the ultimate beneficiaries are the employees and the company’s own development. This results in the diversified and benign development of consumer value, social value, employee value and corporate value. This development logic is what Yili sees as “total value leadership”.

This is similar to the view of Philip Kotler, who believed that “only when a company strives to contribute to the good of all mankind will consumers follow you and profits will roll in.”

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