The road to success: Low to Word-of-mouth, brand, reliance, inertia process

Over the past few years, the internet has been a very big debate on the business, many people think that the general use of the loss of the cost of the market to take the wind to go to more losses is an abnormal cycle, such a commercial model of the value of what is the future? I have been thinking about this issue since I was a practitioner, and I found the right answer, and the loss is a phased process, not the final result. The whole process of pinch loss is: Low price-Word-of-mouth-brand-dependence-inertia. The excellent digital price is much more expensive than many digital, why sales are not low? Jing Dong now many product lines have no http://www.aliyun.com/zixun/aggregation/17725.html "> Price advantage, why still at 300% speed growth?" Why in the major shopping forums, the price of highly sensitive online shopping group when the discussion more focused on services, distribution, the commodity itself, the price of the discussion is very little?


1. Low price-word of mouth


is well known, from the foreign Amazon to the domestic excellence; the red Child; Beijing East, almost all famous companies rely on Low-cost strategies to gain market share through the price wars with traditional industry peers or online rivals. In the initial development period, the annual growth rate is more than 100%. Get customers quickly through a low-cost strategy, and then get more customers through Word-of-mouth. If the price is the best advertising, then Word-of-mouth is the best way to spread, through word-of-mouth communication can be very fast access to a large number of new customers and through these customers of the word-of-mouth spread to obtain a constant increase in geometric level of new customers.


2. Word of mouth-brand


when a low price of word-of-mouth transmission to obtain enough basic users, the consumer entered the brand stage, also known as the high-speed expansion period, the annual growth rate of about 300%. Low price is not the most important competitive advantage, but focus on improving goods, improving service, enhancing distribution and promoting publicity. Increase the threshold of their own advantage at the same time, through their own thrust plus the continued word-of-mouth spread of old customers to further expand market share. The former Beijing east is the best example, from the second half of 07 to the first half of 08, the internal strength of the substantial increase and external regardless of the cost of advertising, make the number of members; Orders and sales have turned 3 times times, the customer unit price also increased by about one times (this is very important). During this period, due to the increase in operating costs and losses, usually the consumer will start a tentative small price increase in the commodity, will cause a part of the old customer rebound, such as the Beijing-East Forum every day there are a lot of complaints about price increases, may cause a small part of the old customer churn, but most of the old customers will remain, Coupled with the influx of new customers, the pace of development does not fall.


3. Brand-Reliance


when the company has become a certain influence and enough market share of the brand, this period has entered an advantage consolidation period, the annual growth rate of about 100%. Have a huge customer base; Repeat the purchase rate and high customer unit price protection, in fact, the company has the ability to profit, the loss of this period is mainly used in the continued strengthening of internal strength, promotion will be weakened, the brand itself is a strong publicity, excellent marketing costs are mainly spent in cps;sem;adwords , coupons and the cooperation of different industries, the portal, the media, the line under the hard wide basic is invisible. And the old customers have been very stable, in order to maintain a good growth rate, focus on the development of new customers, give new customers more concessions, through the investment of new customers, leaving them and transforming into old customers, continue to produce the purchase. Amazon has implemented a strategy to give new customers more discounts, and the former, who claims to have never used an EDM to harass customers, sent an EDM with an electronic coupon to a lower-level member's mailbox (low-level members are not new customers or inactive customers who have not logged in for a long time), Many high-level members (stable and active old customers) have been provoked to protest in the forum. In fact, the old customer is a protest, the purchase has to buy, has been dependent on. For example, and your childhood grew up with the girl next door, you will not take too much care of her, maybe she will occasionally complain about two sentences, but will not leave you, and the new know or want to know the beautiful girl, naturally to the pursuit of flattery.


4. Dependency-Inertia


This period can be called status Tripod regular, development speed will slow down, annual growth rate of 30% up and down. At this time, the company has reached the peak in all aspects, operating costs of a sharp decline, the growth of profits, with millions of loyal customers, the front of the Word-of-mouth, brand, and rely on to continue and better help form a very strong inertia force. Although in the information flow extremely developed network environment it is easy to find more competitive competitors, but loyal customers still buy in this, keep buying, constantly introduce others to buy, because they have formed inertia, transfer costs far higher than the price disadvantage. Just as Newegg used to hit a cheaper 10%,buy than Amazon, which was 10% cheaper than Newegg, it doesn't weaken the leader's position. The consumer's representative, Amazon, has made a profit for 8 years, and Newegg and other followers have spent less time. At this stage of the customer, will not be defeated by the competition, will not be defeated by customers, the only way to defeat him, only his own. This is the value of the Business-to-consumer, unmatched value, this is the prospect of the future, we can get to the future.