This interview is part of WARC's Marketer's Toolkit 2022. Read more.
New skincare and beauty brands that want to stand out must establish a positioning and credible endorsements that are relevant to the Chinese market.
With consumer requirements being more personalised, having a famous brand name, good quality and high-end positioning do not ensure success in the current consumer environment.
There are 2 forms of online channels: one like Tmall and JD.com, where people go to buy products they like, and one like Douyin, where brands achieve conversions from A to P.
WARC: Insights into Gen Z, the Single Economy and the "He Economy" are getting a lot of attention. What phenomena or trends in the mid to high-end beauty business is Unilever focusing on and why?
The most important trend we've observed is that Chinese consumers are becoming more sophisticated in their attitudes toward beauty, which is directly reflected in the fact that they are increasingly looking beyond brand and product efficacy to ingredients, and want to understand why one product is able to achieve such efficacy while others may not. So some of the top livestreaming anchors are now emphasising brand endorsement and focusing on which ingredients in a product can really help consumers solve their problems. In addition, the increasing popularity of medical beauty has also made people pay more attention to efficacy and product ingredients beyond the medical beauty area.
After spotting this trend, the government has also enacted some new laws covering the beauty industry in the hope of further regulating the market. First of all, I believe that the government is happy to see these trends because they will feel it is a sign that consumers are becoming more and more sophisticated, and it will also allow brands and manufacturers that are trying to develop quality products to stand out more. But in order to avoid brands making exaggerated claims to consumers, the government has introduced increasingly strict laws to counter the phenomenon. This is actually a good thing for brands like us.
Also we have noticed a trend of the increasing use of skincare products for men but many male consumers will choose unisex brands or even mid to high-end brands used by female consumers. We haven't seen any mid to high-end brands for men’s skincare emerge yet and most brands that focus on men’s skincare are still relatively affordable or on the affordable side. Another insight here is that since skincare itself is a very sophisticated category, once consumers have evolved from a beginner to being relatively skincare-savvy while pursuing a quality lifestyle, whether it's a man or a woman, they will choose brands that are more effective and have more credibility. So in the current brand matrix, it is still the brands specialising in women’s skincare which dominate. Of course, we are also in discussion with some of the platforms and we hope that some brands will emerge that are particularly targeted at men and have special brand credibility and special technological features. In Unilever's next brand matrix, men's skincare is something we will focus on.
WARC: An increasing number of indicators suggest we’re entering a challenging economic environment with young people “lying flat” (doing nothing, giving up on the rat race, making no effort) and “involution” (being viciously competitive even with people in the same group in order to score a victory without benefiting anyone), which is a reflection of their consumer psychology nowadays. Are Unilever customers affected by this phenomenon when they buy your mid to high-end products?
At present, the trend in the whole medium and high-end product area is still up, which to a certain extent shows that consumers have a very strong demand for upgrading and a desire for better products and services. I feel that the development of the Chinese consumer is similar to that of Japan and the overall consumption trend is still moving in the direction of upgrading. With the national government now emphasising common prosperity and the middle class likely to grow and grow, purchasing power in terms of many basic consumer goods is likely to continue increasing, which is a positive for the whole consumer goods sector.
Consumers are becoming more mature and showing a tendency to choose brands based on their social status and needs. So there is a growing need for mid to high-end beauty and consumer products to continuously strengthen brand credibility. In the past, everyone went for a brand that they thought was good but the challenge now for mid to high-end beauty brands is to find the right brand positioning in the Chinese market as consumers become more sophisticated and to seek out the most relevant consumers who will become loyal to the brand and keep making repeat purchases.
In the past, people would naturally go for globally famous brands but now it’s different. Famous brands from overseas markets introduced into China may not survive or thrive in the domestic market due to stiff competition and with time, the competitiveness of these medium and high-end foreign brands may weaken further. Therefore, the high-end brands which want to thrive in the Chinese market must reflect on their overall brand strategy and ensure that their product layout is suitable for Chinese consumers. If they are doing nothing more than bringing foreign products to the Chinese market to sell to consumers, they will lose their competitiveness.
WARC: How does Unilever position its products as "mid to high-end"? Apart from the price factor, what are the other ways to establish a mid to high-end brand image?
In addition to price, technology is also an important indicator for us to determine whether a brand is in the mid to high-end market range. The biggest difference between mid to high-end beauty brands and those on the affordable side is that the former require a certain level of credibility and endorsement. In terms of the mid to high-end beauty market, the consumer chooses the brand first and then looks at the product. Therefore, the way brand endorsement is presented to consumers is an important factor in determining whether to bring a certain mid to high-end beauty brand to China and whether it will be successful. Especially for some new skincare and beauty brands that want to stand out in the current fiercely competitive market environment, it is important to establish a positioning and credible endorsements that are really relevant to the Chinese market.
It also relates to whether or not a brand can solve all the problems in the consumer lifecycle. There is a growing discussion around that question. From my perspective, I don't really believe that a brand can solve all the problems in the consumer lifecycle because mid to high-end beauty brands must have their own brand attitude and must possess a group of consumers who they can influence and who love the brand. The development path for mid to high-end beauty brands must be pyramid-shaped — the higher up the brand is, the more fixed the clientele.
So at the core and foundation of product power, if the brand has effective brand positioning and credibility, and at the same time the price falls in what we define as the mid to high-end price range, then at least technically we would position it as a mid to high-end brand.
WARC: R&D innovation is definitely one of the main ways to do product localisation. Nowadays, both old and new brands are looking to grab market share by developing whole new product categories. Has Unilever Beauty done any exploration in this area?
Unilever is indeed a very great company because in the past two years, I have witnessed it change massively. It is becoming more and more open and inclusive in a way it did not exhibit two years ago but which is part of its appearance today. This change is reflected in R&D and the supply chain, which is where big sacrifices have been made in the last two years. A traditional large company such as Unilever can do more open cooperation on the marketing and data sides but it is not easy to achieve such open cooperation in terms of R&D and supply chains because there are too many veteran staff in the company who are very insistent about things they have believed in for a long time.
On the beauty products side, our R&D department organises a so-called internal exhibition every year and invites third party labs, digital platform partners and supply chain partners across Asia Pacific to participate. Our brand and product development personnel take the opportunity to have discussions with them, see if they can resolve some of the pain points and work out a way to collaborate with each other.
In addition, Unilever is now taking an increasingly open view of third party partners, especially those in the supply chain, from both marketing and supply chain perspectives, as well as the financial side. In the past, Unilever tended to want to use its own factories for production because it has confidence in its own supply chain capabilities but we now find that the outside world is developing very fast, particularly the whole supply chain aspect. With an open mind and perspective, you will also be able to achieve more effective and longer-term development and progress in your own supply chain. So we are now very open to external supply chain partners and we are increasingly working with these partners on some high-tech products, instead of just getting our own factories to do it. This change will allow us to respond to the market faster. If the supply chain and the R&D work are both in our hands, it can actually waste a lot of time. This is a very big change that we’ve seen in the last two years from the perspective of innovation.
When we discuss category expansion, the question is whether we should do it under a well-known core brand or with a new brand. I think we now have an increasingly mature approach to this. In the past, we were inclined to do category expansion with a new brand but now we find that if we can conduct related category expansion under a big brand, the chance of success is greater. We are becoming more and more mature in this aspect of category expansion. We will of course not adopt a one-size-fits-all approach and will still look at which direction our category expansion is going and take a view on how relevant that direction is to the brand.
WARC: You mentioned the challenge of changing the mindset of older brands and some of the work you've done within Unilever to help the company transform. What else is being done to help older brands change their mindsets? What adjustments have been made to the internal structure and processes?
In the past two years, we have made some big moves. First of all, we have established a team similar to the Digital Centre, which empowers the digital transformation of the whole company so that the whole company can better use data tools to empower the whole business side and the supply chain side. In addition, it enables the company to undergo a very important shift, not only related to the company's capabilities and internal structure, but also in terms of ways of thinking, including the perspective on many things which can empower us.
Through this team, we are able to see how some of the new brands are doing in the market and we also regularly bring in some external people, whether advertising agencies or media or brands, to talk and cooperate with us. The transformation of people's thinking is more difficult and takes more time than the transformation of the company's structure and capabilities. But this team is already helping the company to make improvements in this area and I believe that in the future, it will definitely help the whole company to improve dramatically in many ways, from thinking to technology.
The important point is that now we have a lot of thinking going on about how to go about building a new brand and it is very clear that we will definitely abandon some of the original methods, such as intensive campaigns which are not applicable when it comes to new brand building. We will use an end-to-end approach that is more appropriate for the development of the high-end beauty brands. Specifically, when we launch a new brand in the market, we will do brand building with an efficient and lean team in a practical way, starting with the online approach. We have gradually realised over the past two years that this is the correct approach. When we are introducing new brands to the Chinese market today, we will definitely adopt a completely different way from before.
WARC: How does Unilever, as a large enterprise, integrate D2C brands it has acquired with its internal legacy brands? And how does the D2C model fit into the digital transformation of corporate marketing?
In the past two years, Unilever has been introducing a lot of foreign, especially European, American and Asian, mid-range and high-end brands to China, which can be called emerging brands. They are a very important supplement to the company's brand matrix in the Chinese market and another very important engine for growth. This business has been developing in China for over a year and there is a team responsible for operations in this area. You will see more and more of these brands appearing in the market.
D2C is more of an operational, channel management business model. The foreign e-commerce environment is not as rich and complex as it is in China, so many D2Cs are using some of their own official websites as a channel for online sales, which is a relatively simple approach. But with the whole media environment and social media environment becoming increasingly fragmented, it becomes more and more difficult to create a massively successful brand. The requirements of consumers for products and brands are more and more personalised, so that just having a famous brand name, good quality and high-end positioning will no longer necessarily ensure success in the current Chinese consumer environment. We are also exploring and analysing the new needs of Chinese consumers and the new opportunities that exist therein, thus developing new brands and new categories accordingly. So today, if we want to tell whether a brand can be a D2C brand or not, first we have to see what kind of brand it is and how strong its product power is, since product power is the most vital part of the brand and of the whole business model.
In addition, we are very interested in the brand mission because this is a very important area of experience a company like Unilever has accumulated in brand operations over more than 100 years. Only brands with a sense of mission can survive so long in the market. So we first look at the philosophy of a brand's positioning and the strength of its products. In terms of these criteria, we have recently introduced a number of D2C brands which are close to consumers and have a strong influence on consumers due to their special brand positioning and design, channel selection and the choice of media, and are fast in terms of new product development and adjustment in the face of market changes. This is actually the charm of the D2C business model.
For these reasons, we have seen some very good D2C brands and products in the past two years and have included them in our overall plans. In fact, it is more back to the core fundamentals of marketing itself, that is, whether you really understand your consumers and whether you can adjust your brand and product strategy in time to face the changing needs of consumers.
Now not only D2C brands but in fact most consumer brands and companies are carrying out the so-called digital transformation. D2C brands, whether foreign or domestic, have naturally grown in the online environment, so they didn’t need to go through the traditional brands’ relatively painful transformation from offline to online channels. In fact, digital transformation is a very important thing we have been engaged in over the past two years.
In my view, digital transformation is manifested in two main ways.
One is the organisational structure of the larger company and the layout and construction of the company's entire large digital transformation back office capabilities. This depends on the company's own commitment to digital transformation. Unilever completed this big transformation two years ago. As you know, we have some classification methods within the company based on back office, middle office and front office, and we have established our own strong digitalisation team, which empowers each of the company’s businesses and thereby drives business growth.
Secondly, in terms of personal capabilities, whether it is for e-commerce colleagues or marketing colleagues, or even financial colleagues and supply chain colleagues, speedily making digital transformation a core point of your business to interconnect all business data is very important and for individuals, it is critical. For example, accessing data and getting insights from it can empower your business. Another point is to learn new things quickly on such a digital platform. Following the boom in Douyin e-commerce last year, more and more companies are now increasingly looking for talents who are good at doing promotions on Douyin. It took only one year to get from the emergence of Douyin to such a large demand for Douyin talents, which is very fast. For existing marketers, quickly becoming familiar with Douyin and drawing more traffic to your Douyin account and conducting e-commerce operations on the platform is crucial.
So on the one hand, it’s a digital transformation of the people themselves. They have to gain the ability to make use of the digital tools. At the same time, it can be seen from the overall company perspective that the company needs to empower the brand and all personnel with the relevant capabilities. I think only the combination of the two can mean that a company has really completed its digital transformation and digital empowerment.
WARC: In terms of R&D, many brands work with organisations like the Tmall Innovation Center. Has Unilever worked with similar organisations on beauty products and are there any better and unique ways to collaborate on new product development?
We also have a partnership with the Tmall Innovation Centre and Unilever also recently opened a new area similar to a separate innovation studio where we innovate along with external customers, inviting innovation teams to come and co-create with us. We have a very open attitude in this regard and have an internal innovation team that is constantly introducing innovative brands and products to the market based on future consumer trends.
We are also using some very advanced thinking in running these products, moving away from the old mindsets and using more of a digital approach to do testing. Instead of using consumer testing to help us make judgments, we're bringing some minimal visualised product concepts to the market and then constantly innovating them to identify the brand that fits the market best. This is the model that our team is currently working with. We also hope to bring some of these new brands and products to market as soon as possible and find a model of our own that can achieve impressive performance in the market.
WARC: In terms of channels, there is a theory about digital rental and platform tenancy, which is that the relationship between the brand and the channel continues to be a rent collection model, with vacancy fees and shopping guide fees. Search ads are one way to redirect traffic but it is still essentially an online sales and operational cost known in academia as “physical availability”. The downside of this approach is that it only uses the rent collection model, which improves ease of purchase rather than enhancing brand image. What is your view on this theory of digital rental platforms and digital tenancy?
The traditional understanding of the channel is more about exposure and giving consumers a place to buy your product. For consumer interaction, it is more about how the brand can increase consumers’ desire to buy the products through social media or social interaction.
A few years ago, in addition to selling goods, Tmall also launched "Tmall Guang Guang" with a lot of content videos to impress consumers so that they would use Tmall as a platform to share or find the things they like. But in fact, this change was not very successful, essentially due to the properties of the platform. After all, Tmall is a sales-oriented e-commerce platform.
But now, with the rise of short video media such as Douyin, if you use the AIPL model, you will find that it can directly transform the consumer from A (cognitive awareness) to P (purchase), which gives new inspiration to both marketing and channel personnel. This has created a challenge for us: working out whether Douyin is a platform for brand building or a platform for sales. In fact, the division is somewhat blurred.
As an example, the model of KOLs promoting goods on Douyin is different from that of the live broadcast anchors on Tmall. First, because of the tight connection between Douyin KOLs and their fans, they are very strict on the selection of products and fans do not believe that the KOLs can promote both A and B, two similar and competing products. So the KOLs on Douyin are inclined to form a deep bond with the brands based on which they promote the products and create purchases. Today, if the KOLs on Douyin want to perform well, they must go through the path from A to P. In this process, you will find that Douyin is not only a channel but also a platform to enhance brand awareness and promote products to generate a desire among viewers to make a purchase.
When Douyin first proposed the concept of "interest-based e-commerce", I actually had some questions. But when I got deeper into the platform, I found that the concept of "interest-based e-commerce" was quite interesting.
Douyin itself is a social platform, so it allows brands to do some consumer interaction activities to attract more people and now that the e-commerce buying mentality is being encouraged, Douyin can complete the whole shopping chain cycle, while at the same time helping you to manage the fans in your own pool. We now see that the short video platforms do indeed play a more complete role in the whole process of consumer communication and shopping touchpoints. So we need to think, how should we actually define the channel? And it actually challenges the traditional theory of what a channel is.
The online channel will be divided into two forms, with one form being like Tmall and JD.com, where people go mainly to buy the products they like. We will be more likely to manage these two platform types through a channel approach, which is a challenge for brands because it may be difficult to get more public pool traffic on these platforms and you need to rely on off-site operations to gain the traffic.
The other form is platforms like Douyin, from which you can achieve conversions from A to P. But the challenge is, I believe, that all the major brands are investing in Douyin because they want to make money by doing so but if you see Douyin simply as a channel, it is difficult to get approval from the internal finance department. Douyin is not only a channel, it is also a platform that can help you with consumer interaction and customer acquisition.
WARC: Many brands are now using e-commerce as a platform for long-term brand building rather than just for short-term profits, especially through big festivals like Double 11. You talked about completing the conversion from A to P on Douyin. So for the L (loyalty) stage, it may involve the brand itself in more private domains or some other platforms, including various online-offline formats to complete this phase. How do you link up the chain and use these channels to achieve a balance between the brand and the impact?
If we look at it from a long-term perspective, we still attach the most importance to consumer assets, which is what we have been doing in the past two years, and we hope to be able to open up the consumer assets of these platforms in a legal way as much as possible.
At the same time, Unilever as a group is also vigorously promoting a group-based CRM large consumer asset base and we hope that through this annual investment, after accumulating these consumer assets, we can empower our existing brands and future new brands in the medium and long term so that we can be more efficient in customer acquisition channels. We are also developing in this direction. We have a very strong feeling, especially over the past two years, that the lifecycle of some new brands in China is very short and many brands may not survive the next two or three years.
Fundamentally, there is a very important reason for this, which is that their costs on customer acquisition channels are high. They rely on large annual capital investments but at the same time, do not create the habit among consumers of repeat purchasing. In addition to the individual cost of customer acquisition, we also look at the concept of LTV (lifecycle total value), long-term value, whether the consumers who come through customer acquisition today will generate repeat purchases in the future and whether they will spontaneously repurchase. We may take one, two and three years as the timescales for viewing the value that consumers bring to our brand.
The concept of LTV reflects not only your brand’s problems and operations but more importantly, the product power. So it's a comprehensive assessment factor. This gives us the insight that, in addition to product power and the brand matrix, we need to build a good foundation on the consumer data side so that we can empower the brand. So then we have good products and brands, and then use these tools to communicate more effectively with loyal customers, which is something we are working out now. I believe this will become more and more important in the future.
WARC: This means that while everyone is worried and talking about how to gain more traffic, customer acquisition is actually still important but just in a different way or with a different purpose.
Yes, customer acquisition is definitely important, especially for some new brands, because new customers are a brand's initial important source of business. How to retain these new customers and be able to continue to convert is a very important indicator of the brand's operational ability and product power. Frankly speaking, we cannot keep investing in a new brand forever, continuing to use it to grab new customers. The cost of doing that is very high. We have some brands which grow well but to a large extent, it’s based on existing customer repurchases, which requires no big investment from us, so the brand ROI naturally becomes very high.
The way we think about doing new brands now is that from day one, we concentrate on the 10 customers we capture today, how to get them to repurchase tomorrow, and how to activate them. That is very important. For a mid to high-end beauty brand, from the time you make contact with our brand, to being in contact with our customer service staff and then when you open our first package, you will find that we are a company that allows consumers to communicate with the brand at any moment. This is also something that the new high-end beauty brands that want to win consumers in the current market need to start doing from day one.
WARC: In terms of creative content and formats to attract customers and reach a wide audience, there are so many social platforms and different kinds of short videos and other content available. What kind of content and creative strategy will Unilever’s beauty sector adopt to reach the audience on your preferred platforms in line with the tone of your own brands?
That's a very good question because there are actually some contradictory points here. One of the things that we're all exploring today is that I find that the cost of customer acquisition is completely different for different creative ideas but maybe the creative idea with the most efficient cost for customer acquisition is not what the brands want and that's a point that we all struggle with, especially for mid to high-end beauty brands.
It's also probably the biggest challenge for us as marketers in China when we're dealing with some of the global teams. In terms of short-term tactics, we may have to make some trade-offs but one thing that we've been stressing is the issue of consistency in brand image. We have tried a lot of different customer acquisition ideas and we found that in the medium to long term, the ones with the biggest customer acquisition costs are not necessarily very impressive in terms of making your brand message and tone consistent, not only over time but also across platforms. For example, for brands and products, are the efficacy rates and social media keywords that are talked about on Douyin and Xiaohongshu exactly the same as the product claims the customers will see on e-commerce platforms? This is the most important point that has emerged as we try to improve the effectiveness of customer acquisition costs.
If you have decided on your brand positioning, on your main products and your social media keywords, then you must always be consistent in your communications and provide the same claims on all different platforms. Defining these aspects is not difficult but the challenge is how to present and deploy them properly, and it is very important. Regarding social media strategy and planning, making sure the keywords are distinct and consistent is what we're stressing very much now.
WARC: For these platforms, the KOLs or KOCs are a major part of their assets but this year, the government has introduced some online traffic restrictions. Do you think this will have any impact on the cooperation between brands and KOLs/KOCs on the platforms? We also saw Unilever doing self-streaming during the Double 11 sales festival. How do these two approaches work together, that is, using external KOLs and doing internal self-streaming? Will you do more self-streaming in the future?
First of all, in the selection of KOLs, besides the ability to promote and sell goods, we also care a lot about the image of the KOL because today's KOLs have increasingly become public figures or celebrities, so we assess whether their image is positive and whether they can correctly guide consumers in the right direction. If some KOLs are potentially risky, we will not choose them for the short-term benefit, even if their selling ability is strong. Of course, if a good KOL has a good team, we believe that they will be willing to communicate with consumers and fans with a more positive image.
In this regard, the top two KOLs on Tmall provide us with a very good example. At certain important moments for the nation, they can provide positive support, such as joining projects to help farmers and the poor. I think they largely represent a very positive trend and positive energy.
Concerning our self-produced and KOL livestreaming, from the data side, we think these two forms of broadcasts don’t conflict; they each play a different role in our business process. KOL livestreaming is more of a help to us in attracting new customers to the brand and products, and helps us to promote new products and new brands. We also have some internal data tracking which indicates that KOL livestreaming can bring down our customer acquisition costs.
But our self-broadcasting has become more and more like an operation of our private domain traffic. It can be understood in this way: you may originally face a stark and cold customer service approach, using only text to introduce products or explain problems, while the brand’s self-broadcasts present the information in a lively visual way. It is another kind of customer service or shopping guide. The brand’s self-broadcasts are more to serve people who are already brand users or shoppers who are interested in the brand, so that they can understand the brand and the promotion mechanism better, and can eventually be converted. They each play a different role in terms of boosting traffic and operations.
As a brand, we also need to do a good job of operating the brand’s self-broadcasts and KOL live broadcasts, especially in the design of some discounts; we still need to find the right balance because recently, some big brands have experienced some PR challenges. Fundamentally this is a challenge to operations because there are so many ways to handle promotions on platforms nowadays. For example, Tmall will give consumers a lot of different coupons and so on. And the challenge for operations is that you must have a very comprehensive view on what offer terms to set. From the tactical point of view, the operations team needs to avoid the risk of improper offer design but at the strategic level, including the process of customer acquisition, we believe that there must be no conflict between a brand’s self-broadcasts and KOL livestreams. They are both indispensable.
WARC: Regarding government data policies, a series of new policies on data privacy regulation is being implemented this year and the requirements on data security will definitely become stricter and stricter in the future, both domestically and globally, which may affect some marketing allocation and affect advertising by brands. In this situation, will Unilever use more first party data and zero party data?
We will not make a snap judgment, we are still very willing to cooperate with good media platforms on data. First of all, I very much agree that we must strictly abide by the national laws and regulations related to data. Our company has also set up a special advisory group, including IT experts, data experts and legal affairs experts, and we have also conducted internal self-examination of all data interfaces and made adjustments based on the relevant legal provisions. So in this regard we fully comply with the national laws and regulations, and I think that the more specific the national regulations are, the better it is for the company.
Of course we also agree that it would be best if, in a totally legal way, all of our marketing media could be monitored so we can directly see the measurable benefits and it would also help us to decide whether to increase our budget on each platform. However, there are many different forms of media and we as marketers, apart from data, often use our own subjective judgment on the industry to determine the value of different media. We don't exactly apply a one-size-fits-all approach. We are also working with some third party companies to see if we can create models to help us determine the value of some media in a long-term way, especially for those media with which we may not be able to work directly on data. We could use the models to see if long-term cooperation with these media can bring improvements to our business.
As a consumer goods company, we will always have an open attitude and while first party data is important to us, we must consider other data as well, otherwise the development path for consumer goods companies may become narrower and narrower in the future.
WARC: This year, the platforms are opening up external links to each other and the government has also introduced policies concerning interoperability and anti-monopoly. From the positive side, it can help promote the mutual opening of traffic pools. What is Unilever looking forward to in this area in terms of how these advantages are hopefully beneficial to brand building in the future?
First of all, we very much welcome different platforms having deeper cooperation with us. Unilever is a company that for a long time has always been really willing to introduce new brands into the Chinese market and we are not necessarily desperate to get instant benefits in the decision-making process. We take a long-term view.
Yesterday, I had a meeting with a big institution and they agreed with me on this point. They have experience with many new and local brands, and they have found along the way that the big groups, especially some major foreign groups in the consumer goods sector, will look at this market from a very long-term perspective and this is actually what they want.
On the other hand, we also welcome these platforms working with us on some very in-depth data, we are very willing to do that. Unilever is also expanding its brand matrix. In addition to the core brands that are familiar to everyone, there are more and more mid to high-end beauty brands, as well as some foreign brands that we are waiting for the right time to introduce to China. We also find that there will be more and more ways, angles and possibilities for cooperation with these platforms because our brand matrix is expanding and because we are gradually strengthening our own data capabilities.
We also have sufficient knowledge and capabilities to cooperate with them more. In this regard, Unilever has been adding to its strengths in data in the past two years and with the investment in digitalisation and the establishment of a team such as the Digital Center, we see huge possibilities in the whole cooperation process, both in terms of breadth and depth. In future external cooperation, Unilever's advantages will be reflected more and more, both from the brand matrix aspect and digital credibility.
In addition, we also hope that these platforms can come to us with a long-term partnership mentality. To be blunt, if you want to make quick money, we may not be a suitable partner. There may be some local brands whose decision path is very short and can invest a lot of capital in an operation at one go but we must take a long-term attitude and we invest not for one year but for three or five years. It also depends on how the partner sees their business model and whether they want to find a more long-term or a short-term partner.
WARC: With this new policy, will Unilever adopt a new marketing attribution model?
We will go through some models with our colleagues in the Digital Center and other departments, and the attribution model requires a very large amount of input data, including some input elements for attribution analysis. This attribution analysis is done comprehensively, not only online and in terms of e-commerce, but also offline.
By performing the analysis through the model, we can see the impact of various input changes across various media touchpoints and then make a judgment about, for example, what is the approximate contribution ratio or the appropriate contribution of different channels. It is a more comprehensive model that looks at things from the platform angle.
For some of the marketing points, we make some distinctions internally. Those that can be directly attributed and directly cooperate with data, we call them algorithmic platforms, and more often we make a closer connection between the fees and budgets of these algorithmic platforms and e-commerce channels because they are still more result-oriented.
Of course, there are some platforms such as Xiaohongshu which may not be algorithmic logic platforms and for these platforms, we will make an assessment in a brand building way. We are currently working on the organisational structure with similar ideas and practices to carry out some distribution work, which is still in process, but we have indeed realised that such a problem currently exists, so we are making some adjustments.
WARC: When enterprises do D2C now, the most important thing is still that we need to have people, to have a team. What capabilities do you think a D2C team within an enterprise should have?
Nowadays, many new and up-and-coming brands are not only doing all the operations by themselves but also much of the content management and very importantly, the data analysis and so on. An up-and-coming brand or a D2C branding company today already has the capabilities of a traditional brand company and of a digital marketing agency, which is actually an area where I see a big difference. It's these capabilities that allow them to run their D2C brands and to achieve rapid growth in the market in such a short period of time. From the perspective of the company's capabilities, it seems to me that emerging domestic D2C brands are actually more demanding than foreign D2C companies.
In terms of the whole operation of D2C, there are two special features in contrast to the organisational structure of big brands.
One is the flattening of the organisational structure. We recommend that the decision chain in D2Cs should not be more than two levels – we try to make the entire D2C organisational structure flatter. In terms of reporting relationships, it's best not to go higher than two levels. We want to respond quickly to everyone's feedback and large companies such as Unilever and P&G tend to be very slow in decision-making. In fact, we have made many changes in the past two years. So, in terms of how to speed up the process, it is very important that the organisational structure should be flat.
Second is the end-to-end organisational structure. Today, it's brand marketing to the channel and to the financial partners of your business and to the supply chain, and to IT and so on, and hopefully it's such a small team that we can solve problems in a short time and produce a lot of solutions. This is from the organisational structure point of view.
In terms of the human competency model itself, one aspect is the ability to operate digitally, which is the most basic of any D2C brand because for everyone, it is the online channels that count.
Secondly, there is a great emphasis on being flexible and adaptive. In the process of operations, especially when your brand is still relatively small, you can run into many problems. With big brands, there are many teams to support you but with small brands, it is easy to be ignored. As a creative brand, we would also like to see the entire operations staff being very flexible and able to adjust at any time, both in terms of mindset and work style, which is the only way to make the brand grow quickly.
Third is the so-called entrepreneurial spirit. It's especially important in a D2C brand. We often find that in the process of D2C brand development, their business will run faster than our resources and structure. So at this time, to have an entrepreneurial spirit and a very strong understanding of the brand will enable you to solve problems during the process of change. That is very important to us.
WARC: In the future, marketers will also have to face a complex marketing environment, requiring better marketing skills. Do you have any advice or experience to share and what can foreign brands learn from them?
I have done more than 10 years of branding, including e-commerce operations, and I have experienced the glory days of the offline business and the digital transformation of the channel. As a brand marketer, in the whole environment of constant and complex changes, we need to think about what remains the same and what is changing. In my opinion, what has remained constant is your ability as a marketer to get consumer insights and how you can really build your brand and product’s underlying construction based on consumer insights. That's never going to change. This marketing battle is ultimately about brand power and product power, which is the core.
Working out how to build product power with consumer insights is a very important characteristic of marketers. In the past two years, we have been looking at the capabilities of the best marketers. Most of the foreign consumer goods companies in China in fact used to do most of their product development and brand building abroad, maybe in the Asia Pacific region. Most of the early marketers in China were more focused on brand promotion and channel operations. In the past two years, with the change in the environment, the foreign markets have not been so prosperous and people are placing more and more value on the Chinese market, so the demand for Chinese marketers to build brands and product image in the Chinese market is growing, which is a very important basic skill for marketers.
On top of that, the media environment today, including the social media environment, is changing. In the midst of these changes, catching your consumers in the constantly changing media environment is actually a test of your ability to learn. These two points – having good basic skills plus a very strong ability to learn quickly – are important qualities and will make you more competitive.
There is another very important point I often talk to my team about, which is that after working for so many years, I have found that as your work experience becomes increasingly rich, you will find the development room for your abilities and skills, and your growth space, to be relatively limited. In fact, the perception of one’s own ability, how to better understand yourself, is actually more important than your experience. Knowing where your strengths are and how to play to your strengths in the workplace, avoiding your weaknesses not only in the work but also in daily life, is also important.
What foreign companies can learn in terms of marketing approaches can be viewed from two angles. On the one hand, for some foreign companies or brands that want to enter the Chinese market, you must have a good understanding of consumer insights and trends in the Chinese market before coming in because China is no longer the China of 20 years ago and it is not possible for a product or brand with a foreign label to easily succeed in China. You really need to see if your products can find its target group in the Chinese market. And don’t expect to impress all of China’s 1.3 billion people with your brand, that is impossible. If your customer base can slowly expand from tens of thousands to hundreds of thousands and millions, that is already very good.
Secondly, China's consumer development is still very much at the forefront of e-commerce, including social media interest e-commerce. I used to think that Chinese social media would not be able to adapt to foreign countries and foreign social media would not do well in China but with the increasing popularity of TikTok (Douyin) in foreign countries, we find that to some extent, consumers all over the world share some of the same characteristics. Foreign TikTok users will now also buy things on it and there are also many examples of cross-border e-commerce from China opening up to foreign markets. So I think something that many foreign brands can study and explore is how to better integrate into today’s social media and form a conversion process from A to P.
Because of the many changes in Chinese e-commerce every year, one of the important lessons we have learned is that advance planning and arrangements is crucial. With foreign e-commerce as represented by Amazon, there is no concept of how to arrange things in advance. Instead, they like to see an existing item and then work out how to handle it. They want to see the output and the future but the fact is that e-commerce development is not like that. Often, when a thing is very mature and when everyone wants to do it, you have already missed the so-called traffic dividend.
For some foreign markets or some brand operations people, it would be worth studying the development of Chinese e-commerce over the past two years. I think the early approach is a very good one. Even if you have not understood it all clearly, it’s still worth trying. That is very important.