Discussion of Week 4 _Group 4

 

Jiang Xiaobai

Wang Xin

Niu Yunyi

Shi Congshuang

Tan Xiangling

Liu Xinyi

Zhu Jiaqi

The ERRC grid

Eliminate:

Eliminate settled historical tradition: The brand history of Jiang Xiaobai is significantly shorter than other liquor brands (founded in 2012), which indicated that Jiang Xiaobai is an emerging young liquor brand.

Eliminate long maturing years: The traditional fermentation, distillation, and brewing processes are used by the Jiang Xiaobai company, with only a short period of brewing time remaining.

Reduce:

Jiang Xiaobai has reduced its high standards for taste flavor and brewing process. Traditional liquor focuses on craftsmanship and taste, and many brands emphasize brewing techniques and craftsmanship, which take up a large portion of the value. They also emphasized rich flavors, such as “saucy” and “fragrant”, which are the key competitiveness of many liquor brands. Jiang Xiaobai just uses natural fermentation and distillation to make ordinary, traditional sorghum spirits.

Raise:

Packaging Recognizability: Jiang Xiaobai raises its packaging recognizability by applying appealing, emotionally engaging and relatable contents to the packages of the bottles, attracting youths who seek a sense of belonging and hope to stand out from the others, instead of providing functional instructions for liquor on the bottles like many other traditional brands do.

For example, on a typical bottle of Jiang Xiaobai, words like “I out-drink everyone else just to privately talk with you.” are shown to customers. In this way, Jiang Xiaobai really resonates with young people.

Create:

In naming its brand, Jiang Xiaobai abandoned the traditional naming conventions of Chinese baijiu. Instead, it adopted a more personalized approach, creating a brand image that resonates with the characteristics of young people. By incorporating artistic elements, Jiang Xiaobai has struck a chord with its target clients (young people), providing a certain emotional value.

Jiang Xiaobai set up a Weibo-focused marketing strategy. It designed its products, publicity materials, and brand marketing campaigns according to Weibo’s platform feature, creating a sense of expression and engagement among Weibo’s users.

 

The Porter’s Five Forces

Competitive Rivalry:

Jiang Xiaobai competes primarily with Moutai and Wuliangye, but it differentiates itself by targeting lighter liquors and aiming at younger consumers, in contrast to traditional brands known for their strong flavors and emphasis on tradition. Jiang Xiaobai uses modern branding and digital marketing to appeal to this demographic. It benefits from maintaining unique production standards despite facing moderate supplier power. Purchasing power is high as young consumers have alternatives.

Supplier Power:

The main raw materials for Jiang Xiaobai are agricultural products such as sorghum. The bargaining power of suppliers is relatively weak because these raw materials are sufficiently available and have many substitutes. Due to Jiang Xiaobai’s certain brand recognition and its significant market share among young drinkers, the bargaining power of suppliers is reduced to some extant to achieve stable cooperation.

Buyer Power:

Jiang Xiaobai’s target consumers are mainly young people. According to reports released in recent years, the potential young alcohol-drinking population is as high as 490 million people, and the size of the young people’s alcohol-drinking market reaches 400 billion yuan.

According to Jiang Xiaobai’s brand definition, consumers are more likely to buy small quantities with several times rather than hoarding large quantities.

Young consumers are more sensitive to price, so Jiang Xiaobai needs to offer competitive prices while maintaining its brand image.

Young people are more willing to try new products, and there are many brands for young people to choose from in the alcohol market, so they have little brand loyalty and can easily switch to other brands.

Threat of Substitution:

There are many other types of alcoholic beverages such as beer, wine and cocktails that are also among the top choices for many young people. What’s more, fruit wines, European and American spirits are becoming the new favorites of young people. There are also a lot of affordable brands of these substitutes and they mostly possess the same or higher level of quality as of Jiang Xiaobai. Therefore, the threat of substitutes could be quite intense for Jiang Xiaobai.

Threat of New Entry:

Brand awareness and market share: Jiang Xiaobai has already established high brand awareness and market share among young consumers, which makes it difficult for new entrants to reach the same position in a short period of time.

Industry barriers to entry: The liquor industry has high barriers to entry, including investment in production technology, brand building, and distribution channels.