Mike’s Blog

Our press release on the Melamine scandal…

The melamine incident has shaken China’s milk industry and is having knock-on effects through food markets globally.  But it is also sowing the seeds of positive change for China’s milk marketers by strengthening brand loyalty. 

A newly released study, “Tainted Brands”, from All Media Count (allmediacount.com) finds that milk consumers have had their confidence in milk brands deeply shaken, but that there is not likely to be a flight from milk consumption.  On the contrary, the incident has suddenly made most milk consumers more loyal. 

China’s major milk brands have spent years investing in product development and marketing communications, only to have a large chunk of that equity wiped out almost overnight.  San Lu, the brand at the epicenter of the scandal, is probably damaged beyond repair.  According to the AMC study of 900 milk buyers which was carried out from September 22^nd to 26^th, over 85% say they have a more negative impression of the brand due to the incident.  Half of San Lu’s former loyalists claim they will avoid the brand in future. Because it was the first brand to be implicated and, according to tests by health authorities, the most heavily tainted, San Lu has been a lightening rod for most of the initial shock in what is actually a very pervasive problem.   This is likely to be an insurmountable loss of trust for a brand which might have been expected to fare better due to its partnership with New Zealand’s Fonterra.

Mengniu and Yi Li, are also both widely known to have been implicated.  They were spontaneously named as tainted by about 60% of milk buyers in the study.  For these brands, the impact of the tainting appears closely related to their status.  This is the flip side of being a leading brand: when the scandal is industry-wide, the better known a brand is, the more likely people are to remember that it is implicated.  These leading brands, despite having resources to manage the impact of the scandal, also have the most to lose by mishandling it.  Although only about one quarter of their loyal customers say they will avoid these brands in future, many more of their customers say they are open to alternative milk brands.  For example, nearly two-thirds of shoppers formerly loyal to Mengniu now say they are on the move, looking for alternatives. 

For a smaller brand, especially “also buy” brands (the second or third brands in a consumer’s repertoire), these betrayed loyalists are a huge potential opportunity.  Even minor spillage from a mega brand like Mengniu could make a huge positive impact on the sales of a small local brand, provided these potential customers are already aware of the brand.  For instance, the number of disgruntled Mengniu customers considering San Yuan (prior to San Yuan also being implicated in late September) was about twice as many as San Yuan’s own loyal customer base.  

A crisis can often change the rules of the game.  During the melamine incident, some local loyalties became liabilities.  At such times, superficial awareness of a brand may be a stepping stone to trial and later lead to trust.  A very good example of this is the shift in interest toward Bright Dairy in Beijing versus its home city of Shanghai (see table below). 

The trust of many Shanghai milk buyers was betrayed when Bright was named as a tainted brand.  54% of consumers in Shanghai said they had bought Bright in the past three months, but only 7% said they would consider it after the scandal broke.   

Beijing milk buyers, on the other hand, did not feel betrayed by Bright.  For them, the brand was peripheral, only 17% had bought it in the past three months, though most would have often seen it in the store or in advertising.   When popular northern brand Mengniu came under the melamine spotlight, Beijing milk buyers turned away from Mengniu in droves.  They did the same with equally strong national brand Yi Li.  That left Bright – a brand all Beijingers have heard of but few buy – in an unusual but fortunate position: not close enough to people’s hearts to trigger a backlash and not a complete stranger either.  It emerged unscathed in Beijing, even picking up a couple of points of consideration.  Possibly, being a southern brand, Bright was thought to be distant enough from Beijing’s neighbor Hebei province to be seen as having less risk of tainting.

By contrast, national brand Mengniu, with solid awareness levels in all markets suffered deep losses of consumer consideration in all markets.

The most important finding from the study according to AMC’s Managing Director, Mike Underhill, was the immediate transformation of loyalty behaviour: 

“Most consumers who used to buy two or more brands of milk a month, now say they will stick with just one.  That will mean a lot less brand switching, a lot less sensitivity to price.” 

With the major brands on a more or less equal playing field with regards to price, availability and exposure to tainting, the brands that benefit from this sharpened degree of loyalty will be those such as Bright who find themselves with unexpected market openings and any of the smaller brands who, on their home turf, can pick up and hold onto spillover customers from the big brands.  To do that, smaller companies would need to quickly lift the volume and standard of marketing communications because it would be hard to make any fast changes to their product offerings or distribution. 

From a branding and strategy perspective, this would be a bad time to stimulate trial through discounts.  Although discounting can stimulate immediate purchase and clear out excess inventory, it often leads to long term negative side effects such as consumer expectation of cheaper prices in future, sales slumps after the discount ends, and erosion of a brand’s imagery.  And because the illegal use of melamine was driven by the motivation to cut costs, consumers may be especially suspicious of cheap prices this soon after the incident. 

In the longer term, the melamine incident’s impact on loyalty is likely to benefit all milk brands that survive the industry consolidation that occurs.  Consumers will have more reason to care about brands and milk will become somewhat less of a commodity.  The inevitable shake-up in the system of getting milk from the cow to the breakfast table will of course result in higher prices for consumers, but with a better-developed understanding of what quality means in the milk category and more effective and better targeted brand communications from milk companies, AMC believe that higher prices need not lead to less consumption.

Top three things for milk companies to do

Large brands:

1. Identify your loyalists.  Use market research to find out who they are, where they are, what they use, why they love you and how to talk to them (the media they use).  Through this process, learn what new opportunities there are to keep these customers loyal to you.

1. Do contingency planning now.  Identify vulnerabilities (such as underlying product quality in this case), designate a crisis manager and a chain of command which extends beyond the CEO, have mechanisms in place which provide rapid feedback about the development of the crisis, both within and outside the company.

1. Remain upbeat.  Avoid the temptation to explicitly or implicitly make the subject of the crisis part of your ongoing brand positioning, eg. “We are the brand with safest levels of such-and-such”.  Often these issues are best left to the authorities to make pronouncements about and there are probably regulatory limits on what a brand can say about itself.  Furthermore, marketing communications which try to exploit negative news are usually not well remembered by consumers (people subconsciously like to forget bad things).

Small brands:

1. Find out where you stand.  Where do consumers see you in relation to other larger brands?  As markets develop and become less commoditized, feelings and attitudes about brands become increasingly important.  These feelings are often not rational; you need to be able to say the right thing at the right time, if your brand is to capture any lost loyalists from other brands.

1. Make your brand known.  You may have local strength, but a crisis may lift your brand in markets where spillover matters.  Being unknown is an almost certain barrier to trial, even during a crisis, because people become more risk averse and less willing to try anything new.

1. Revisit your assumptions.  Your company may have entrenched ideas about accessibility of local markets or customer segments.  During times of crisis, these may all be up for grabs and you may not have time to fully evaluate your basic assumptions as the incident unfolds.     

All Media Count is a media and advertising consulting firm based in Beijing.  The company specializes in cross-media and non-traditional media analysis.  AMC’s founder, Mike Underhill, has lived and worked in China since 1996.  More information on the Tainted Brands study and how to buy a copy of the report is available at http://www.allmediacount.com/

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三聚氰胺事件为众多奶制品品牌带来机遇

最新报告显示：污染导致品牌忠诚度增加

三聚氰胺事件已经震动了中国的奶制品行业，并且对于全球的食品市场产生影响。但同时也为中国奶制品企业加强品牌忠诚度播下了积极的种子。

北京同源信商业咨询有限公司最新发布的“被污染的品牌”研究报告指出，牛奶消费者对于奶制品品牌的信心已经发生严重的动摇，但是并不会停止牛奶的消费。相反，这次事件突然间使得大多数牛奶消费者变得更加忠诚于某一品牌。

中国的主要奶制品企业花费多年的时间着力于产品开发和市场推广，但一夜之间几乎所有的努力灰飞烟灭。处于事件震中的三鹿，更是几乎遭受到了灭顶之灾。根据北京同源信商业咨询有限公司在2008年9月22~26日期间对900名牛奶消费者所进行的调查，超过85%的受访者表示，他们因为这次事件而对三鹿的品牌产生了负面的印象。一半的前三鹿品牌拥护者表示他们将来不会再购买三鹿的产品。由于三鹿是第一个被牵扯到事件当中的品牌，而且，由卫生部所进行的检测表明其产品被污染的程度最严重，三鹿成为了由行业内人尽皆知的潜规则所引发的最初的震动的避雷针。这也使三鹿，原本期望与新西兰恒天然公司合资而获得良好效益的品牌，遭遇到不可避免的信任丧失。

蒙牛和依利也双双被牵扯到这次事件当中。自然地，超过60%的受访者称两者为被污染的品牌。对这些品牌而言，污染会导致什么样的影响与各自在行业中的地位有密切的联系，这正是作为领导品牌的另一面：当事件发展到遍及全行业时，越是知名度高的企业，人们就越记住了该品牌是被污染的。这些领导品牌，无论是否有能力应对事件造成的影响，都一定会由于违规操作而遭受损失。虽然只有大约四分之一的忠实用户说将来不会再购买该品牌产品，但更多的顾客表示会考虑其他的品牌。比如，大约三分之二前蒙牛的消费者说他们正在寻找其他的替代品。

对于小品牌而言，特别是那些“偶而购买的”品牌（即在消费者清单上位列第二或第三的品牌），这些分流而来的消费者却是潜在的巨大机会。从蒙牛这样的百万量级的品牌中分流出极少部分的消费者，也会给小品牌的销量带来巨大的提升，因为他们已经认可了这个品牌。例如，不满于蒙牛转而考虑三元（注：这是在2008年9月底三元被卷入到本次事件中之前）的消费者数量是三元现有忠实顾客的两倍！

一次危机能够改变游戏的规则。在此次三聚氰胺事件中，一些本地的忠诚用户改变了立场。在很多时候，对于品牌的肤浅认知能促使消费者试用产品并最终导致信任该品牌。关于这一点的生动例子是下表所示的在北京和来源地上海，顾客对于光明牛奶感兴趣程度的对比。

当光明被列入到被污染品牌后，上海的牛奶消费者对其的信任受到了影响。54%的上海消费者说他们在过去3个月中购买过光明的产品，但只有7%表示在事件爆发后还会继续考虑它。

另一方面，北京的牛奶消费者却并没有这样的感觉。对他们而言，光明是一个遥远的品牌，只有17%的人曾经在过去3个月中购买过光明的产品，虽然很多人曾在商店或广告中经常见到光明。当来自北方的知名品牌蒙牛被卷入到三聚氰胺事件当中时，北京的牛奶消费者陆续地抛弃了蒙牛。他们对于同样具有全国影响力的品牌依利也是如此。光明——北京消费者熟知却很少使用——处在了非同寻常却非常幸运的位置上：既不是过于靠近人们的心脏以至于被后座力所伤，也不是完全陌生。从上表也可以发现，光明在北京几乎没有受到影响。也许，作为南方的品牌，光明被认为距离河北省太遥远以至于没有受到污染的风险。

对比之下，作为全国性品牌的蒙牛，却被全国各地消费者排除在可考虑的范围之外。

北京同源信商业咨询有限公司常务董事戴德尧先生指出，本次研究最重要的发现是消费者忠诚行为的立刻转变。“大部分以前每个月购买两个或多个品牌的消费者表示他们今后将只购买一个。这将意味着更多消费者稳定地忠诚于某一品牌和对价格的不敏感”。

事件当中，对于在价格、品质和暴光度拥有同样更多（或同样更少）的腾挪空间的大品牌而言，只有象光明那样的察觉到拥有了自己不曾预料的市场机会的企业才能获益于愈发集中的忠诚度。同样，那些能够在自己的区域内抓住并且牢牢掌握住从大品牌分流而来的消费者的小品牌也能从事件中受益。为了达到这一目标，小品牌需要迅速地增加市场推广的数量和标准，因为，想要迅速改变产品产量或者输送会更加困难。

从长远的品牌战略来看，目前并非通过降价来吸引顾客试用产品的时机。

在更长期的阶段，三聚氰胺事件对所有品牌的忠诚度的影响有可能会有利于全体的品牌。顾客将会有更多理由去关注品牌，牛奶将不再仅作为日用品。将牛奶从奶牛身上送到早餐桌上的整个系统会不可避免地发生变化，这当然会导致更高的牛奶销售价格，但由于消费者更加充分地理解牛奶产品品质的意义、奶制品企业开展更加有效和有针对性的品牌建设，北京同源信商业咨询公司认为更高的价格并不会导致销量的下降。

立刻需要做的三件事情

对于大品牌：

1、找到你的忠诚用户。进行市场调查去发现谁是你的忠诚用户，他们在哪里，他们使用什么产品，为什么他们喜好你的产品以及如何与他们沟通（他们阅读什么样的媒体）。通过这些措施，可以找到新的机会去保持这部分顾客继续忠诚于你的品牌。

2、现在就制定应急预案。找出不足之处（比如这次事件所暴露出的产品质量问题），并委派危机管理人员，制定一系列与现有公司运营相独立的措施，建立适当的机构，这样才能针对危机做出公司内、外部迅速的反应。

3、保持低调。避免试图直接或间接地利用危机来进行公司定位宣传，比如,“我们是最安全的品牌云云”。通常，这些事情最好是留待政府相关部门来宣布，同时相关制度也会限制企业能说什么不能说什么。更进一步的，利用负面新闻来进行的市场宣传一般不会被人们记住，因为人们都愿意尽快忘掉坏事情。

对于小品牌：

1、找到你的位置。顾客如何看待你与其他大品牌？由于市场处在不断发展之中，对于品牌的感觉和态度变得越来越重要。这样的感觉经常是不理性的，所以如果你想要抓住从其他品牌分流出来那些顾客，你必须能够做到在正确的时间说正确的话。

2、提高你的品牌知名度。也许你在本地很有优势，但一次危机可能将你置于到由其他品牌分流得来的顾客集中的市场当中。即使是在危机当中，一无所知也是产品试用的障碍，因为人们都不愿意冒风险去尝试新东西。

3、重新审视你的计划。你的公司也许已经制定了开拓本地市场或细分顾客群体的策略。在危机当中，这些目标都可以实现，但是当危机来临时你可能没有时间去充分评估你的原有计划。

北京同源信是一家媒体和广告研究公司，总部位于北京。同源信擅长跨媒体和非传统媒体分析。公司的创始人戴德尧先生从1996年开始在中国工作和生活。更多信息和研究报告请见http://www.allmediacount.com/