Various media and netizens went their separate ways, some complaining about the Brutalist perfume, while others ridiculed the IQ tax for eyeballs.

For a while, everyone was debating whether Brutalist perfume was worth the price.

Through the emotional value judgment, the essence of the core topic involved in this hot search is: Is it reasonable to conclude that "brand premium" is reached through the comparison of cost price and market selling price?

This is a complex problem involving different system modules. The front-end is the consumer's willingness to pay, and the back-end involves the value alliance of the supply chain.

Brands have been around since ancient times.

A noodle shop can open three in Chang'an City; an inn can exist for hundreds of years. There is a prototype of the brand within a certain geographical range. It is recorded in the "Book of the Later Han Dynasty" in the "San Fu Jue Lu" of the Southern Dynasties: "If a husband wants to do his job well, he must first sharpen his tools, using Zhang Zhi's pen, Zuo Bo's paper, and Chen ink." These products named after characters have basically increased brand influence.

But the brand premium did not appear at that time.

Because the geographical scope that the brand can cover is too small, and the communication environment is backward, the number of people that the brand can reach is too small, and it can only accumulate value in the time dimension, but cannot expand its scale horizontally. Without large-scale production, it is difficult to achieve brand premium.

After the emergence of industrialization and globalization, a large number of unified production methods and global trade have solved this problem, from the difficulty of production to the breadth of sales.

The world business market has innovated, and modern brands have emerged.

In the beginning, goods moved within a limited geographical area, industry competition was not fierce, and there was basically no need for commodity protection. After the period of industrialization and globalization, production capacity has been greatly improved, and a large number of similar and homogeneous goods have emerged. Only then did producers and sellers begin adding logos to their goods to show their differences.

But under such circumstances, there is still no institutional guarantee, and everyone is trapped in vicious competition. Western society was the first to establish a trademark legal system. At the beginning of the 19th century, France, the United Kingdom, the United States, Germany, Japan and other countries that were the first to enter industrialization successively promulgated trademark protection laws. By the beginning of the 20th century, modern brands with trademarks as the core were not only protected by law, but also became an important part of the modern commercial market.

With the emergence of modern brands, brand premium is the basis for its creation.

In its marketing dictionary, the American Marketing Association defines the concept of "brand" as follows: a "name, term, logo, symbol, or design, or a combination of the above, that identifies a manufacturer or a company. Group manufacturers' goods and services, thereby distinguishing them from those of other competitors.

David Aaker, the father of modern brand marketing, believes that the brand represents an intangible asset. Brand expert JeanNo lKapferer pointed out that the brand is the most valuable asset of the company. For the company to which the brand belongs, the brand itself represents a legal property with wealth value in addition to the goods produced. This property can influence. Consumer behavior can ensure a steady stream of income for its owners during the buying and selling process. This is the brand equity theory.

In addition to the brand equity theory, there are also brand image theories, brand relationship theories, etc. Three or four brand theories. No matter which theory, it is recognized that the brand itself is valuable.

This is the origin and theoretical basis of brand premium.

However, this is. It does not mean that Brutal perfume can generate a brand premium at 14 times the price. The brand premium cannot be achieved by putting a logo on the product.

According to David Aaker's five-star asset model. , a brand must have at least five dimensions of value to achieve premium. These five dimensions are: popularity (knowledge about knowing), awareness (knowledge about quality), and brand association (knowledge about personality and value). , loyalty (knowledge about price differences) and other proprietary assets (trademarks and patents).

If this model is condensed and put into contemporary business society, at least the following three elements must be achieved:

In the field of technology, no brand dares to claim that its products are 100% produced by itself. of. In theory, all of our current consumer technology products are "supply chain products." ——It is a collection of countless small brands that form a final technology brand and reach us.

In the early 1980s, Intel's main business was memory chips. At the time, they were battling rapidly emerging Japanese competitors. When IBM released its own personal computer and it became extremely popular, then-Intel CEO Andy Grove saw this as a great opportunity and decided to bet Intel's future on CPUs. In 1985, Intel's CPU "80386" was released and integrated into IBM's personal computer, which was commonly known as the "386 computer". The "386 Computer" was a great success, bringing the PC from the 16-bit era into the 32-bit era in one fell swoop.

However, this success did not give the public a broader and deeper understanding of Intel, but instead made IBM famous. Is it possible for Intel to build its own brand premium as one of the component suppliers in integrated technology products (albeit probably the most critical one)?

In 1989, Intel attempted to place 386 ads in newspapers in Denver, USA.

This is the prototype of Intel inside plan. Dennis Lee Carter, an Intel technical assistant who proposed the concept at the time, believed, "We want the processor to occupy a more prominent position in the computer. She is extremely important but invisible. People don't know the existence of the microprocessor, and they don't know it." Get to know us."

In 1990, Intel launched the "Intel Inside" program, first in the United States, Europe and Japan. According to this plan, Intel is willing to share the advertising costs of this computer product as long as PC manufacturers purchase Intel processors and display the "Intel Inside" logo on their computer products and product advertisements. Partners came one after another, and more and more consumers began to see the "Intel Inside" logo on various PC brand computer products. Moreover, in various PC brand advertisements on TV and radio, I heard the familiar sound logo of "light, light, etc."

The "Intel on

side" plan is one of the few marketing plans that achieves dual brand premiums for itself and its partners. It has not only established itself as the unique king of PC processors in the minds of consumers, but also established consumers' strong purchasing decision intention for cooperative PC brands.

This is excellent marketing, but in essence, it is the patent monopoly behind Intel.

On Pinduoduo, there are a large number of "white label products" - these are the products of big brand OEMs after removing the brand logo. Generally, the price of "white label products" is only the price of big brands. half or even less.

Why can’t “white label products” sell at the same price as big brands? Obviously the product functions are the same, is it just a matter of name and logo?

No, one of the key factors is that big brands have already spent a lot of money building their brands.

In essence, brands are the solvers of consumer needs. It is the brand that understands consumer needs and explores a set of solutions (whether it is products or services) - production suppliers are only the executors of this demand. Before manufacturers and suppliers produce products, they are separated from the consumer market. They do not know who to sell the products they produce and how to sell them.

Therefore, from the beginning of the establishment of a brand, the brand owner must always conduct market research, spend huge amounts of marketing and advertising expenses, invest a lot of channel sales expenses, and if there are offline stores, there will also be a lot of rent and labor. Costs, these various brand building costs, all need to be borne by the brand.

And, the risk cost that big brands have to pay for this - "white label products" can close their stores at any time on the TV platform and open another one, but big brands cannot bear such risks.

As the widely circulated hypothesis goes: If all Coca-Cola factories around the world were burned down, as long as the brand still exists, all the factories can be rebuilt from the ruins overnight.

However, a hundred years ago, Coca-Cola's main product selling point was functional:

Coca-Cola - delicious and refreshing, satisfies thirst, and helps health.

Now, Coca-Cola has become a way of life. Whatever this lifestyle may be, Coca-Cola has become an important symbolic element in this lifestyle.

Brand has three values: functional value - emotional value - symbolic value.

Every time a value is realized, the brand premium will go up to a higher level. The last end is the most difficult to achieve.

The reason why Coca-Cola can realize this symbolic value is that the "key battle" was its deployment with the US military during World War II.

During World War II, the United States had been making a fortune in arms. It was not until Japan attacked Pearl Harbor that it declared war on Germany, Japan, and Italy and joined the war. When the U.S. military began its expedition, Coca-Cola took advantage of this opportunity and secured a quota for "military supplies." Coca-Cola’s then-President Robert Woodruff declared: “No matter where our country’s troops are, no matter how much it costs our company, we must ensure that every American soldier can get a bottle for only 5 cents. Coca-Cola! ”

With the pace of the US military’s war, Coca-Cola also “conquered” the world. At the same time, Coca-Cola began to construct a unique lifestyle symbol for two types of people. For the American officers and soldiers participating in the war, Coca-Cola was a symbol of home. No matter where in the world, drinking a bottle of Coca-Cola, this refreshing sip can provide a sense of security from home; and for the people in the country where the war is taking place, For one, being able to drink Coca-Cola, which is the standard product of the powerful US military, is the "American dream" and a symbol of lifestyle from the most powerful country on earth.

When a product transcends its product value and emotional value and enters the spiritual world and life of consumers, its symbolic value has already been built.

Judging by these three criteria, it is self-evident whether the Brutalist perfume can charge a brand premium of 14 times.

To achieve real brand premium, the brand needs to accumulate investment costs at the market and consumer levels as mentioned above. This is just one of them, which determines whether the brand can obtain consumers' purchase intention. There is another very important factor: whether the brand can achieve the greatest value of the supply chain.

At present, more than 90 brands have a supply chain system composed of various roles such as brand owners, manufacturers, and sellers.

In this supply chain system, brand owners do not participate in organizing production. They only propose demand solutions for uncertain markets based on their accumulated brand influence in the market (expense costs). , work with production suppliers to formulate production plans, and then achieve brand premiums at higher sales prices.

As for production suppliers, they organize and implement production according to the brand owner's entrustment and the technology required by the brand owner. In this way, they can avoid the risk of market uncertainty and obtain stable income.

In this supply chain system, both parties get what they need, and the brand premium is actually the result of the joint efforts of both parties/multiple parties. As for how much "spillover" can be achieved, it not only depends on the brand momentum built by the brand on the consumer side, but also depends on the manufacturer's ability and willingness.

Foxconn is willing to invest huge amounts of money in technology research and development and upgrades for Apple’s orders, but for a start-up mobile phone company, it will definitely charge higher than the market average foundry fees.

Therefore, the ultimate value of the supply chain is also an important part of the brand premium.

Although the fragrances of Brutalist and Miniso are produced in the same foundry, we do not know what their respective relationships are with the foundry.

Perhaps, behind the fact that The Beast is 14 times more expensive than Miniso, its cost is also much higher than Miniso.

To achieve brand premium, it must also be based on the total investment of various factors in the entire supply chain system, in order to achieve the goal of maximizing revenue sharing and win-win cooperation.

From this hot search for Brutalist perfume, we see a lot of challenges faced by new domestic consumer brands in the process of growth. On the one hand, it must not only continuously accumulate its brand reputation in the time dimension and remain sensitive to consumer needs at all times, but also build its own brand influence and achieve a breakthrough in symbolic value; on the other hand, it also requires domestic brands to start To face real challenges, go deep into the supply chain system and establish a solid and valuable relationship with manufacturers.

"Brand Management" (2nd Edition)

This article was originally published on Everyone is a Product Manager and may not be reproduced without permission.

The title picture comes from Unsplash, based on the CC0 agreement. Related Q&A: What does premium mean? Premium means that it exceeds the actual value and exceeds the original price. It means that this thing is only worth 1 yuan, and someone is willing to pay 2 yuan to buy it.

Extended information: 1. Premium is a securities market term, and its pinyin is yì jià. Refers to the fact that the actual amount paid exceeds the nominal or face value of the security or stock. In terms of funds, it refers specifically to the fact that the buying and selling price in the closed-end fund market is higher than the value of the net assets of the fund units. We usually say that a stock has a premium, which means that there is still money after deducting various handling fees and other expenses. When we say how much room for premium a stock has, it refers to the price difference between the target price we judge for the stock and the stock's par price. Premium refers to the transaction price exceeding the par price of the security. As long as it exceeds, it is called a premium. Premium margin refers to how much the transaction price exceeds the par price of the security. 2. Risk Premium Risk Premium: For risky assets, investors require higher investment returns to compensate for uncertainty. This necessary rate of return compensation that exceeds the risk-free rate of return is the risk premium. Risk premium is also called risk reward. Risk reward is the additional reward that investors require for taking risks when investing, which exceeds the risk-free reward. Return on risky assets = risk-free return risk premium. 3. Stock premium We usually say that a stock has a premium, which means that there is still money after deducting various handling fees and other expenses. The cost of issuing stocks is more complex. It generally includes two aspects: First, pure issuance costs, that is, related expenses incurred by the stock issuer during the issuance process, such as stock printing costs, underwriting costs, publicity costs, and other intermediary service agencies' costs. expenses, etc.; the second is the dividends paid by the issuing company to investors every year. Therefore, the ratio of the cost of issuing shares to the actual amount raised is equal to the dividend divided by the issue price after deducting pure offering expenses. Expressed as a mathematical formula: Cost ratio of issuing stocks = Dividends / (Issuance price - Issuance expenses) × 100 4. Warrant premium Premium reflects the price of the underlying stock when an investor buys a warrant at the current price and holds it until expiration. How much must it rise or fall for this investment to be profitable? Judging from the premium calculation formula (taking call warrants as an example), the premium is actually calculated by first calculating the difference between the break-even point [(warrant price/exercise ratio) exercise price] and the underlying stock price, dividing it by the underlying stock price, and then Expressed as a percentage. For example, based on the closing price on March 26, the premium of SIPG CWB1 is 65.65, that is, if investors buy the warrant at the current price (3.527 yuan) and hold it until expiration, the price of the underlying SIPG stock must rise by at least 65.65 Only when the investment reaches approximately 11.93 yuan or above can the investment be guaranteed and make a profit. 5. Calculation formula: premium rate of call warrants = (exercise price of call warrants/exercise ratio-positive stock price)/positive stock price put warrant premium rate=(positive stock price of put warrants price/exercise ratio-exercise price)/ Positive stock price