Although the price is much lower than that of peers, the product quality is not bad. At that time, the batteries used by Xiaomi's mobile power supply were original customized batteries from top international battery suppliers such as LG and Samsung, with super capacity 10400 mAh. In design, the body of Xiaomi mobile power supply has been anodized and sandblasted, which has a shiny metallic luster, and the surface is more sweat-proof and corrosion-proof, which is easy to carry around.
Xiaomi mobile power supply went on the market and sold 20 million units a year, creating an amazing sales record and becoming an amazing explosion.
Xiaomi's mobile power supply has had a subversive impact on the mobile power supply industry. High cost performance is the competitive advantage of Xiaomi mobile power supply, but this competitive advantage is difficult to imitate. Other manufacturers dismantled Xiaomi's charging treasure and found that it would cost more than 100 yuan to purchase those raw materials according to their own supply chain. The product made at this cost can't be compared with Xiaomi at all.
Then why does Xiaomi's mobile power dare to sell so cheaply?
Because Xiaomi has a cost advantage.
Liu De, vice president of Xiaomi, revealed that the essence of mobile power supply is the tail goods business, which is also the reason why Xiaomi charging treasure can achieve the ultimate cost performance.
In 20 13 years, Xiaomi noticed that due to the competition of tablet computers in the notebook market, notebook sales began to stagnate, and the enterprises that mainly provided 18650 batteries for notebooks in the international market experienced overcapacity.
Xiaomi found Samsung and LG and proposed to exchange the lowest price in the world for a large number of orders to order batteries, so that the other party could maintain the factory capacity.
The extremely low price obtained in this way helped Xiaomi reduce the price of mobile power supply to 69 yuan and become an explosive product.
This kind of explosive product with high cost performance is difficult for competitors to imitate. In other words, such products have moats.
What does this case inspire you to make products?
Some people say that the most worthless thing in the world is thought.
When you have a great idea and make a product, many competitors will immediately follow suit and seize market share with you. Then you will fall into the red sea competition, resulting in products that don't make money.
It is not safe to have a leading market share. Netscape and Rising Antivirus used to have a leading market share, but they were eventually killed by their competitors because there was no strong competitive barrier.
In order to prevent competitors from entering and attacking, products need to establish competitive barriers, just like ancient moats protecting castles.
At the beginning of product development, we should first consider building a moat for our products.
Teacher Warren Buffett said that there are four kinds of moats:
Next, analyze these four moats one by one.
Intangible assets include brands, patents, core technologies, customer relationships and channels, contents, data, licenses, franchise rights, etc.
Brand:
Apple mobile phones are much more expensive than other brands with the same configuration, and still attract many loyal fans.
Patents:
Huawei's 5G patents rank first in the world, accounting for 20%. 5G core patents of all enterprises in the United States account for less than 15%. These patents are Huawei's moat.
Content:
Zhihu's function is not complicated, and there are no technical barriers. The massive content and data accumulated by Zhihu's years of operation are hard for competitors to have in a short time.
Xiaomi's mobile power supply and famous products have cost advantages.
Speaking of cost advantage, I have to mention a classic case, the No.9 balance car.
Feng He, the founder of No.9 Balance Car, graduated from Beihang University. In 2003, they took part in the school robot competition and began to get in touch with robots. Many years after graduation, when they started to make balance cars, Segway, a mature American company, already existed.
In 200 1 year, Dean Carmen, known as "contemporary Edison", introduced the first suitable two-wheeled electric balance car Segway, which became the originator of balance cars and occupied a leading market share.
As a start-up, how does the No.9 balance car compete with the industry leader?
Segway is very expensive. Sell tens of thousands of RMB in China. It is a toy for a few rich people.
The competitive strategy of No.9 balance car is cost leadership, which reduces costs by reducing materials and optimizing supply chain. The price of the first-generation No.9 balance car is 12000 yuan, which is a fraction of Segway.
In 20 14, Company No.9 received a series financing of 80 million dollars from Xiaomi, which became a part of Xiaomi's ecological chain, which was a key turning point in its development.
20 15 10, No.9 company and Xiaomi jointly launched No.9 balance car. In terms of selling price, it follows the concept of price/performance ratio of Xiaomi and directly drops to 1999 yuan.
With the help of Xiaomi's sales channel, the No.9 balance car sold 65,438+10,000 units in just two months, which successfully opened the door to the mass consumer market and achieved rapid growth in scale. By 20 18, No.9 company had become the global sales champion in the field of balance cars with millions of sales.
With the increase of sales volume, the manufacturing cost can be further reduced. At present, the cheapest balance car in JD.COM is 1399 yuan, and you will see more and more people using the balance car on the street.
20 15, No.9 company acquired Segway, the originator of the balance car. Through this acquisition, we obtained Segway's patents, brands and channels, and successfully entered many countries and regions in North America, Europe and Asia-Pacific, achieving penetration in many overseas markets.
What does the development of No.9 balance car inspire you?
It is very important for cost manufacturing industry, because price is often the key determinant for customers to choose products.
Cost advantages can come from the following aspects:
Conversion cost refers to the one-time cost of users switching from one product to another, including economic cost, time cost, energy cost and emotional cost.
My mobile phone number has been used for 20 years, not because I am too satisfied with this operator, but because it is too troublesome to change my mobile phone number. When changing the mobile phone number, it is not only necessary to inform friends, relatives and partners, but also the current mobile phone number is bound with many accounts and bank cards, and the conversion cost is very high.
Your users' loyalty to you is determined by two factors: the degree of temptation and the turn of competitors.
Change the cost.
The degree of temptation of competitors is beyond your control. What you can control is the switching cost.
Let's look at some cases that increase the conversion cost:
Baidu network disk: users have stored a large amount of content in the network disk, and it is very troublesome to migrate to other network disks. You won't give up easily if you buy a member.
There is a cloud note: users have stored their notes on cloud notes for many years, but they cannot export them to other note products in batches.
B-end products: B-end products are usually closely related to the business, process and organizational structure of enterprises. After a period of use, a lot of business data has been deposited, and new products have to undergo special training and learning, and the conversion cost is very high, so it is generally not easy to replace.
Designing software products (such as Adobe Photoshop) is usually complicated and requires special training and learning to be handy. Users finally learned Photoshop and didn't want to switch to competing products that had to be learned from scratch. Adobe's highest market value once exceeded $300 billion. Adobe's gross profit margin is as high as 86%, which is close to 9 1% of that of Maotai, and it can be called Maotai in the software industry.
Network effect refers to "network" products. The more users use the product, the greater the value of the product.
Metcalfe's law is used to describe the network effect. The Network Effect is named after robert metcalf, the pioneer of computer network and the founder of 3Com Company, in recognition of his contribution to Ethernet.
The content of network effect is that the value of a network is equal to the square of the number of nodes in the network, and the value of the network is directly proportional to the square of the number of users connected to the network.
A network consists of many nodes and their connections. Internet is a kind of network, and the essence of Internet products is connection.
Products that connect people and information, such as Baidu;
Products that connect people, such as WeChat and QQ;
Products that connect people and goods, such as Taobao and JD.COM;
Products that connect people and services, such as Meituan and Didi.
Interconnected products often have network effects.
The most typical case is WeChat.
The monthly active users of WeChat exceed 654.38+0 billion. Many people use WeChat because friends and relatives around them are using WeChat, and it is convenient to find and contact friends through WeChat.
There have been many competing products trying to compete with WeChat, such as Ali's contacts and Netease's Yixin, and finally they all went away.
Didi taxis also have a network effect. The more passengers use Didi, the more attractive Didi is to drivers. The more drivers use Didi, the shorter the waiting time for passengers to use Didi taxis, and the better the service experience, further attracting more passengers to use Didi. As a multilateral platform, Didi has a mutual promotion between the demand side and the supply side.
Building the moat of products is usually not done overnight, but it has to go through a development process.
The initial product is often a tool product, as a tool to solve a user's pain point.
Tool products are usually easy to replace, and moats can be built in the following ways:
The content in the product needs time to accumulate, and it is difficult to imitate in a short time. For example:
Encourage users to establish social relationships with other users in the product. Social relations have network effect and can form competition barriers.
For example, for primary school students, children's watches are more than just a phone tool. Little genius children's watch has the function of touching and adding friends. After adding friends, students can contact each other through children's watches or form a student group.
The social function of little genius children's watches is closed, only for little genius children's watches, and other brands of children's watches are not supported.
When most students in the class are using children's watches, other students who don't use children's watches will feel isolated and unable to blend in with other students. So they will clamor to buy their parents a little genius watch.
At present, little genius children's watches account for half of the domestic market share, so some people say that there are only two kinds of children's watches: little genius and others.
We can even predict that Xiao Tian will become a potential competitor of WeChat when more and more children use Xiao Tian as a social tool.
Through the moat built by the first two steps of "tool content" and "tool socialization", the market share of products has gradually expanded and it has great influence in the industry. At this time, it is possible to win over partners and build an ecosystem.
It is difficult to establish an ecological circle composed of many partners in a short time. Once the ecological circle is built, it will form a wide and wide moat.
Building an ecosystem is the dream and ultimate goal of many products.
Xiaomi, WeChat and Android have all formed their own ecological circles.
The front is to consider building a moat from the perspective of a single product. When this single product has the core competitiveness, we can consider the diversification of products, build a product matrix, and further strengthen the moat through the cooperation of multiple products.
Meituan used to be a group buying business. Meituan emerged from the "Thousand Regiments War" and accumulated merchants, customers and consumers. Later, these resources were used to cut into the take-away market and quickly gained a leading position.
After the take-away business is done, the established instant distribution network is the moat of the take-away business.
Later, we used the resources of cooperative merchants and instant distribution network to cut into "medicine delivery", "fruit delivery" and community group purchase.
These businesses can cooperate with each other, with high-frequency business driving low-frequency business and low-frequency business bringing new profit growth points. These mutually promoting businesses can further strengthen the core competitiveness of Meituan.
Another way of multi-product collaboration is the different positioning of multi-product business objectives, as shown in the following figure.
For example, the limited edition sales of Huawei mobile phone Porsche are not high, and it can't make much money. It is an image product, which can strengthen the brand and establish the high-end image of Huawei products.
Next, let's take a look at how Keep, a fitness product, builds a moat.
Keep is a tool-based product, with a small number of fitness courses and training plans at the beginning of the product. After that, "tool content" was started, and more fitness videos and fitness courses were launched one after another. And Keep also encourages users to share their fitness photos and experiences, and precipitate more content on Keep.
Keep Mall sells many fitness products, including yoga mats, treadmills, water cups and healthy foods. The brand of these products is "Keep", which is actually made by many partners of Keep.
Keep's goal is to build an ecological chain like Xiaomi. This is to build a moat through "tool ecology".
The moat you imagine is only your hypothesis, and whether the moat is effective needs to be verified.
The moats mentioned above all look very powerful. Then, after the products have these moats, can we still sit back and relax?
Of course not.
All moats are only temporary defensive measures and cannot guarantee the victory of the war.
The moat can prevent infantry from attacking the city, but the ancient moat has no effect on modern wars using high-tech weapons.
Some enterprises started with excellent products, built a wide moat and became industry giants. However, with the progress of science and technology and the changes of the times, the moat that was finally built will also fail.
Industry giants are often bypassed by cross-border competitors and their scale is reduced.
Although the former telegraph network had a network effect as a moat, it was replaced by the telephone network.
The telephone network also has a network effect as a moat, but now there are fewer people calling and more people using WeChat to communicate.
Kodak, once a film giant, had a strong brand, a large number of patents and a global channel network, but it was defeated by digital cameras.
Nikon, the former digital camera giant, used the patent of digital camera technology as a moat, which could stop competitors, but it could not stop the progress of the times. Nikon declined as people stopped buying digital cameras.
There is no fixed moat.
The only constant is change.
The title map comes from Unsplash and is based on CC0 protocol.
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