US Remodeling Little Swan From Multi-brand to Multi-category

“Classic has the power to make your product stand out. It is a powerful concept of differentiation, because having a long history seems to have a natural psychological importance. This allows people to feel safe when they choose.” The father of science, said Jack Trout. Because of this, in the business world, smart decision-makers are spreading the "security" of those classic brands through the continuous extension of the industry chain, but the challenge is how to make this "spread" not evolve into a dilute brand power. , And the final copy is successful?

People have seen that Chinese home appliance companies are building multi-brand industrial empire through dazzling mergers and acquisitions. For example, after Haier launched the Casa Di Refrigerator for the mid-to-high-end market, it launched the commander’s brand for the rural market earlier this year to subdivide the brand; Hisense, after acquiring Kelon, had Hisense, Kelon, which covered all household appliances. , Rongsheng three brands; and Changhong after entering the main Meiling, also completed the Changhong, Meiling two major brands of black and white household appliances coverage.

It is worth noting that after the multi-brand empire, China’s home appliance giant extended its tentacles into its own kingdom. Recently, Midea announced that after more than two years of merger and acquisition of Little Swan, based on the Little Swan Washing Machine, it will push Xiao Swan's air conditioners and refrigerators and build a large white electric platform based on the Little Swan brand. Chai Xinjian, general manager of Little Swan Co., Ltd. emphasized that Little Swan air-conditioning and refrigerator products are positioned in the high-end market. “In the harsh competition environment, Chinese home appliance companies are keen to carry out the extension of different categories under the same brand. This is a clear trend.” Dong Shaobo, partner of Dao Zheng Qi Management Consulting Co., Ltd. believes, “This can be used by consumers. Brand memory to speed up the market entry period of new products and reduce marketing costs. But not all companies can carry out multi-brand operation, which depends on the company's financial strength and operating experience, but also depends on the market space, that is, the brand positioning opportunities."

To awaken the little swan in the industrial park in Wuxi, Little Swan completed the construction of the top of the industrial building, hung two brands, one is "beautiful" and the other is "little swan." One year ago, it was only a wasteland in the memory of people. In 1978, Little Swan produced China's first washing machine. It once had the brilliance of the national washing machine championship for 10 consecutive years, but it changed hands from private enterprises in 2003.” "Sweet", by 2006 Wuxi National Union to recover the state-owned shares, this middle Little Swan has experienced hardship. In that year, after completing the expansion from a washing machine factory to an integrated white power company, it successively entered various fields such as air conditioners, refrigerators, dry-cleaning machines, dishwashers, and small home appliances. However, diversification and expansion has never been an easy task. After promoting Little Swan to become a home appliance company with a production and sales of over 10 billion yuan in the short term, large input and small output eventually gave Little Swan abandonment of diversification.

In fact, as early as 1997 Little Swan began to get involved in the air-conditioning industry, but also as a second pillar industry, and spent heavily invested. However, due to fierce competition and personnel turmoil, the transcripts submitted are not outstanding. At the end of January 2007, Little Swan announced that the product line had been strategically contracted, returning to the main business of washing machines, and Little Swan Air Conditioning began to withdraw from the market.

In February 2008, Midea acquired the 24.01% stake in Little Swan and became a controlling shareholder. "The primary goal of the United States after its entry into the Lord is to 'awaken the Little Swan'", said Chai Xinjian. "U.S. launching the layout of Little Swan in Little Swan is to make the Little Swan brand do some markets and consumers that the American brand cannot cover and radiate, grab the share of some closed brands, and increase the market share of the American department." An insider Said.

The other protagonist of the Little Swan story is famous for producing air conditioners. After entering the "One Billion Billion Club", Midea is conducting a multi-brand test. As we all know, this company started with the production of electric fans, and gradually expanded to air conditioners, microwave ovens and other fields. In 2002, the United States began to launch a white-white strategy (refrigerators, washing machines, and air conditioners collectively known as Dabai). In 2004, through the acquisition of Rongshida and Hualing, Midea built a complete white-electricity framework.

One special significance of the acquisition of Little Swan's strategy for Midea in the United States is that the Little Swan is one of the few companies in the world that possesses the same technology as the impeller, drum and agitator. This is obviously very important. Fang Hongbo, Chairman and President of Midea’s Board of Directors, has a long-term vision for making decisions. He said: “Good assets are not afraid of being expensive, and problem assets cannot be touched. The combination of strength and strength is the precondition for our decision-making when acquiring related assets.”

“The market share of the top three companies in the domestic refrigerator and washing machine industry is much larger than that of the air conditioner industry. This means that the industrial value of these two markets has not yet been fully tapped, that is, there is room for integration.” Dong Shaobo believes that “China’s household electrical appliance industry is still in a situation where vassal separatism does not form an oligarch, there is still room for integration. Because of this, for large home appliance companies, how to use multi-brand strategy to seize different groups of customers is still its place. Serious issues that must be faced.”

However, the acquisition is only the first step in the Long March. For the long integration, the hardest part is always after thrilling negotiations. This is a more complex and difficult battle. In Fang Hongbo's layout, Little Swan will become an integrated platform for its washing machines.

In September 2010, Midea sold its 69.47% stake in Hefei Rongshida to Little Swan. Little Swan used this asset as a value to issue 83.4 million shares to Midea Electric. This completes the mission of Little Swan to integrate all its washing machine operations. From the outset, Midea began to integrate the competition in the industry between Little Swan and Midea Electric, planning to install Rongshida's washing machine business into Little Swan.

At this point, Little Swan became the protagonist of the integration of the stage, and the United States is the general director. After the large-scale household appliances and air-conditioning industries, the related diversification of the United States locked the field of refrigerators and washing machines, and mergers and acquisitions became a breakthrough point for its rapid entry. In terms of the transformation of Little Swan into the United States, at present, it has achieved initial success. On March 15th, Little Swan's 2010 financial report showed that its annual operating income was 11.202 billion yuan, a year-on-year increase of 65.7%; net profit was 507 million yuan, an increase of 78.66% year-on-year.

From the multi-brand to the multi-category in the process of integration, the core idea of ​​Midea is to put the Little Swan into its own big game for consideration. It knows what kind of company the Little Swan should eventually be shaped into. This is actually The starting point for integration.

In fact, before the acquisition, Midea had already made a clear strategic positioning for Little Swan - Midea's washing machine platform. Therefore, all subsidiaries that have nothing to do with washing machines are stripped. After entering the Little Swan, the United States has successively stripped off a series of non-related assets of Little Swan.

At present, the sales department, supply chain, manufacturing and R&D departments of the washing machines of the three brands of Midea, Rongshida and Little Swan under Midea Group complete the integration and “implement a set of teams and manage them in a unified manner”. These three brands are positioned in the professional high-end, young fashion and popular market respectively. At this point, Midea's product line is more plentiful, and with the help of the Rongshida brand, it will enter the third and fourth-tier markets, and will continue to extend to the low end without driving down the brand image of Little Swan. The three brands of Little Swan, Midea and Rongshida are targeting disparate markets for different segments of the market to meet the needs of consumers in different regions, markets, and levels. However, Midea Electric is committed to refrigerators, air conditioners, and small household appliances businesses, solving the problem of horizontal competition between major shareholders and holding subsidiaries. This is its carefully crafted multi-brand layout.

After the completion of the integration campaign, Fang Hongbo began to lead Little Swan back to the air-conditioning market that had been fighting for a decade. From this year, the unified image ads of Little Swan air conditioners, refrigerators, and washing machines began to be broadcast on CCTV's prime time. In addition to washing machines and refrigerators, there is also a cabinet air conditioner in the final screen of advertisements.

However, people are worried that Little Swan will repeat the mistakes in the air-conditioning market. Xu Dongsheng, the secretary general of the China Household Electrical Appliances Association, believes that the US$100 billion financial strength of Midea Group will make it easy for air conditioners and refrigerators to be used in marketing.

"The idea of ​​the United States is that the Little Swan is not only doing large air-conditioning, but the key is to go 'up' and fully participate in the high-end market competition." Huang Jinliang, vice president of the China Marketing Headquarters of Midea Refrigeration Appliances Group said.

The premise of focusing on white-chip multi-brand strategy is that each brand should have a clear positioning of a certain market segment, which is driven by consumers' minds and their internal needs. Dong Shaobo pointed out that “the most typical example is P&G. The company's multi-brand strategy for shampoo products, Head & Shoulders promotes 'anti-dandruff', Rejoice is 'soft', Pantene is 'nutrition', Sassoon is 'professional', etc. This means that consumers are unique Demand will be met by P&G's products, which is why P&G occupies more than 60% of the shampoo market in China.”

However, in his opinion, “the extension of multi-category single brand is a double-edged sword. On the one hand, sales of new products will increase rapidly in the short term, and marketing costs will be greatly reduced; on the other hand, its brand is unique. Values ​​may be eroded and the target customer's differentiated perception of the brand may be blurred, destroying the brand's original differentiated positioning in the long run and damaging its long-term brand value."

“In fact, in the strict sense, our main business is still very prominent. We only focus on white electricity, and we have not done a very big leap. We are diversifying our products based on the professionalization of white goods.” Fang Hongbo said, “The Appliances will not be involved in the field of black electronics in the next five years."

He Xiangjian, the founder of the United States, also admitted in 2007 that “in the past seven or eight years, doing cell phones, color TVs, and real estate have been very good. Many people have made a fortune. My subordinates and friends have given me many opinions and opinions, but I am very clear-headed, I must take advantage of my own strengths to earn what I can earn.” In fact, Midea Group, which was founded in 1968, although it has three listed companies and four major industrial groups, has also set foot in logistics and other fields. Has also been operating around white goods production bases and exports.

“However, business competition is extremely cruel and consumers will face more and more choices. In each selection, consumers are more inclined to do simple and repetitive purchases, psychologically refusing to fall into complexity and confusion. The choice." Dong Shaobo thinks, "This means that the ultimate goal of any brand is to become a synonym for this category."