Core Insights - The article emphasizes that brand-driven strategies are essential for sustainable growth in a competitive market where companies face challenges of stagnation and homogenization [1][2] - It highlights the need for companies to transition from a sales-driven approach to a brand-driven one, focusing on long-term brand equity rather than short-term ROI [2][4] Brand Building Strategy - The core of brand building lies in creating differentiation and establishing a sustainable trust relationship with consumers [4][5] - The strategic framework for brand building involves guiding consumers through six stages: awareness, consideration, purchase, usage experience, loyalty, and advocacy [2][4] - Data indicates that brand influence on consumer purchasing decisions is paramount, accounting for 33%, surpassing other factors like product and price [2][6] Importance of Hard Advertising - Hard advertising is regaining importance as it effectively communicates brand differentiation and ensures clarity in messaging [5][6] - It achieves high reach and coverage, particularly through mainstream media, which enhances brand recall among consumers [6][7] - Hard advertising benefits from the credibility of authoritative platforms, creating a strong social consensus around the brand [7][8] Embracing Certainty in Brand Growth - In a variable market environment, sustainable brand growth increasingly relies on controlling certainty through reliable communication channels and consistent brand messaging [8][9] - The strategic value of hard advertising is being recognized, with brands shifting their focus back to traditional media for broader brand recognition and core value communication [9] Conclusion - Sustainable growth fundamentally depends on brand-driven strategies that establish clear and meaningful differentiation in consumer minds [9]

Core Viewpoint - Since July 17, the stock price of Nongfu Spring has risen for four consecutive trading days, recovering its market value to pre-controversy levels [1][3]. Market Performance - The total market capitalization of Nongfu Spring has returned to 500 billion HKD, reaching a new high of 510 billion HKD on July 22, with a stock price of 45.25 HKD per share [2]. - From April 8 to July 22, the stock price increased by over 42%, adding 144 billion HKD to its market value, with the controlling shareholder Zhong Shanshan's holdings increasing by approximately 120 billion HKD [2]. - In 2024, Nongfu Spring's stock price had previously halved to 23.04 HKD, resulting in a market value of only 259.1 billion HKD, reflecting a 23.4% decline throughout the year [2]. Leadership Changes - Zhong Shanshan, the chairman, has become more public-facing, engaging with media and stakeholders to restore confidence in the brand [4][5]. - He has made several public appearances and statements addressing market challenges and defending the brand's pricing strategy [5][7]. Financial Performance - In 2024, Nongfu Spring reported total revenue of 42.896 billion CNY, a slight increase of 0.54%, and a net profit of 12.123 billion CNY, which was nearly flat compared to the previous year [7]. - The gross profit margin decreased by 1.4 percentage points to 58.8%, influenced by promotional activities and rising raw material costs [8]. Water Business Challenges - The bottled water segment faced significant challenges, with revenue dropping by 4.31 billion CNY, a decline of 21.3% compared to 2023 [12]. - The market share of Nongfu Spring's bottled water products has been declining, with the revenue contribution from the water business shrinking from 47.5% to 37.2% in 2024 [13]. Product Strategy - In response to market pressures, Nongfu Spring launched a green bottle version of purified water, aiming to compete on price, with some products priced as low as 8.9 CNY for a pack of 12 [10][11]. - The company has also expanded its tea beverage offerings, with products like "Dongfang Shuyue" achieving significant revenue growth, compensating for the decline in the water segment [16]. Collaborations and Innovations - Nongfu Spring has increased collaborations with Sam's Club, launching various new products and leveraging the retailer's strong market presence [17][19]. - The company is exploring new product categories, including carbonated tea drinks and plant-based beverages, to capture market interest [17][20]. Market Trends - The non-sugar tea beverage market has seen rapid growth, with Nongfu Spring capturing over 70% market share in the second quarter of 2024 [20]. - However, the overall growth rate of the tea beverage segment has begun to slow, indicating a shift in market dynamics [20][21].

Core Viewpoint - Citigroup expresses increased confidence in the recovery trend of Nongfu Spring's drinking water business by 2025, anticipating a return to double-digit sales growth after a year of slowdown, which should restore investor confidence in the company's long-term performance, particularly in the drinking water segment [1][2]. Group 1: Sales and Market Performance - Nongfu Spring's management expects to achieve double-digit growth in overall group sales by 2025, despite a slight downward adjustment in net profit consensus forecasts for 2025 due to lower-than-expected revenue in the second half of 2024 [2]. - The company's market share in the drinking water segment has been recovering since June of the previous year, with strong sales performance in January and February of this year, indicating a clearer recovery path for its drinking water products [1][4]. - The company has maintained healthy channel inventory levels for its drinking water products since the end of Q3 2024, which lays a solid foundation for a significant recovery in 2025 [3]. Group 2: Profitability and Cost Management - Citigroup does not expect a significant year-on-year decline in net profit margin for 2025, projecting that the margin will remain stable due to several positive factors, including improved capacity utilization in the drinking water business and reduced rebate intensity for pure water products [2]. - The management plans to cut expenses related to pure water products in 2025, focusing instead on enhancing the natural water segment, which includes new packaging designs and additional water sources introduced in December 2024 [4]. Group 3: Strategic Adjustments - Following a decline in market share from March to May of the previous year due to negative publicity, Nongfu Spring's management has actively increased rebates to distributors to reduce channel inventory, which has contributed to the recovery of market share since June [4]. - The company intends to retain only one SKU of pure water (550ml) and is not planning to significantly expand its pure water product line, indicating a strategic shift towards natural water products [4].

Core Insights - The article emphasizes the importance of effective marketing and promotional strategies for businesses to stand out in a competitive environment, highlighting the expertise of Shijiesong in providing valuable marketing guidance based on extensive experience in various industries [1][2][3]. Group 1: Marketing Strategy - Shijiesong's modular marketing consulting has successfully assisted over 80 large brand enterprises in overcoming bottlenecks and advancing brand marketing in Northern China [1][3]. - The marketing strategy focuses on "practicality + data," addressing pain points in the fast-moving consumer goods (FMCG) sector through precise promotional strategies that achieve "brand effectiveness" [3][45]. - The methodology emphasizes "usefulness as truth," prioritizing consumer benefits and creating compelling reasons for purchase through benefits-driven promotions [5][45]. Group 2: Promotional Tactics - The promotional planning framework includes defining objectives, categorizing strategies, and standardizing execution processes, ensuring a closed-loop management system [4][10][12]. - Key promotional tools include giveaways, interactive games, and bundled packages, with a focus on maximizing terminal support and integrating online and offline communication [12][13]. - Successful case studies, such as Nongfu Spring's campus marketing and Evergrande Ice Spring's Valentine's Day promotions, demonstrate effective strategies that significantly increased sales and brand exposure [20][26][35]. Group 3: Performance Measurement - The effectiveness of promotional activities is evaluated through quantitative metrics like sales achievement rates and qualitative metrics such as consumer satisfaction and brand perception [20][27]. - Shijiesong's approach includes a PDCA (Plan-Do-Check-Act) cycle for continuous improvement in promotional execution, ensuring alignment with market dynamics and consumer needs [4][13][45]. Group 4: Long-term Brand Value - The article discusses the synergy between promotions and brand building, advocating for a shift from short-term sales boosts to long-term brand loyalty through educational marketing and social responsibility initiatives [40][41][42]. - Strategies for managing product life cycles involve focusing on star products while phasing out underperforming items, optimizing inventory turnover rates [41][42]. Group 5: Industry Impact - Shijiesong's marketing framework has been recognized as a standard reference for FMCG promotional planning in academic settings, indicating its influence on industry practices [42][45]. - The article concludes that continuous innovation and meticulous operations are essential for converting promotional traffic into lasting brand loyalty in a dynamic market [45].