Axing low-end products to establish high-end positioning, Nobel Ceramics’ ambitions extend beyond the domestic market
Positioning leads strategy Fourteen inspirations from the practice of Chinese enterprises: Launching porcelain tiles to win the defensive war, Nobel Tile achieves growth against the trend
“It was impossible to get in before, but now they take the initiative to come.” Luo Shuigen, chairman of Hangzhou Nobel Group Co., Ltd., said that when the company attended the conference in Bologna last year, an American customer ordered seven containers of goods in one go. .
The goods ordered by this American customer are not ordinary ceramic tiles. They are "porcelain tiles" officially launched by Nobel in July 2016 after several years of repeated testing and hundreds of millions of R&D funds invested.
Before 2016, the entire ceramic tile industry was caught in a vicious price war, causing widespread suffering. Nobel was confused, not knowing whether to stick to the high-end market or enter the mid- to low-end market. In 2016, Trout's team set a strategic direction for Nobel. By launching porcelain glazed tiles, a high-end product that represents the world's latest ceramic tile technology, it gradually replaced the traditional "glazed tiles" products that had fallen into a serious price war at that time. This regains pricing power and leads the entire industry back to a healthy development track.
"Why didn't we do well before? We didn't have a systematic theory before. The positioning theory actually clarifies the strategic direction and how the company will go in the future." Luo Shuigan mentioned that although the company's goal from the time it was named was to become the world's number one A ceramic tile brand, but before implementing a positioning strategy, it was never able to achieve such a goal.
In fact, the overall market situation of the ceramic tile industry in 2018 is not optimistic. The "Development Overview of the Architectural Ceramics and Sanitary Ware Industry in 2018" released by the China Building Ceramics and Sanitary Ceramics Association pointed out that in 2018, 137 of the 1,265 building ceramics companies above designated size withdrew from the historical stage; revenue fell by 28.09% year-on-year, and total profits fell by 33.57% year-on-year. %.
Luo Shuigan mentioned that under this background, Nobel achieved growth against the trend in 2018. During last year's Double Eleven, Nobel's total sales across all channels exceeded 520 million, breaking the sales record for home decoration main materials held by Nobel Tile itself in 2017.
Deng Delong, Global President of Trout Partners commented:
When Trout first started cooperating with Nobel in 2016, Nobel was already a large-scale company and at the top of the industry. Mr. Luo Shuigen, Chairman of the Board, founded Nobel more than 20 years ago and is dedicated to producing the highest quality ceramic tiles in the world.pursuit and determination. However, there is a strange phenomenon in the Chinese market where "followers control pricing power", and the ceramic tile industry is no exception. Followers are constantly engaged in price wars. The price of one square meter of ceramic tiles has dropped from 80 yuan to 50 yuan and 30 yuan, and the whole industry is full of troubles. Nobel is in an awkward position. If it continues to engage in a price war, this price can no longer support the company's continued survival; if it does not engage in a price war, its market share will continue to be eroded by its opponents. What to do?
In our opinion, after clarifying Nobel's strategic positioning as an industry leader, it should fight a "defensive war." Jack Trout said, “The best defense is against yourself.” Mr. Trout also said: "Only leaders can fight defensive wars." Nobel's technical level is far ahead in the industry. After taking stock, we recommended that heavy troops be deployed on the latest technology that has taken several years and invested hundreds of millions of dollars in research and development. The first generation of "porcelain polished tiles" technically replaced the mainstream "glazed tiles" in the market at that time. At that time, most of Nobel's own products were also "glazed tiles", but it had to achieve transformation and upgrading through self-attack and self-elimination, and lead the entire industry out of the vicious cycle of price wars.
Since the implementation of the new strategy, the company has used new technologies to create better ceramic tiles, which have been widely welcomed by customers and sales have continued to grow. Against the backdrop of a decline of more than 30% in the entire ceramic tile industry in 2018, Nobel achieved growth against the trend. More importantly, through this defensive war, Nobel raised the average price of ceramic tiles from dozens of yuan to about 150 yuan, reversing the vicious cycle of price wars in the entire industry. As a leader in the ceramic tile industry, Nobel not only regained the pricing power, but also significantly raised the price ceiling for the entire industry, allowing more companies to have pricing and survival space. This is the greatest responsibility of a leader to the industry.
At present, Nobel's high-end products can be sold for thousands of yuan per square meter. In many scenarios, they can completely replace high-end marble that costs tens of thousands of yuan per square meter. Moreover, it is more environmentally friendly, more wear-resistant, and easier to maintain than marble. As natural marble resources are increasingly depleted, society's requirements for environmental protection are increasing, and people are pursuing a higher quality of life, the prospects for Nobel Porcelain Tiles are infinitely broad.
36Kr Chief Content Officer Li Yang commented:
Tile is a market where brand concentration is quite dispersed and it is easy to fall into the trap of price war. Therefore, this market is very suitable for applying positioning theory. By launching "porcelain polishing tiles" that represent the highest technology, Nobel established the awareness of "newer technology, better tiles" in the minds of users, raised prices, and gradually cut off low-end products, implementing aA systematic project from product research and development to strategic positioning. In the high-end ceramic tile market, its target group is no longer a large number of retail investors, but some to B companies or agents. In order to meet the demands of these high-end customers, it is necessary to make the ceramic tiles behave more like natural stone, so it is no longer following There is competition among a bunch of ceramic tile products, but it is looking for benchmarks in the stone market - in this market, Nobel provides solutions with better costs and better effects. Therefore, this has also allowed it to successfully enter the overseas market.
Video transcript
Luo Shuigen, Chairman of Hangzhou Nobel Group Co., Ltd.:
The purpose of my cooperation with Trout is not only to make the company's brand number one in the country, but also to strive to be one of the best in the world.
Because we have always wanted to go high-end, positioning theory has found a way to achieve it.
The ceramic tile industry, especially last year, fell by 29.7%, close to 30%. However, (Nobel) increased significantly in the second half of last year, by 20%, 30%, and just calculated, it increased by 30.01%.
Why choose porcelain tiles as the strategic direction of Nobel
Luo Shuigen:
Nobel is the highest award in the world. Our brand is named "Nobel" because we want to follow Nobel standards and make ceramic tiles number one in the country or even the world. It is based on this goal. .
However, since there is no systematic theory to support it, we just go too low and cannot sustain it.
By 2012 and 2013, everyone thought that there was no hope for Nobel because it was too difficult to do high-end products. Once they did, they would compete with others and become homogeneous. Many people have proposed that Nobel should make mid-range products or even move to the low-end. But I think Nobel has always been high-end. If it were low-end and competed with ordinary brands, it would be more troublesome.
In the ceramic tile industry, we are already a relatively well-known brand, and our market influence is already among the best. General consulting companies cannot solve our problems.
Trout really helped us find the support point for high-end products, which is porcelain tiles, updated technology, and better tiles. This high-end is truly high-end, not just in China but also in the world. This is also a fact.
Porcelain polished tiles are indeed the first of their kind in the world. They were made through four or five years of innovation and repeated trials. After Trout established our strategic direction and positioning, we felt very relaxed. We couldn't figure it out ourselves, but we understood it as soon as the other party explained it to us.
Nobel began to implement strategic adjustments in June 2016. WeLow-end products have been blocked, and adjustments have been huge. The entire product structure has to be adjusted, and the marketing and operation systems have also been adjusted accordingly. It took more than two years to adjust and operate, and it was completed in June last year.
After the adjustment, we turned on all the publicity. After turning it on, the difference between us and our peers widened. Once porcelain polished tiles were launched, especially high-end customers in the United States, they all came to our company to purchase. More than ten agents have come to purchase. They could not do it before, but now they come to our door automatically. Last year we held a meeting in Bologna, Italy, and an American customer ordered seven containers at once.
Why positioning is a systematic project
Luo Shuigen:
Positioning seems simple, but in fact it is not that simple. Positioning is not only about positioning the brand as high-end, but also about improving product quality. Positioning is a systematic project.
Why didn’t we do it well before? There was no systematic theoretical support before. Positioning theory is actually to clarify the strategic direction and how the company will go in the future.
I think what we used to obviously call factory thinking and self-thinking. I am afraid that no one will want it after it is developed. I am also worried about this because the cost of good products is very high. After cooperating with Trout, they can see the problem from a third-party perspective and a consumer perspective, and they can see the problem more clearly, so they don't have to worry now. Now Nobel's positioning is very clear. It wants to go high-end and no one will want good products.
Especially for me, I know exactly what the company’s next development focus will be. If the ceramic tile industry wants to be high-end, it must imitate high-end, luxurious marble, because only marble can enter five-star and six-star hotels and sell at a high price. How much does marble fish maw cost? The domestic sales price is more than 30,000 (per square meter). In fact, high-end marble resources are becoming less and less, and mining is restricted. Some good marbles are now hard to find. If we imitate the porcelain tiles and make them exactly the same, then I can sell them for one to two thousand yuan (per square meter). It is more environmentally friendly, cheaper, and the quality is actually the same as marble. It can not only reduce costs, but also bring benefits to our company.
So, I will continue to plan this year. We will definitely increase our investment in this area and work hard to develop high-end marble (substitutes).
Blessings for the 50th anniversary of the birth of positioning theory
Luo Shuigen:
Mr. Deng Delong’s team introduced positioning theory to Nobel Prize, which had a significant impact on our company’s business philosophy, methods and results.
I value the business results jointly created by Trout and Nobel. Now we have formed an "internal and external doubles" cooperation with the Trout team.In every major decision-making, our industry perspective can fully collide with the external perspective of the Trout team to ensure that Nobel is always in the right strategic direction.
Positioning theory is the most important and effective theoretical weapon that helps companies stand out in fierce competition. Trout has a great vision and a company culture that pursues excellence. They are committed to using positioning theory to help China's economic transformation and help more Chinese companies gain global competitiveness. I am deeply moved.
I hope that positioning theory can be introduced into more and more companies, transforming one industry after another, and helping to achieve China's economic transformation goals.
(Original link: https://36kr.com/p/5241637)
