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Haier's Ecosystem Brand Strategy under the Experience Economy in IoT Era

The 2021 BrandZTM Most Valuable Global Brands List was unveiled in Cannes, France, on June 22, with 18 Chinese brands, including Tencent, Huawei and Haier. Among the Top 100, Haier has been listed as the world's only ecosystem brand of Internet of Things for three consecutive years, and its brand value has increased by 41% compared with last year. This authoritative ranking, published by Kantar Group, combines rigorous financial analysis with extensive brand equity research to quantify the contribution brands make to financial performance.
 
Haier first put forward the eco-brand in 2018, and officially started the ecosystem brand strategy stage in 2019. Since then, it has not only opened a new track for eco-brand in the world, but also continued to lead the development of the Internet of Things era. Under the guidance of the Rendanheyi model, Haier has transformed into an open Internet of Things ecosystem. By building a three-tier brand system of high-end brands (including Casarte and other brands), scenario brand Three-Winged Bird and Ecosystem brand COSMOPlat, Haier has built an IoT ecosystem of clothing, food, housing, entertainment, health care, medical education around the needs of global users.
 
IoT Era: 'Products Will be Replaced by Scenarios, and Industries Will be Displaced by Ecosystems'.
 
Today, the Internet of Things is regarded as another wave of information technology revolution after the Internet. Under the "Internet of Everything", the market is quietly transitioning. Previously, company-led technology and product production were gradually losing the market while users were on track to become the final and most critical referees to lead iterative product upgrades. The advent of the “Internet of Everything” makes it a fact that "devices are networked"; and “enabling hardware with software” is the development trend of technology as hardware only provides basic general functions, and more and more advanced functions will be realized by software. The result of "being networked" and "software-empowered" is that what users buy will no longer be an established product, but an experience of continuous iteration and upgrade.
 
As Joseph Pine, the author of The Experience Economy, said in the book, “Commodities are fungible, goods are tangible, services intangible, and experiences memorable.” The economic development of traditional brands has gone through three stages. From the product economy based on product brands to the service economy based on platform brands, now we have an experience economy based on ecosystem brands that Haier promotes and implements. The product economy is now a Red Ocean market. If a company only makes one product or series, the product features can be easily copied by other players, and a price war will inevitably ensue in the end. Companies of the service economy such as Amazon and Taobao focus on serving as a product marketplace, and there is still room for growth compared with those stuck in the product economy. But the real “Uncharted Water” strategy is to be an ecosystem brand of the experience economy, because no single product or company can achieve the creation of user needs and experience on their own. This requires an ecosystem composed of different products, different companies and different industries, and this ecosystem is difficult to replicate.
  
Therefore, in the era of the Internet of Things, the relationship between companies and users will not cease with the sale. On the contrary, the sale is the beginning of a new round of optimization and upgrade. The interconnection of things makes users demand experience that is no longer offered by a single product, but a total scenario-based solution. As Chairman Zhang said, in the era of the Internet of Things, "products will be replaced by scenarios, and industries will be displaced by ecosystems." Scenarios have become the basic unit of experience, and products are only components of it. Companies need to create a complete set of value-based experience for users according to their various needs emerging from a scenario. This "scenario-based experience economy" superimposed on the ability of "rapid iteration" forms the first economic feature of the Internet of Things era - the "rapidly iterating, scenario-based experience economy". In this context, Haier took the lead in proposing mass customization solutions, allowing users to become the core of the entire manufacturing process, with "activating users" as the purpose, and realizing a closed value loop from product experience to user scenario customization. The production chain is geared towards the user groups, and the information collected from the user groups is fed back to the production chain. This means that production must become user-centric, so as to guide the business with the feedback and form a "user-supported, closed loop". Being user-driven serves as the internal motivation for disruptive changes in the mass customization model.
 
User-Driven Mass Customization
 
In other words, industrial mass customization is to allow users to participate in the entire process of mass customization and intelligent manufacturing model, which is an ecosystem that aggregates resources and continues to create user experience and value. With a real-time company-user-product interconnection platform in place, personalized requests put forward by users on the platform in real time will be assessed with big data accumulated in existing, connected products or user scenarios, while allowing users to participate in real-time interaction. In this way, users can acquire specialized knowledge on the platform, which also helps designers to develop product models that meet user needs. The mass customization model pursues products before users. This is the only way to make each customized product marketable on the production line and to nurture lifelong users.
 
Now, especially since the COVID-19 pandemic, the entire era has changed from the Newtonian era to the quantum era, from the times when everything was certain and orderly to the VUCA era of uncertainty and disorder. Companies cannot follow their prior methods. Bureaucracies and assembly lines are the hallmarks of the Newtonian era. The change of the times requires companies to change as well. They must change from the previously "static" way of thinking to the "dynamic" mindset. The old strategy to make a "five-year plan" or "two-year plan" and then follow through step by step is no longer applicable to the Internet of Things era.

1 July 2021 : 02:21 am

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