The basic logic of consumer goods investment

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• Consumer goods, from a category perspective, there are two basic categories of sales growth, one is “from nothing”, and the other is “from something to another”.
  • For any individual, the first consumption of a certain category is “from scratch”, and its core is “penetration rate”.
  • Consuming a certain category again is “from existence to re-existence”, the core of which is “re-existence cycle”, and then can be divided into three categories according to the existing state of the original item, “destruction”, “abandonment”, “retention”, three The difference is
    • “Destroyed” refers to the disappearance of the original item’s effectiveness, usually fast-moving consumer goods, such as pork, beverages, razor blades.
    • “Destroyed” means that the original item is functional, but has no value to the owner. such as cell phones.
      • One is the “abandonment” of “performance” requirements, for example, new mobile phones perform better than old ones and have to be replaced.
        • One is “new performance”, such as a folding screen, which is afraid of pseudo-demand.
        • One is “efficiency improvement”, fearing two situations
          • Efficacy is insensitive, such as the network, computing, and photography of mobile phones may be almost insensitive.
          • Efficiency is the bottleneck, that is, the customer has demand but the manufacturer can’t do it, such as battery.
      • One is the “abandonment” of “psychological” needs.
        • One is to “please yourself”, such as colors and shapes that you prefer.
        • One is to “please it”, such as pretending to be coercive, the essence is also “please yourself”, and there may only be Apple on the mobile phone.
    • “Reservation” means that the original item remains functional and still has value to the owner.
      • One is the “reuse” of “psychological” needs, such as clothing.
      • One is “collection” for “psychological” needs, such as figures. From this perspective, Bubble Mart is indeed a good business.
      • One is “collection” for “investment” purposes, such as Maotai, Maotai YYDS.
    • Both “abandoned” and “reserved” categories may have “re-circulation”.
  • No matter whether it is penetration or another, it involves spending power and willingness to spend. The best is to double-click, and the worst is to double-kill.
    • “Required”, “Optional” and “Low Price” and “High Price” form a four-quadrant, and under different circumstances, the priorities are different.
      • Low price must be chosen to resist economic downturn
      • The lipstick effect, also known as the low-price product preference trend, as a “cheap non-essential”, lipstick can act as a “comfort” to consumers, especially when the soft and moist lipstick touches the lips. . In addition, the economic recession will reduce the consumption power of some people, so that there will be some “small spare money” in their hands, just to buy some “cheap and unnecessary things”.
    • The reduction in consumption power may be beneficial to “re-circulation”, but it is affected by the supply of “abandoned” or “reserved” products in stock.
• The value of the enterprise = “penetration rate + more * more cycles” * customer unit price * profit margin
• Logic and logical changes
  • Enterprises have core logic at different stages, which are divided into
    • The “penetration rate” logic, generally speaking, if the penetration rate increases rapidly, that is, the company’s sales grow rapidly, it can give a high PE, and even allow losses, such as VR; this situation is easy to overestimate.
    • The logic of “renew”, generally speaking, gives different PEs according to the profitability and the cycle.
    • “Penetration rate” and “re-existence” are mixed, which is a troublesome situation, and the market needs to modify the parameters frequently.
  • logical transformation
    • If there is only “penetration rate” but no “re-existence” or the “re-existence period” is very short, it is easy to stop abruptly. Some excellent companies will deliberately change the logic of “penetration rate” to “re-existence”. A typical example is “good luck”.
    • The logic of “penetration” changes to the logic of “more”, which is usually reflected in the gradual decline of PE, such as smartphones. What makes Apple better than other mobile phone bulls, in addition to higher profits, may be that more customers change phones more frequently based on psychological (pretend) needs.
    • Categories with different granularity have different logics. For example, “automobile” is “re-logic”, while “new energy vehicle” is the logic of “penetration rate”.
• Industrial consumer goods. There are also some characteristics of consumer goods
  • For example, lithium batteries and photovoltaics currently prefer the logic of “permeability”, while cement prefers the logic of “more”. Industrial consumer goods will also have collections for investment purposes, but there is almost no reuse and collection for psychological purposes.
  • But industrial consumer goods have an additional “share” for “performance” or “capacity” purposes.
• manufacturing. Depending on the characteristics of the consumer product, the risk is
  • “Subjective” risks from the brand, such as being kicked out of the supply chain by Apple, of course, this possibility is usually compensated.
  • “Non-subjective” risks from brands, such as Apple itself suddenly no one buys it. After thinking about it, this is not an additional risk, but a shared risk.

The basic logic of consumer goods investment first appeared in Laughing Books .

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