Immersive and face-to-face chats with seasoned influencers are a fan experience easily gained by joining Vlubhouse. We periodically invite top influencers from Yicai to make surprise appearances in Vlubhouse's Yicai fan groups, where they provide comprehensive answers to fans' queries on current events, consumption, finance, policy, and more, based on their areas of focus.

In the 19th influencer drop event, we invited Huang Liyuan, former Executive Director of Hongtai Fund, for a 30-minute conversation with Vlubhouse fans. Let's see what we discussed.

Question 1: The trend of the "poor man's meal" in consumption, which is popular among netizens, has started with fast-food brands and has also "spread" to some high-end brands. What do you think are the underlying causes?

Huang Liyuan: First, we will notice that a large number of "poor man's meals" are mainly in the retail and food industries because eating is a basic necessity, and they usually have a characteristic, which is that they are mainly brands with a large number of offline chain stores, such as McDonald's, KFC, Sam's, Hema, Domino's, Starbucks, Luckin, and so on. People need to eat three meals a day, and if they don't spend money on KFC, they will spend it on Starbucks, and so on.

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So how do these brands attract public attention? I believe that "poor man's meals" are to some extent a marketing consideration. In many cases, we have to spend time going to the store to enjoy these "poor man's meals," which can be seen as an offline traffic attraction behavior. Since online traffic is so expensive now, brands plan some activities themselves, sacrifice some so-called profits, and then attract the audience to offline stores. Anyone who has done offline retail knows that there must be store visits to have orders, and there is a chance for associated sales to occur.

There used to be an industry rule of thumb, for example, when a milk tea shop just opened, the common trick was to "buy people to queue." At the beginning, out of 10-20 people, only one was a real customer, and it slowly evolved into two out of ten. Among ten people in line, two are real buyers. The same logic can be applied to "poor man's meals," like a large number of people going to KFC during "KFC Crazy Thursday" to buy food, which also forms the same logic in the store.

Secondly, from the brand's perspective, it is more about spending a little money to achieve big things. For example, last year's Moutai and Luckin collaboration, whether it was Moutai or Luckin, both "won big." The collaboration between Fendi and Lele Tea is a "planting grass behavior." Now, if you can't afford luxury brands, you can increase your understanding of the brand and create an anchoring effect in your mind, and you may become a customer in the future. A lot of big brand marketing, in fact, sometimes doesn't care so much about short-term ROI (Return on Investment), especially for some big brands. They sponsor some college student activities or some activities for young women, which is cultivating their customer base from a long-term perspective.

Thirdly, when building a brand, there is a logic called the "product composition triangle." When merchants or brands set up their product composition, they usually set up three types of products. The first is the core product, which refers to the products that can bring utility and benefits to customers and meet their core needs. This is what customers really want to buy; the second is the form product, including product quality, shape, appearance, color, trademark, etc., which has some special or limited things; the third is the derivative product, also known as the additional product. It refers to the additional benefits and services that customers receive when purchasing the product, including some training, customer group circles. For example, LV's bags are the most famous, and its Neverfull has always sold very well. The bag is LV's core product. Last year, LV launched a so-called form product, which is a combination of a book and a canvas bag for 580 yuan, among which the cheapest is the city guide series, one for 290 yuan, and you can only get a canvas bag by buying two. Many people may not be able to afford a LV bag for ten thousand or twenty thousand yuan, but they can spend 580 yuan to buy a LV book and canvas bag, which may also create a connection with this brand for such consumers.

So LV's form product is the book and canvas bag, which has lowered some customer acquisition thresholds, and the extended product actually provides emotional value. The buyer has created a connection with the brand, which may satisfy their vanity.There are numerous categories in marketing, such as various types of tea beverages. If you pay attention, almost all tea shops nowadays offer free items like canvas bags, stickers, straws, and a range of co-branded products when you buy tea. In a way, tea is the main product, but all the derivative products given away are more about satisfying emotional values like sharing on social media, or belonging to certain social circles. This is because tea shops often collaborate with themes from period dramas or the latest IPs, which also creates a sense of community.

Question 2: What impact do you think these "budget packages" have on consumer psychology?

Huang Liyuan: The logic built between capital and consumers is that capital is bloodthirsty, just like sharks that come when they smell blood. The "budget package" is not a baseless action by businesses, but rather a response to the overall economic environment, offering products with higher compatibility to consumers. In the minds of consumers, we find that in this period, money is becoming harder to earn. So, our generation is building a new consumer rationality, with clearer needs and a more introspective approach. They believe in "spend when you should, save when you can," and they may also have demystified brands, caring more about the intrinsic value of the product itself.

Of course, part of this is also a result of competition among businesses, which can reveal some strengths or weaknesses of competitors, helping consumers to understand a product more rationally.

Here, we need to introduce the concept of the "Fourth Consumer Age." Many of the situations we are facing now, Japan has already encountered and gone through a complete cycle, and they call the current consumer cycle the "Fourth Consumer Age."

The "First Consumer Age" was during the reform and opening up, when people suddenly became wealthy, and we started to think that everything Western was good. So, we see that the decoration at that time pursued a very luxurious European style. The aesthetic or logic of purchasing at that time was that the West was good; the "Second Consumer Age" was when "bigger" was considered "better." For example, people wanted to buy big houses, large cars, and large TVs. This was a very simple pursuit; the "Third Consumer Age" was when a new wave of young people grew up, thinking that the aesthetics of the older generation were very ugly, so during this period, personalized items were considered good. Around 2017-2018, a concept called "new consumption" was proposed, emphasizing that "everything is worth being remade in this era." A survey showed that when the national disposable income reached $7,000, the new generation would have new aesthetic demands for many consumer goods; the "Fourth Consumer Age" is marked by real estate turmoil, aging population, economic bubbles, and economic weakness. At this time, everything becomes less valuable, unemployment rates rise, and making money becomes more difficult. So, in this period, products with cost-effectiveness are considered good, and well-known Japanese brands like "MUJI" and "Uniqlo" emerged during this time.

In such an era, many people say "consumption downgrade," but I disagree. I think the concept of "consumption substitution" is appropriate because for some people it is a downgrade, but for others it is an upgrade. It is actually a concept of consumer stratification. In the era of consumption substitution, "substitution" is the key point. Quality cannot be compromised, but the price must still be acceptable. So, in this period, for example, China's Miniso has become quite popular and best-selling. When Ye Guofu was creating this brand, he also stated that he would try to keep all items under 99 yuan, which I think is very suitable for the trend of the times.

Including Pinduoduo, Taobao, and 1688 (Alibaba), more and more e-commerce platforms are conducting billion-yuan subsidy activities. So, in such an era.

Question 3: How do you view the long-term impact of "budget packages" on consumer behavior? Can this pricing strategy effectively stimulate consumers' desire to purchase?

Huang Liyuan: In fact, as ordinary consumers, we are building our lives through our consumer behavior. Every act of payment is a vote with money. The taste of consumption, clothing, perfume, and so on, are all building our lives.The deep psychological motivations behind our current consumer behavior can be categorized into three types. The first is novelty, which can be expressed with the popular term "crush"; it's the feeling of a fluttering heart in the moment or the psychological curiosity it generates. The second is events, or "events" in the current vernacular. You'll find that businesses create many "events" to encourage consumption, such as Uniqlo's annual summer collaborations with major IPs to produce limited-edition T-shirts for the season; or the collaboration between Moutai and Luckin, which might prompt you to spend money on something you might not have otherwise, driven by the curiosity and novelty of the event. The third, and possibly the most important reason, is the desire for a sense of community belonging and social currency. For example, some women nowadays are fond of wearing Lolita fashion, known as "Lolitas," while others may prefer Hanfu, representing different social circles. More and more people in these circles may exhibit similar consumption behaviors.

Based on these three points, we can see that if businesses rely solely on one marketing pattern, they cannot stimulate long-term consumer purchases. Therefore, businesses must continuously develop new "events." Seeking a bargain is just one form of pleasure, but humans are inherently fickle. Even the most frugal individuals experience joy in impulsively buying things they would normally hesitate to purchase. In this context, I believe businesses will become more "competitive" because the seller's market has turned into a buyer's market. The public has more room to choose from and among brands. There's also a logic that people didn't become less willing to spend money just because of the existence of "budget packages." Even with many "budget packages" available, not every young person is saving money. They shift their spending towards their hobbies and emotional value, contemplating what their true needs are—whether it's a designer handbag or saving money to see the world. In recent years, for instance, the number of people purchasing Chinese fragrances has increased, along with spending on tarot cards, meditation, Pilates, or wearing rose quartz and tourmaline for attracting love or wealth. People are increasingly investing in their physical, mental, and spiritual well-being, which can be seen as some redirecting the money they save on food to emotional value.

Question Four: From the perspective of businesses, does the "budget package" provide new ideas for consumer enterprises, or is it just a short-term effective marketing strategy?

Huang Liyuan: Returning to the logic of the marketing triangle, a brand typically has three types of products when building its product matrix. The "budget package" is, to some extent, just a means of attracting traffic. If it's Uniqlo or Miniso, their products are actually of good quality despite their low prices. Choosing Uniqlo or Miniso, we perceive them as offering extremely high value for money. Similarly, I don't think Pinduoduo represents a sustainable and healthy logic. These so-called "affordable alternatives" or "budget packages" are not of poor quality; what they do right is in their cost structure, where every penny is spent with a purpose, matching the quality.

I've always believed that the world has dimensional barriers, and as the world becomes more segmented and atomized, people's needs become more diverse and specialized. Not all categories and product types can adopt the "budget package" approach; it depends on the category, the core consumer group, and whether the brand has something worth a premium and payment.

Under the influence of various marketing channels over time, consumers have become smarter. As the world becomes more atomized, everyone feels lonely, and many people don't want to fall in love, but social interaction is a permanent need.

So, I think the "budget package" simply restores the essence of life, whereas consumption in our previous era might have been somewhat pseudo-refined, like a society in a showcase.

How should we use consumption to vote and decide our lives? I believe everyone is the same; we want to live a life that makes others envious and admiring or one that respects our inner values. Perhaps between the ages of 25 and 30, we may pursue a life that others envy more, but once you reach a certain age and see through some things, you might feel the need to follow your inner feelings more.

The so-called "budget package" and "consumer alternatives" are constructs created by businesses. We continuously escape the traps set by businesses, and life is about constantly discovering these traps, demystifying them, and finally, through consumer behavior, discovering our true needs.I'd like to share a few books that I believe can help us understand the world and our own consumer behaviors, as well as how the world's commercial activities are structured. The first book is "Power," which discusses how to acquire and wield power in the real world. I find this book to be very important for my personal development; the second one is called "The Mushroom at the End of the World," which tells the story of how mushrooms grow in a place where an atomic bomb has exploded, how they exhibit vitality, and eventually how they end up on people's dining tables, being marketed more and sold at higher prices. Nowadays, mushrooms like those from Japan and China are quite expensive, and we can use this to understand how consumerism arises; the last book is "Work, Consumerism, and the New Poor," through which we can discover how we are commodified by capitalism and manipulated by consumerism. Therefore, we must continually demystify commerce and consumption in order to lead a more fulfilling life.

Question 5: Will the "poor man's package" model affect people's perception of brand value and product quality?

Huang Liyuan: The brands that offer these so-called "poor man's packages," such as Luckin, KFC, and McDonald's, are not bad brands at their core, and sometimes the "poor man's package" is a strategy to facilitate their breakout.

We will find that Miniso, Uniqlo, and Muji are also relatively affordable brands that people tend to choose. Whether it's Miniso, Uniqlo, or Muji, the quality is quite good, and they are actually the products needed in this era—low-priced but with guaranteed quality.

Consumers are smart; everyone will make choices based on their financial situation.

Question 6: If everyone demystifies consumption, will it lead to a downgrade in consumption?

Huang Liyuan: The world is too vast; it's impossible for everyone to demystify consumption at the same time. There is often a stratification of consumption. For some people, dining at the Bund in Shanghai is an easy affair; for others, it might be an impossibility in their lifetime. So we cannot view the world in a purely binary opposition.

On one hand, we should trust that Chinese merchants can continuously invent new, fun, useful, high-quality products that provide sufficient emotional value to create new "magic" for consumers. Just as many people have the opportunity to travel to various places around the world, there is still a world they have not yet seen; on the other hand, human energy, ability, and horizons are limited, and it's not possible for everyone to demystify at a certain time like flipping a switch—everyone's cognition is very different.

Question 7: It seems that new consumption is no longer trendy; will consumer brands that focus on providing emotional value have a chance in the future?

Huang Liyuan: In fact, when looking at a problem, the first perspective is from the overall market, and the second is from the perspective of structural opportunities. Although from a capital standpoint, new consumption is on the wane; from the perspective of true practitioners in the consumption industry, they are constantly exploring new opportunities and new consumer needs.As long as the population continues to segment, including changes in family structure and social group composition, people will continuously have new needs and new identities, which is the opportunity for new consumption.

Therefore, the opportunities for new consumption in the future, such as the pet economy, are increasingly evident in platforms like video accounts or TikTok, where more and more pet-related content is emerging. The treatment we give to pets is getting better and better. Pets are not only provided with clothes and their own houses, but also with cat climbing frames and customized food. In the past, many families would just feed their cats and dogs with regular pet food, but now it's observed that they are eating too well and becoming overweight, leading to the creation of so-called weight loss cat food.

This is because people are now very lonely and need companionship, yet they do not want to get married or live with others, so cats and dogs are a good choice for companionship, which is actually a new need arising from changes in people's lifestyles.

Nowadays, there are many only children, and the family structure is often "421": four grandparents and two parents, one child. Therefore, the silver economy will definitely be a major trend in the future. Current nursing homes tend to be rather rudimentary, and we will certainly look forward to better environments emerging to help take care of the elderly. Senior universities are becoming more popular, and nursing homes are also becoming more vertically segmented, with services improving. In addition, there are still many things that can be done, including wearable devices for the elderly. From the perspective of the capital market, new consumption may not be a good theme right now, but from a business standpoint, I always believe that there are opportunities in new consumption.

Adults nowadays also have a lot of demands for toys and figures, focusing on emotional value. There is a popular saying online, "Raise yourself again." Those who couldn't afford or were not allowed to buy toys as children now have the means to purchase them. Therefore, the number of toys purchased by adults is quite high nowadays.

I believe there will always be opportunities in new consumption, and it is important to be observant of life and empathetic to the needs of many people. When we identify a need among a group of people, it could potentially become a business.