Eight
Evolve
Jinmailang Instant Noodles
from innovating products to innovating system
“The fittest not only means the strongest or the smartest, but also those who react the fastest to changes.”
—Charles Darwin
Entropy is a concept in physics. The second law of thermodynamics, also known as the law of increasing entropy, states that the entropy of a closed system with no external force acting on it will continue to increase. A closed system will gradually go from a state of in order to disorder, until it reaches maximum entropy (heat death).
Illustration 8.1 The Increase Entropy Chart of Huawei Organization Management
Ren Zhengfei has introduced the concept of "entropy" into the management of Huawei. He points out that a roughly correct direction and an energetic organization are the two fundamental elements of the success of a company. Life thrives on negative entropy; and for a company, it must continue to evolve, keep entropy decreasing and avoid entropy increasing.
The Product Evolution of Jinmailang Instant Noodles
In 2008, Uni-President instant noodles focused on the flavor of traditional jar pickled cabbage, and did an outstanding job in competing against Master Kong's braised beef noodles, becoming China's second best-selling instant noodles brand by 2013. Inpired by the success, Baixiang instant noodles, as the leading brand in economy segment, launched the premium Super Pork Bone instant noodles in 2012, hoping to replicate Uni-President’s success. Under the huge competitive pressures, Jinmailang's sales had been declining year after year, dropping from No.2 to No.4 in terms of market share. What’s worse, Jinmailang had been losing money for three consecutive years by 2013.
In 2014, we partnered with Jinmailang instant noodles in portfolio optimization and product innovation. Through the field trips, we found out that Jinmailang's economy brand Jinye Ramem instant noodles contained 100 grams per pack, which was bigger and heavier than its main competitor — the 85 grams of Baixiang Super Pork Bone instant noodles. Jinye Ramen had much better market performance than Baixiang in certain regions. A mini store owner in Hebei expressed the selling point of Jinye Ramen as “bigger and heavier and better value for money” with the tagline of “6 sachets beating 7 sachets (of competitors’)” (in terms of weight). Enlightened by this insight, we persuaded Jinmailang to pioneer and embrace the era of big noodles with product innovations. In the second half of 2014, Jin Ye Ramen was rebranded into Jumbo Jinye Ramen and re-launched into the economy instant noodle segment with the official slogan “Jumbo noodles, six sachets beating 7 sachets (of competitors’)".
Illustration 8.2 Jumbo Jinye Ramen
The Jumbo Jinye Ramen was a huge success, gaining sales instantly. It surpassed the same economy products of Baixiang at first and that of Master Kong followed in certain regions. Jumbo Jinye Ramen also helped to uplift the overall sales of Jinmailang instant noodles, achieving a successful turnaround in revenue in the same year.
The jumbo pack strategy was approved to be effective in economy segment. Would it be effective as well in premium segment? It raised lots of debates internally. Most people were quite conscious of that the jumbo pack in premium segment would not be effective in beating competitors. Instead, it might lead to internal cannibalization of economy products. Without a conclusion after numerous rounds of discussion, we decided to pilot in certain regions.
In 2015, building on the success of Jumbo Jinye Ramen, Jinmailang introduced new brands Yidaiban (1.5 sachets) and Yitongban (1.5 buckets), with 50% more noodles in weight than main competitors Master Kong and Uni-President at the selling price of 2.5 yuan and 4 yuan respectively. Yidaiban and Yitongban were launched in Southeast China at first. They had remarkable market performance during the period of piloting sales, beating Uni-President and Master Kong respectively soon in the Three Northeastern Provinces (Liaoning, Heilongjiang and Jilin Provinces). Jinmailang expanded Yidaiban and Yitongban to national wide following the success. From its launch in August 2015 to the end of 2016, Yidaiban and Yitongban kept growing very quickly, experiencing shortages during some time. They helped the company to grow and outperform the total instant noodles market which was declining back then. By 2020, Yidaiban and Yitongban had sold over 5 billion servings with cumulative sales, turning into phenomenal brands in the industry. The main manufacturers, Baixiang, Uni-Presient and Master Kong all rolled out their jumbo pack products.
Illustration 8.3 Yidaiban and Yitongban
Illustration 8.4 Yidaiban and Yitongban with a Cumulative Sales of 5 Billion Servings
In 2020, we noticed the rapid growth of a new category — instant noodles with soup, which was well received thanks to its richness in nutrition, digestibility and delicious taste. Instant noodles with soup draw many manufacturers to launch their dedicated brands, such as Tangdaren (Soup Expert) from Uni-President, Tangdashi (Soup Master) from Master Kong and Tanghaohe (Tasty Soup) from Baixiang etc.. Following the strategy of Yitongban and Yidaiban, Jinmailang unveiled new brand Datangmian (Jumbo Noodles with Soup) with a combination of its expertise in jumbo noodles and the trendy element of soup, resulting a 1+1>2 effect. Datangmian appealed to consumers with the idea of “jumbo noodles with soup brings super happiness”, quickly joining the 1 billion yuan brand club.
Illustration 8.5 Datangmian (Jumbo Noodles with Soup)
From Jumbo Jinye Ramen, Yidaiban, Yitongban to Datangmian, over the past a few years, Jinmailang kept evolving its jumbo noodles and maintained its competitiveness, resulting fast growth for a dozens of quarters in a roll and making Jinmailang Instant Noodles business approach 10 billion yuan revenues.
Innovation System Ensuring Organization Vitality
Over the recent years, no matter beverage or instant noodles, Jinmailang had created many popular brands. Behind the scene, the success can be attributed to not only its progress in product development but also its evolution in innovation system.
Illustration 8.6 The Best Team in Positioning Research Institute
In 2017, Jinmailang established a Positioning Research Institute in Beijing, leading by its chairman himself to focus on category innovation and brand positioning. It had only a team of 10 members coming from its initial internal branding team. Nowadays, it had a team of over 100 members with offices in Beijing, Hangzhou and Shenzhen etc.. The institute is composed of 8-9 competing teams, racing against each other for innovative products, high-quality products and best-selling products. Meanwhile, they are competing against external consultants. The innovation system of Team Red + Team Blue + consultants/mercenaries safeguards the evolution of product innovation and the increasingly strong competitiveness of Jinmailang.
