{"id":1660,"date":"2023-01-05T04:19:35","date_gmt":"2023-01-05T04:19:35","guid":{"rendered":"http:\/\/wanginnovation.com\/?post_type=portfolio&p=1660"},"modified":"2023-03-14T02:20:18","modified_gmt":"2023-03-14T02:20:18","slug":"%e6%a1%83%e6%9d%8e%e9%9d%a2%e5%8c%85","status":"publish","type":"portfolio","link":"https:\/\/wanginnovation.com\/en\/portfolio\/%e6%a1%83%e6%9d%8e%e9%9d%a2%e5%8c%85\/","title":{"rendered":"Toly Bread"},"content":{"rendered":"
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Seven<\/h1>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Build activity system<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t
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Toly Bread<\/h4>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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growing into Chinese Yamazaki with daily delivery of fresh bread<\/h4>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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\u201cStrategy is not just about establishing a competitive advantage; it is also about \nmaintaining that advantage.\u201d<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\u2e3aMichael Porter.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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<\/div>Innovation often comes from subtle details. In order to transform these small \ninnovations into game-changing ones, companies need to create fit among their \nactivities. Strategic fit is the most critical element in creating the competitive \nadvantages, as the system create an interconnected and tightly linked chain that keeps \nfollowers out of the loop. There are three types of fit. First-order fit is simple \nconsistency between each activity (function) and the overall strategy. Second-order fit \noccurs when activities are reinforcing. Third-order fit goes beyond activity \nreinforcement to what Michael Porter calls optimization effort. In all three types of fit, \nthe whole matters more than any individual part. Competitors can quickly imitate an \nindividual activity, for example special sales model, production techniques or product \nperformance, but they can\u2019t imitate the entire interconnected activity system.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Illustration 7.1 Southwest Airline\u2019s Low-Cost Activity System<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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The \u201cFresh Bakery and Direct Delivery\u201d Model of Yamazaki Baking in Japan<\/strong><\/h3>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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<\/div>Founded in 1948, Yamazaki Baking Company has created the short-shelf-life packaged \nbread category in Japan and pioneered in the innovative \u201cfresh bakery and direct delivery\u201d model, providing short-shelf-life bread to various retailing channels such as \nconvenience stores and supermarkets. In 2012, Yamazaki Baking's revenue reached \n24.6 billion yuan. Owning over 40% market share, Yamazaki is definitely the market \nleader of packaged bread in Japan.<\/p>

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<\/div>Yamazaki Baking\u2019s factories are usually located in suburban areas of the cities, where \nbread is produced and processed through assembly lines and modern equipment. \nTaking the factories as the center, products are distributed to local or nearby shopping \nmalls, convenience stores or dealers through centralized logistics. Normally Japanese \nconsumers can buy Yamazaki bread from convenience store just a few hours after \nbeing produced. Under the model of \u201ccentral factory baking and direct delivery to \npoints of sales\u201d, the company has the advantage of economies of scale: streamlined \nproducts with the pursuit of single-product production, scale and costs reduction; \ndirect to sales terminals such as supermarkets with a significant drop of its sales costs. \nFor consumers, they get the dual benefits of enjoying the fresh taste bread as good as \nin bakery stores yet paying at a much lower prie.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Activity System on the \u201cFresh Bakery and Direct Delivery\u201d Model<\/strong><\/h3>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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<\/div>Yamazaki Baking has built an interconnected activity system on the Fresh Bakery and \nDirect Delivery model.<\/p>

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<\/div>Firstly, it built its own factories and expanded step by step. From 1948 to 1966, taking \nTokyo as the base, Yamazaki Baking constructed and operated factories in Ryogoku, \nYokohama and Suginami, fortifying its leading position in Kanto Area. In 1966, it \nopened a factory in Osaka, entering the Kansai market. By 1980, Yamazaki had built 16 \nfactories in key cities in Kansai, Chubu, Chugoku, Kyushu and Tohoku, gradually \nachieving geographic expansion and nationwide coverage. Currently Yamazaki has 27 \nfactories in Japan. Over the past 18 years, Yamazaki focused on the Kanto market, the \nbiggest one in terms of economy scale, and had high level of share of mind. \nMeanwhile, it owned a leading market share through its principle market to provide \nstable profits to fuel its national expansion.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Illustration 7.2 1984-2000 The Factory Expansion of Yamazaki Baking<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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<\/div>Secondly, it expanded its sales network. Yamazaki's channels include convenience \nstores, supermarkets and many other retail terminals. The fast-growing number of\nconvenience stores, represented by 7-11, Family Mart and Lawson, had also brought \nan increased number of points of sales for Yamazaki. Yamazaki has always insisted on \nmanufacturing and providing bakery products to convenience stores with its own brand \nrather than through third parties. By 2010, Yamazaki had 97,000 retail terminals in \nJapan, selling freshly baked bread and delivering directly from its factories every day.<\/p>

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<\/div>Thirdly, it created the daily delivery logistic system. Behind the \u201cFresh Bakery and \nDirect Delivery\u201d system is Yamazaki's powerful logistics and distribution network. In \n2001, Yamazaki started to build its own logistics company. It also built distribution and \nlogistics centers nearby the factories. In 2012, Yamazaki's logistic footprint expanded \nto 15 locations across Japan, with 15 distribution centers, 2 vehicle factories and 2,600 \ntrucks, delivering to 100,000 stores every day, with even up to two to three deliveries \nper day for some stores. The workflow of Yamazaki's trucks is well standardized. A \ntruck will deliver to around 50 stores before the convenience stores start selling \nbreakfast with bread: departing from the factory at 2 a.m., delivering to a store every 5 \nto 10 minutes, and finishing all deliveries around 5 a.m. After delivering the bread in the \nearly morning, the truck returns to the factory to refill with new products for another \nround of delivery. From 8 a.m. to 11 a.m., the truck completes its second round of \ndelivery. The truck continues its third round of delivery during 2 p.m to 5 p.m.. The \nfrequency of three deliveries per day enables consumers to enjoy fresh and best-value-for-money bread at key meal occasions in the morning, at noon and in the evening, \nwhich also further promotes the adoption of bread into meals in Japan, helping \nYamazaki to enlarge the market size of the packaged bread category.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Toly Bread, the Chinese Yamazaki<\/strong><\/h3>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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<\/div>Due to the vast geography scope of China, the lagging behind cold chain logistic \ninfrastructure and strict requirements of food quality, the packaged bread market is \ndominated by ambient long-shelf-life products. Dali and Panpan, both located in Quanzhou, Fujian Province, are the leading brands in this category. However, with the \nimprovement of people\u2019s living standards and awareness of health, the consumer \ndemand for fresh and short-shelf-life packaged bread has emerged. In 2012, we aided \nToly Bread in propelling short-shelf-life packaged bread in China.<\/p>

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<\/div>Firstly, starting from consumers\u2019 perception, we communicated with effective brand \npositioning with more extensive education to consumers.<\/p>

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<\/div>The best positioning for a new category is to take the most important attribute, such as \n\u201cNnongfu Spring, a little bit sweet\u201d, \u201cEvery drop of Luhua oil spreads the fragrance to \nthousands of households\u201d. In consumers\u2019 mind, comparing with the long-shelf-life \npackaged bread, the No.1 attribute of the short-shelf-life one is freshness. Hence, we \nhelped Toly Bread to create the brand positioning \u2013 \u201cToly Bread, daily delivery of fresh \nbread \u2013 providing fresh bread to millions of consumers national wide\u201d. In terms of \ncommunication touch-points, we recommended Toly Bread focus on offline by \nleveraging the closets touch-points with consumers, such as product packages, \nshelves and transportation trucks.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Illustration 7.3 The Brand Positioning of Toly Bread<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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<\/div>Secondly, we focused on best-selling core products.<\/p>

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<\/div>Under the central factory model, streamlining the product portfolio helps to reduce the \ndifficulty of product sorting and shipment, and helps the factory further expand \neconomies of scale and reduce costs. More importantly, focusing on best-selling core \nproducts is easier for consumers to connect the new category with the brand in their \nmind. To ensure that the brand stand for the most valuable part of the category, the \nbest-selling core products should appeal to mainstream consumers.<\/p>

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<\/div>Through our consumer studies, we came up with a clear picture of product portfolio of \nToly Bread. On one hand, we streamlined the product lines by gradually discontinuing \nthe long-shelf-life ones. On the other hand, based on the consumers\u2019 criteria of \nproduct segmentation and product retail sales value, we focused on key brands Mini \nRed Bean Bun and Chunshu Sliced Bread. Besides, each region, province or city can \ncomplete its own product portfolio basing on local popular flavors.<\/p>

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<\/div>Thirdly, we recommended build a daily delivery logistics system.<\/p>

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<\/div>During that time, nationwide competitors Mankattan and Bimbo mainly sold products \nwith a shelf life of 14 days, and the delivery frequency was usually every 3-4 days. Toly \nBread\u2019s delivery frequency was about every two days in the Northeast region. We \nsuggested learning from Yamazaki Baking to increase the delivery frequency to further \nadvocate its standpoint against the long-shelf-life bread and raise the bar for \ncompetition.<\/p>

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<\/div>In 2012, Toly Bread piloted daily delivery in the Northeast market, transforming from \ntwo-day delivery to daily delivery. Taking its biggest market Shenyang city as an \nexample, the weight of daily delivery reached 30% and that of two-day delivery \nreached 60%. The result was amazing. Among the 180 stores piloting daily delivery, \n80% achieved growth versus previous month, with a significant growth rate up to \n127%. In the cities where the competition was very intense, the daily delivery helped \nToly Bread to pull ahead of its competitors.<\/p>

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<\/div>Lastly, we designed the market expansion plan: from point to line, from line to area.<\/p>

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<\/div>Due to some historical reasons, Toly Bread didn\u2019t have a universal strategy in market \nexpansion and development. Toly Bread had certain competitive advantages in the \noverall Northeast market, unfortunately the advantages were scattered in many \ndifferent areas. We urged Toly Bread to follow the way how champagne tower works: \nfocusing on markets where they have competitive advantages with increased \ninvestments in resources in order to become the dominating brand in terms of share of \nshelf and share of mind; leveraging the achieved and cumulated competitive \nadvantages in those markets to penetrate into neighboring areas.<\/p>

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<\/div>Taking the factories in the Northeast Region as the foundation, Toly Bread expanded its \nfootprints into all untapped markets, covering all cities and counties. Meanwhile, it \ncreated a connected network with Beijing, the North and Northeast China combined, \nwhich served as the base for further expansion. Sequentially, Toly Bread started to \nenter into Central and East China by constructing new factories, building sales \nnetworks and promoting the category and brand. Eventually, Toly Bread would expand \nto the South and Southwest China to achieve the national coverage.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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Illustration 7.4 Champagne Tower<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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<\/div>Since 2012, after a decade of development, Toly has become the market leader in \nChina\u2019s short-shelf-life packaged bread category, with a revenue of 6.335 billion yuan \nin 2021. It owns 20 factories and 260,000 points of sales across China. Following Toly \nBread, the manufacturers of long-shelf-life packaged bread entered the short-shelf-life \npackaged bread category. Panpan introduced the Lingxian (leading fresh) brand in \n2016, while Dali launched the Meibeichen brand in 2018. The short-shelf-life packaged \nbread category is thriving.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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INNOVATION CASES<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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