Strauss: We are a brand of water

A water purification equipment company does not make profit by selling water purifiers, but instead makes money by replacing the filter service. It is like the famous Nespresso coffee machine company is actually profiting from coffee capsules, and the profit engine of the HP printer business is actually By selling ink cartridges. “We have been promoting the transformation of the business model. Strauss is not only a water purification equipment manufacturer, but also a service provider for overall drinking water solutions. We are water experts and the moment the products are sold and installed in consumers' homes. It's not the end of everything but the beginning," said Rami Ronen, global CEO of Waters equipment at Strauss. Just as Apple, IBM, and Hewlett-Packard were all typical product manufacturers, they experienced new challenges in the face of fierce competition, declining gross margins, and failures of their peers. Instead, their experience is not in their products. Their success is due to the transformation of their business model - focusing on user experience and providing overall consumer solutions.

From manufacturing products to providing services, this change from a business model is sweeping the world. As "the father of competitive strategy" - Michael Porter, a professor at Harvard Business School, said, "Because the processing and manufacturing links in the value chain are easily imitated, the low cost advantage is usually short-term, and the service link is especially R&D, design, Marketing, after-sales services, etc. are not easily imitated, and they can obtain differentiated competitive advantages over a longer period of time. Therefore, in order to obtain competitive advantages, manufacturing companies often use processing and manufacturing as a starting point, and extend their services to R&D, marketing, and other service sectors, thereby increasing the value chain. From manufacturing-centered to service-centered."

"Jews are committed to the principle of sharing in doing business. This is the way we survive. In the UK we are working with the Virgin Group to open up the European market. In China, we have chosen to cooperate with Haier, each with a 50% stake." Rami Ronen said.

In 2008, Guo Chao, the current CEO of Strauss Water Purification Equipment Greater China, joined the Strauss Group and began to form a Chinese company. Prior to this, the investment consulting company hired by the Strauss Group was responsible for investigating the entire China. Water purifier market, the entire research project lasted more than three years. “I used to be responsible for a lot of investment consultancy projects before, but Strauss is obviously the most cautious one. The entire survey included: understanding the drinking habits of Chinese consumers, their views on foreign brands, and their product advantages and disadvantages. The potential of the entire water purifier market and the investigation of potential acquisition targets.” Guo Chao said.

“In the globalization process of global companies, the first thing is to find a suitable partner and understand the rules of the local market. It is not only technology and capital.” Guo Zhao said, “To enter the overseas market and establish a brand new brand, This kind of investment and risk is very big. So, in the end we chose a joint venture."

She believes that any company will encounter political, legal, financial, operational, and strategic risks in its overseas expansion. If the sole proprietorship is adopted, the risk in channel and brand construction is large. If overseas mergers and acquisitions are conducted, the general success rate is relatively low. Many mergers and acquisitions are not ideal, and the cultures of companies from different countries are very different. "Enterprises' overseas investment should be based on an accurate judgment and take risks, make a full assessment of the risks, and then find ways to reduce the risk, then integrate resources and resolve management risks."

"The ability to acquire and combine the resources of other companies is an important capability. Opportunities are based on capabilities and knowledge. In addition, joint ventures must prioritize the development of international talent," she stressed.

It is reported that in the Chinese market, there are thousands of water purifier makers, large and small, and they are mixed. Market competition is extremely cruel. Many products are low-end drinking fountains, but low-end products have shown negative growth in recent years. The opportunity is undoubtedly. In the high-end water purifier market, the growth rate has reached 100% in recent years.

After several contacts and negotiations, Strauss finally chose Haier to cooperate. In October 2010, Haier established a joint venture with Strauss. “Our business model differs from that of existing water purifier companies. We use a membership system to establish a more viscous customer relationship with customers and provide after-sales services including installation, replacement of filter elements, machine cleaning, periodic inspections, and accessories. Services, the traditional business model is to sell products, and we provide the overall solution."

According to its introduction, before entering the water purifier market, Strauss found that users will not use the original filter after purchasing the water purifier for a period of time. Most water purifier companies do not have after-sales service. Only relying on consumers to find companies, companies will come to serve, and some small companies can no longer be found. For Strauss, this is an opportunity, so a new business model was born. Haier Strauss has set up a consumer management center and adopts a membership system to keep abreast of the use of intelligent drinks machines sold, and then actively contact consumers to provide filter cartridge solutions.

"From a business perspective, any micro-innovation may cause differences in the consumer's experience. If the company takes a small step forward, users will find it convenient to take a big step." Guo Chao told me, "China's The three-member family generally replaces the filter cartridge in about three months. In the Chinese market, Strauss' partner, Haier, has more than 5,000 community stores in various cities across the country.

“We hope that users will not regard Strauss as a manufacturer of water purifiers, but a brand of water. In markets around the world, we enter the minds of users with the image of “water experts”. Only in this way Can really continue to occupy the market." Rami Ronen said.

In fact, the water purification market is not an industry with rapid technological changes. Application innovation from the user experience is even more important. According to Rami Ronen, in Israeli laboratories, R&D personnel are user-centric and tap the needs of users to discover the real and potential needs of users. “Applying innovative design concepts makes the user experience easier and easier to use. For example, we studied how to make the entire cartridge smaller to make the replacement process easier; we added an RFID identification device to the smart drink machine. The regular core change becomes inevitable, so that the consumption of the filter element changes from a time measurement to a usage measurement, and the frequency of user replacement will be reduced if it is used less frequently. This is a more humanized design.”

Obviously, application innovation comes from insights into the potential needs of users. Like Ford Motor Co. founder Henry? As Ford once said, “If I ask the user what transport they want, they will say “a faster horse.” In fact, users often don’t know what their needs are and they don’t know it. How to express, they always hope that the company will do a perfect product. But for the most part, the needs of users are much more flexible and richer than they think.

Guo Zhao said that the product design details often determine the success or failure of the product, and some micro innovations will make the user experience different. “For example, Strauss has added the function of baby milk powder in product application design. In fact, many of Apple’s product design concepts have influenced our design thinking. Apple does not have much cattle technology, but they are applying innovation. And the user experience is the best. Consumer experience is important, but users often cannot accurately describe what they really want, so you must have insight into their needs and guide the market in product design."