For the exclusive use of U. PUTRO, 2022. SIVEY | Publishing w24771 LIDU LIQUOR CO. LTD.: IMMERSIVE EXPERIENTIAL MARKETING Haibo Hu, Meju Fe, Heiteo Lu, Huayuan Hen, Tao Huang, Fan Yu. and Wiliam Viei mote tis csse solely 1 prove material for ‘lass discussion. The authors cb natinterd to lustrete ether efectire or ineffective handing of @ managerial situaton. The aithors ‘may have disqused certain names and other identifying infomation to prtect confit. This publication may not te transmited, photocopied. digitized, or otherwise reproduced in any form or by any means withcut the ermssion of tne cogyrgnt holder. Reproducton ef this material = noi covered under authorization dy ary reproduction rights Drganzaton. To order copies or request permission to reproduce meterias, contact Ivey Publishing, Ivey Business School, Western University. London, Ontario, Canada. N6G ONT; () 519.661.3208: je) cases@iveyca, nww.ireyceses.com. Our goal isto publish ‘materals ofthe highest qual; submit any eraia fo publishcases@vey.c2. Copyright © 202, Ivey Business School Foundation Version: 2021-09-08, Midway through 2019, Tang Xiangyang, general manager, was aware that Lidu Liquor Co. Ltd. (Lidu) was facing additional challenges. The liquor industry had entered a period of brand concentration and liquor sales had become increasingly concentrated. In 3017, about 23 per cent of the market share was controlled by five companies: Kweichow Moutai Co. Lid. (Moutai), Wuliangye Vibin Co. Ltd. (Wuliangye), Jiangsu Yanghe Distillery Co. Ltd., Luzhou Laojiao, and Anhui Gujing Distillery Co. Lid.' In 2018, Moutai’s and Wuliangye’s net profits accounted for 68 per cent of the net profits of listed liquor companies.” The development space for liquor companies was relatively small; however, emerging liquors, which were famous for their brand culture, had risen. For example, the 2018 sales of Chongqing Jiangxiaobai Liquor Co, Lid, exeveded ¥2 billion, * which was about seven times I idu’s sales that year“ Moreover, domestic and foreign brands had already noticed Lidu’s success and had begun to imitate its immersive experiences Lidu’s unique advantages were weakening. For future growih, Tang had to determine how to optimize the company’s experiential marketiag plan. With rapid development of the Interaet and live e-commerce, to stay one step ahead ofthe competition, Tang needed to transfer immersive experiential marketing fiom offline to online LIDU LIQuoR CO. LTD. Lidu, a traditional Chinese liquor enterprise,’ was located in Lidu Town, Jiangxi Provinee, China. This part of central China was known for its long history of liquor production, which stretched back more than 1,500 years." Legend had itthat when passing Lidu Town, Wang Anshi, a famous politician and author ofa series of reforms called the “New Policies” (written in the eleventh century), would stop to taste the region's liquor because he was attracted by its distinctive aroma, Similarly, Yan Shu, prime minister of the Northern Song dynasty, would stop and buy bottles of liquor every time he passed through Lidu Town” The Lidu distillery workshop fiom the Yuan dynasty period was the oldest distillery site in China and was sil in use. It contained rare historical relics and was thought o have the most complete history of distillery production.® The modern company of Lidu, founded in 1955, had 260 employees and registered capital of ¥12.24 million In 2002, HongKong Hengyuen Tuozhan Investment Ltd. (Hengyuan Group) acquired Lidu. For the first “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 2 w26771 few years after the acquisition, sales were strong because the new owners sold off Lidu’s inventories. As inventories were depleted, new production wasscheduled with cheaper raw materials sourced from Sichuan Province. But as consumers noticed that Lidu’s flavour was becoming more diluted, sales dropped. As arresult, by 2006, Lidu was incurring losses. Consequently, VATS Group purchased the company from Hengyuan Group in 2008. The group had been successful using traditional marketing to grow its Jinliufu brand of liquor—a strong Chinese aromatic spirit of 45 proof. Therefore, it tried to employ the same strategies with Lidu, which included advertising in traditional media, building out distibution channels, and running promotions at retail stores. However, these traditional methods yielded poor results, and Lidu’s sales growth stalled between 2008 and 2013, WU XIANGDONG AND TANG XIANGYANG Wu Xiangdong founded the Jinliufu brand in 1997. In three years, Wu's efforts generated brand sales of YI billion, In 2006, based on the success of Jinliufi, VATS Group was established with Wu as its chair. VATS Group then acquired Lidu in 2008, and in 2016, the group citanged its name to Jindong Group. As of 2019, Jindong had 15,000 employees and over ¥30 billion in total assets, Born in 1966, Tang graduated from Shaoyeng College in 1989 with a major in winemaking, Tang successively obtained the Chinese qualifications of senior liquor sommelier and senior winemaker. Friends called him “Commander Tang.” In 1989, Tang joined Hunan Shaoyang Distillery, where he worked as the dircetor of its winery forsix years and then as a sales manager for eight years, In 2003, VATS Group acquired the Shaoyang Distillery, and Tang worked as the pioneer of the group’s Guangzhou business under Wu's supervision. When Tang took over as general manager of Lidu in March 2014, the company bad suffered losses for five consecutive years with five different chairs attempting to lead the company out of its stagnation, However, unlike the previous five general managers, Tang had a wealth of experience in the wine industry. His past experience included time with a local winery and serving as the general manager of several local liquor companies in VATS Group. Shortly after his arrival, Tang reviewed Lidu’s sales and marketing plans. He noted that Lidu had focused all its efforts on conventional marketing tools and channels, spending a lot of money on advertising, ‘maintaining dealer relations, and promoting sales. Lidu’s key selling messages—its historical heritage and its unique flavours were not adequately conveyed. As a resull, it was difficult for the brand to stand out in the minds of is potential customers Although the traditional Lidu distillery workshop had becn excavated, the site had not yet been effectively protected, nor had the modern company used the traditional workshop to produce or brand its liquor. In addition, because the original liquor-producing formula had been lost, the modem Lidu had lost the “old Lidu taste” once praised by consumers and was no longer attractive. Also, even though Lidu had 16 brands at the time, Tang found that 76 per cent of Lidu’s sales were generated from its entry-level liquor brand, which sold for ¥8 per bottle. Tasked to revive Lidu, Tang decided to abandon traditional marketing, replacing it with in-person experiential marketing as the key marketing pillar—a sharp departure from the company’s prior approach “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 3 w26771 to industry standards. Core to the new marketing plan was a series of Internet communication campaigns designed io reinforce the key marketing messages, Tang also charged his new product development team with creating Lidu Sorghum 1955—a premium brand with a distinctive flavour profile that resembled Lidu’s products in the 1950s. Lidu sorghum liquor referred to all sorghum products brewed by Lidu, which had a brewing history of more than 200 years. Lidu Sorghum 1955, however, was to be a new product, different from Lidu’s other sorghum products in terms of raw materials, ‘echnology, packaging, and pricing, Tang insisted that the grains used in the Lidu Sorghum 1955 brand were prepared for disilling in the company’s Yuan dynasty-era (thirteenth century) cellar. In accordance with the established strategy of focusing on high-end products, once the product had established its credibility as @ premium brand, Tang set about promoting it directly to customers, relying on immersive experiential marketing techniques Launched in 2015, Lidu Sorghum 1955 carried a premium price of ¥580 per bottle To maintain the brand’s premium positioning, Tang raised prices steadily, reaching ¥770 per boitle by May 2019,!° which ensured that the brand remained the highest-priced brand of a type of Chinese liquor known as guangpingyiu. Sold without packaging—the bottle was directly visible— guangpingjiu liquor was once synonymous with low- end liquor. As Tang said, “We drew a lot of attention and praise for our bold efforts.” Tang’s experience with traditional marketing and standard sales promotions led him to consider the need for more effective marketing tools. In 2007, when he was in charge of sales for a liquor brand, he had challenged the company’s 800-person sales team to boost their sales. Whereas other liquor brands were employing a “buy 10, get onc free” strategy, Tang went one step further with his “buy five, get one free” tactic for end customers, He backed this promotion with ¥20 million in advertising. Tang's brand recorded #10 million in losses in the first year of the business, largely due to the cost of promotions, By the fifth year, total losses had grown o ¥100 million and Tang had learned his lesson, concluding that the #100 inillion spent was a “tuition fee.” THE INTERNAL AND EXTERNAL ENVIRONMENT OF LIDU IN 2014 The Liquor Industry Liquor was a popular and traditional beverage in China, In 1984, liquor production accounted for 45 per cent of alcoholic drink production in the country by volume.'! However, in 2001, after the market reforms of the 1990s and the opening of China's economy, the proportion of liquor production as a percentage of the production of all alcoholic drinks had decreased by 14 per cent Yet, on an aggregate basis, the liquor market by value had grown from ¥50 billion in 2002 to ¥500 billion in 2011, with consumption driven by government and the business consumer. "* Two important events in 2012 led to the end of this “golden era” decade in China’s liquor industry. First, in an effort to rein in expenses, government officials were told by the China State Council to control their spending on the “thres public expenses” namely, vehicles, entertainment, and overseas trips. Officials not heeding these new rules would be removed from their posts." Second, the results of a government-initiated quality test found unacceptably high traces of dibutyl phthalate (DBP), a plasticizer, in liquor samples."* The test was conducted by Shanghai Tianxiaag Quality Technology Service Limited Company, and 50 samples were tested. The highest detected value of DBP was 1.04 milligrams per kilogram, exceeding the allowable standard by 2.6 times.'* “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 4 w26771 The two events led to a drop in liquor demand, especially for high-end brands. Two premium liquor bbrands—Moutai and Wuliangye—initiated price cuts in an effort to prevent a plunge in sales.” While manufacturers were eager to find ways to prove to consumers that they produced quality products, the negative publicity had left consumers skeptical of such new claims. It was during this time that more experiential marketing began taking place with taste tests at local distilleries. The government-imposed limit on entertainment expenditures resulted in a reduction in liquor sales to government officials. From 2012 to 2015, liquor sales to government as a percentage of total sales fell from 40 per cent to less than 5 per cent. However, the percentage of sales to business consumers rose from 42 per cent to 50 per cent, and the proportion of sales for personal use rose from 18 per cent to 45 per cent." Consumers Following years of social progress and the rapid development of China’s economy. a young, wealthy, and urbanized population began to tum their focus on their spiritual life and on defining what it meant to be part of China’s “new middle class.” This new middle class had four characteristics: (1) they were young, mainly of the post-1980s and 1990s generation; (2) they were well-edueated; (3) they lived mostly in Tier 1 and Tier 2 cities in China, with annual incomes above ¥100,000; and (4) they sought a quality-oriented lifestyle, In 2014, years of economic growth meant that there were over 200 million people in this new midgle class who paid attention to health trends and quality products.!” COMPETITIVE ANALYSIS Competitors National Brand-Name Competitors In the Chinese liquor industry, brands such as Wuliangye, Jiannanchun, Luzhou Laojiao, Fenjiu, Xitengjin, and Dongjiu had long been regarded as national brand-name products.” In contrast, Lidu was viewed as a local brand in Jiangxi Province. As a result of their premium pricing and positioning, national brands generated the majority of their sales in Tier | cities such as Beijing, Shanghai, and Guangrhow and in provincial capitals. When sales started to decline as a result of the clampdown on expenses and the DBP plasticizer scandal, these brands started to expand their sales efforts outside Tier | cities. These moves Drought the national brands in direct competition with local and regional brands." Site Liquor Site Liquor was considered the premier liquor brand in Jiangxi Province (where Lidu was located). Site Liquor was selected as Jiangxi Province’s flagship product, a designation conferred on the brand thought to be most representative of the area. The brand enjoyed widespread popularity in the region. Similar to Lidu, Site Liquor used rice as the main ingredient and was known for its unique flavour. In 2014, Site Liquor had sales of ¥4.2 billion.” “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 5 w26771 Jiangxiaobai Liquor Many liquor companies shunned Intemet marketing, believing liquor sales to be more readily influenced by retail promotions. Jiangxiaobai, a new liquor brand, took a different approach by relying on Internet promotions, and it built a strong brand in the process.”> Jiangxiaobai relied on a combination of visuals, consumer engagement through microblogs, releasing videos, and publishing online comic strips. As ts key online character, the company used a cartoon image of a small, handsome man with a generic-looking face, wearing black lens-free glasses on the bridge of his nose, an English-style black-and-white checkered scarf, and a casual suit, It was generally believed that rapid social changes had resulted in youth not grasping the finer details of traditional “liguor culture.” Jiangxiaobai seemed to turn that observation on its head, suggesting that traditional liquor culture did not understand today’s youth, For example, Jiangxiaobai paid close attention to consumer taste preferences, ‘tweaking its product to taste more “smooth, light, [and] pure.”** REVIEWING MARKET TRENDS Wu believed that, in the future, connecting with consumers would require a more personal touch. Wu asked ang to pay attention to two issues: (1) understanding where the liquor industry was headed, as well as the future development direction of liquor, and (2) creating marketing ideas with distinctive local brands. According to Tang, brands would become more important in China’s liquor industry. For consumers, especially the younger generation, “drink less and drink better” had become the norm for liquor consumption, Younger consumers paid special attention to the historical and cultural history of the brand and cared about brand “experience” and being engaged While Tang was researching Lidu’s market and consumers, a remark from one of his old friends in Nanchang (the provincial capital of Jiangxi Province) stood out. Recalling Lidu’sheritage, the friend stated, “Lidu is an old brand. It was the first liquor brand in Jiangxi Province. [ only started drinking Site Liquor when T found that Lidu’' distinetive flavour had disappeared.” Tang reasoned, also, that many Chinese continued to harbour a special fondness for the 1980s because they viewed this period as a simpler time. According to Tang, “Nostalgia is a kind of emotion and resonance {rom the bottom of your heart, and traditionally branded wine—with historical gravitas will undoubtedly Tesonate with consumers.” The strategy of revising Lidu’s brand to be more in touch with its roots was echoed by Wu, who listened in on the strategic meetings. By retuming Lidu to its roots, Tang hoped that the company could close the gap between its brand and its consumers’ preferences. “I think there is a gap between companies and their consumers,” said Tang, “In an era where advertising is not likely to be easily believed, we are aiming to position Lidu as a brand that remembers its traditional positioning, This is reinforced by the redesign to feature an older-style bottle, older-style trademarks and lids, and a more traditional taste.” Combining the traditional with an embrace of experiential marketing and online promotion was the key to We are in the Intemet age. We will invite customers to Lida to participate in our immersive experience, When they visitour Yuan dynasty liquor production sit, they will understand the heritage “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 6 w26771 ‘ve have and the care with which we produce liquor. When these customers post their own videos and photos of our site and our products, what they post is genuine and itis credible. It builds our brand. REVIVING LDU After systematic market research, Tang decided that Lidu, with its relatively small size and annual output value of about ¥40 million,”* would best compete based on a differentiation strategy: What we have to make clear is that there is no easy thing to do in the liquor market in the future The days of relying on advertising promotions and pushing relailers to stock up on product are over. If you do not choose the most difficult road, you will not succeed. Lidu's differentiation strategy would consist of the following: (1) 2 differentiated philosophy (small but beautiful”); (2) differentiated products reflecting Lidu’s unique cultural connotations: (3) differentiated marketing methods, including an immersive experiential marketing model; and (4) differentiated information dissemination, with reliance on the Internet. Reproducing the Original Lidu Liquor Flavour After taking office in March 2014, Tang decided to launch a new range of products. To this end, he spent 4¥2 million on purchasing a batch of the old Lidu for the research and development team, They reviewed old recipes end rediscovered traditional brewing methods. In July 2015, the Lidu Sorghum 1955 was successfully “cloned,” resuscitating the original T.idu favour. ‘The market positioning of Lidu Sorghum 955 was that of a high-quality and high-value liquor, but without any faney outer packaging, Tang deseribed the favour as “tasting four Mavours in one sip.” What Tang ‘meant by this was that customers could smell the aroma of the liquor when they picked up the cup and taste the Mavour of the riee as the liquor touched their lips. The beverage left a delicate Nlavour in the mouth, with a Moutai aftertaste. Renovating the Site of the Lidu Distillery Workshop In June 2002, when Lidu expanded a production workshop in the old factory area, workers accidentally dug out ancient liquor-making ecllars. Later, afler further excavation and reorganization by professionals, a complete liquor-making site was uncovered, including ceramic pols, liquor cellars, and wells that dated back to the Yuan dynasty, as well as stoves, drying halls, distillation facilities, guiters, and wall foundations from the Ming, dynasty. The Lidu distillery workshop site was named one of the top 10 archacological discoveries in 2002. Yet despite the provenance and the marketing opportunity it presented, before Tang’s arrival, the Lidu distillery workshop had sat dormant Tang petitioned VATS Group to release ¥7.8 million to develop and protect the archaeological finds. He also secured ¥8.96 million in funds from a national cultural protection foundation to renovate the site, The funds went to refurbishing the ancient site and preparing it for visitors. After refurbishment, a set of reproduced equipment for the three-step production of liquor brewing—cocking raw materials, fermentation, and distillation—was presented to the world, At the same time, Lidu also obtained government permission to use the actual ancient cellars from the Yuan dynasty to continue making liquor “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 7 w26771 Personalizing Liquor for Customers Many consumers wanted a liquor that was tailored to their tastes. To meet customers’ special needs, Lidu began to provide private customized services for its products in December 2014. The company provided “pure customization,” which meant that aside from including the words “Jiangxi Lidu Distillery” on its bottles as a mark of the liquor’s quality, everything else could be customized according to customers’ whims. For example, customers could alter the appearance of the bottle as well as the taste profile of the liquor. Ittook less than two weeks to deliver a customized order, At Lidu, personal customization became an important part of experiential marketing. After experiencing Lidu’s unique liquorculture, many customers were happy to immediately place an order for customized Lidu liquor, Launching the ing of the Altar” Event An altar was a storage vessel or jar with a large bottle mouth and a small belly, made of a material that did not easily deteriorate, It was mostly used to hold liquids such as wine, vinegar, or soy sauce. The act of “sealing the altar” referred to putting a fixed amount of the newly brewed liquor (20 or 50 kilograms) in the ceramic altar and storing it in the cellar or in mud, The plan was to use the sealed liquor in important ceremonies in the future, such as children entering university or getting married, the use of the sealed liquor implying good blessings and expectations The sealing of the altar was an important custom that had been passed down for thousands of years, In ancient times, altar-sealing festivals were held every year in winter. However, as the pace of life continued to accelerate, the traditional culture of altar scaling had gradually been forgotten. ‘On August 24, 2014, Lidu opened the ancient Lidu Yuan dynasty cellar and held a private altar-seating press conferenec in T.idu Town, officially launching the business of sealing the altar ofits pure pulp liquor: freshly brewed, original liquor from fermentation with rice koji, and not yet mixed with other liquors or added Navours Lidu sealed altar liquor was priced according to grade, ranging from¥20,000 to ¥80,000 per 100 kilograms, with sales starting at 25 kilograms. Collectors subscribed to the Liquor, which was stored in Lidu’s century- old liquor store for five for three years. After three years, a 3 per cent annual slorage fee was charged. I the collector sold the liquor for personal reasons, Lidu had the first right to purchase the liquor being sold Creating Online Buzz Afier Lidu abandoned traditional media advertising, social media became the company's main channel for product information. As Tang said, “Now everyone uses WeChat, everyone is their own media. Through the spontaneous communication of WeChat friends, Lidu Liquor fans who have had a good immersive experience will bring many people to the experience.” To this end, Lidu needed to constantly create relevant copies to attract the attention of fans and consumer groups. First, Lidu opened an official new media platform. In 2015, the Lidu WeChat official account began to publish daily original news content supported by the company’s interactions with consumers. In 2016 and 2017, WeChat frequency and event-planning activities inereased by almost 50 per cent.” “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 8 w26771 Subsequently, Lidu organized a series of promotional activities to strengthen liquor lovers’ interaction, expand other participants’ knowledge of liquor, and strengthen the influence of the immersive experience. On February 27, 2017, Lidu held a 10,000-person self-mixing liquor experience event and planned to apply for the Guinness World Record for this event. It also held the Lidu Golden Sorghum Photo Contest in April On June 3rd, the 16th China Liquor Industry Forum Community Exchange Summit and Awards Gala was held at the Lidu distillery. Then, to further gather target customers, Lidu held the first Lidu Fan Festival in Nanchang, Jiangxi, and established the Lidu Super Fans Club on February 2 of the following year. To promote experience activities on the Internet effectively. Tang had more than 10,000 WeChat friends, each salesperson had a minimum of 4,000 friends, and each Lidu production worker had a minimum of 2,000 friends. At Lidu’s request, every Lidu employee was required to send a message about the company or its product to their circle of friends each day.* Lidu’s immersive experiences achieved remarkable results, attracting liquor industry experts, government leaders, and professional media to the distillery to experience and report on Lidu’s products. On April 23 and 24, 2018, the group leaders of the company’s seven major network communities —including New Marketing, New Retail, New Distribution, New Beer, the Chinese Wine Industry Forum, the Fan Research Institute, and the Xuzhou New Youth Planning Club~organized a 100-person tour of the Lidu distillery and the covered communities. In September 2018, the party and government leaders of Renhuai City, China’s liquor capital and where the famous Moutai liquor originated, investigated Lidu’s “immersive experience.” A documentary about Lidu liquor was broadcast by China Central Television on April 11, 2019, LIDU’S IMMERSIVE EXPERIENCES Tang commented on Lidu’s immersive experiences: | simply explain it through examples. For example, when you play cards or play computer games, you might not even want to pick up the phone if it rings. You are very reluctant to Ietothers bother you: you are completely immersed. When we designed the immersive experience of Lidu Liquor, we also considered this, We wanted to make consumers focl that even if they were in Lidu for just an hour or ‘wo, they probably did not want to answer the phone or be disturbed. They wanted to be completely immersed, So the immersive experience is meant to help altract consumers io the company. The "Seven One" Model To attract customers, Lidu designed and gradually improved on its “Seven One” model, which featured products and events that revolved around the making and tasting of liquor. Liquors were made with grains such as rice, sorghum, and wheat left dregs, known as lees. One product was a popsicle made from the sake lees—a product created by the original Lidu distillery. The company made this natural, old-fashioned popsicle from sake lees and goji berries, strietly following traditional techniques. The popsicles could be experienced at all locations, no matter the season. Lidu’s popsicles were sweet and pleasant, with a flavour similar to Lidu’s liquor. The lees were also used to prepare eggs. Lidu made these eggs by covering them in hot lees and steaming the eggs for a few minutes during Lidu liquor production. Every participant could experience an egg at the Lidu distillery “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 9 w26771 One of the events of the experience mode! involved a liquor ceremony. Through vivid performances, the etiquette and customs of ancient liquor and the basic process of appreciating liquor were reproduced, showcasing China’s 1,000-year-old liquor banquet culture. Another event involved making custom-made liquor. Participants watched a bartender engage in an old custom of mixing liquors in a custom recipe: 300 millilitres (ml) of 35.5-proof liquor, 200 ml of 60.2-proof liquor, 1 ml of 45.5-proof seasoning liquor, and one drop of 45.2-proof seasoning wine were combined to compose 500 ml of 45-proof custom-made liquor, With staff guidance, participants at the event prepared their own liquor, which was then packaged in a company bottle with a custom-made liquor label and made available for participants to purchase. In a competition known as the Liquor King, staff would pour participants a glass each of six different drinks—ild flavour, rice flavour, strong flavour, special flavour, Moutai, and Lidu Sorghum 1955. An expert advised the participants how to distinguish between the characteristics of each liquor using smell and taste, The order of the glasses of liquor was then shuffled and the participants attempied to identify the different drinks in a blind test. Whoever received the highest score was crowned the “Liquor King.” In addition, as an experience event, the competition was layered with levels, with every small game aimed at choosing the “King of the Month” and, eventually, the “King of the Year.” Lidu also held Chinese liquor tasting classes. Participants took a training course on the taste, comparison, and judgment of liquor, A brief explanation of the history of Chinese liquor was given, various tasting techniques and methods were taught, and participants were introduced to the characteristics of 12 types of liquor Mavours. ‘The seventh item wasa liquor banquet in which participants were served a menu of dishes that were i by and cooked with Lidu liquor as an ingredient, ied With continuous iteration, Lidu’s experience model expanded to include more than seven customer experiences; however, the concept of Seven One was retained. For example, Lidu chose to incorporate the history of Chinese liquor culture into the experience content, Participants watched a special film about the excavation of the ancient liquor site, listened to a presentation on the liquor-making process at Lidu, watched demonstration of the traditional artisanship of spirits, and visited the science hall and the ancient cellar with its 100-year-old liquor storehouse. Through cultural immersion, participants gained an overall understanding of the history of Chinese liquor culture Tho Throo-Lovol Experience Structure The immersive experience that built on the Lidu distillery workshop from the Yuan dynasty period was also called the “distillery experience” or the “total rudder” experience. Participants could experience all of the immersive experience activities offered, including visiting the cellars from the Yuan, Ming, and Qing dynasties, as well as attending brewing workshops. For participants, these were the most direct and complete content experiences, limited only by the size of the plant and the geographical distance. Immersive experiences in selected cities were called the “liquor house” or the “sub-rudder” experiences. To expand its influence and reach moce participants, Lidu chose to establish a Lidu liquor house in some city locations away from the Lidu distillery. With the exception of visiting the Lidu distillery workshop trom the Yuan dynasty period, liquor house participants could experience most of the immersive experience activities, including popsicles and peanuts made from lees and goji berties, a liquor banquet, the Liquor “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 10 w26771 King competition, and making a bottle of custom-made liquor. Thus far, Lidu had opened liquor houses in Beijing, Shanghai, Guangzhou, Hangzhou, and Xi'an. Immersive experiences in villages and towns were known as the “sorghum co-operative” or “small rudder” experiences. Lidu chose alcoholic drink and tobacco stores witha business area of at least 50 square metres as partners for establishing consumer experiences, including a Lidu distiller’s popsicle refrigerator and a Liquor King competition platform. Customers at these venues could experience only limited immersive experience activities, including tasting popsicles and peanuts made using lees and participating in a simple Liquor King competition. In fact, this experience was based on sales channels, and its main purpose was to attract more new customers and promote the brand. Lidu’s revenues rapidly rose over three years, from ¥80 million in 2016 to ¥120 million in 2017, with revenues for 2018 estimated at nearly ¥300 million, The company officially Launched I idu Sorghum195S in 2016 at the price of ¥380 per bottle. Ry May 2019, after 10 consecutive price increases, its unit price reached ¥770 per bottle. It had become the highest-priced guangpingjiu in the Chinese liquor market. In 2018, more than 50,000 people participated in the immersive experiences offered at the Lidu liquor distillery, and their direct purchases reached 25 per cent of Lidu’s total sales volume in the same year. That same year, more than 40 Lidu liquor houses welcomed more than 40,000 people. The resultant high-end _aroup purchases of a single bottle at ¥200 or more accounted for 75 per cent of Lidu’s total sales. ‘THE FUTURE OF LIDU'S IMMERSIVE EXPERIENTIAL MARKETING According to Tang, from 2014 to 2019, “Lidu had been doing one thing: the ereation of product value through the immersive experience.” Lidu’s immersive experiential marketing model was maturing. It started with the refurbishment and promotion of ancient liquor sites and had moved to the creation of enriched customer experiences. In addition, Lidu had established retail outlets online to reach more consumers, such as selling Lidu’s products on Lidu small program mall and JD.com to expand the impact of experience activities, By mid-2019, Tang realized that Lidu’s unique marketing methods had become well-known in the market and were being eopied. While Lidu had a first-mover advantage, Tang knew that the company could not be complacent. Competition was becoming more intensive, with well-known national brands and online brands entering Lidu’s local and regional markets. Tang wondered how Lidu could continue to achieve breakthroughs in building the unique and immersive experience marketing it had created. With the increasing maturity of new retail practices, Tang also noticed that emerging online marketing ‘models such as Internet advertising marketing, community marketing, and live broadcast marketing played an increasingly important role in the development of enterprises. Tang wondered whether the company should explore an online immersive marketing model. “The case authors wish fo thank Jiangxi University of Finance and Economics, the School of Business ‘2dministration, and Dean Professor Haito Hu for their support in developing this case. “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022For the exclusive use of U. PUTRO, 2022. Page 14 w26771 ENDNOTES Zhi Qian, “2018 Liquer Markel Trends in China in Chinese], Qlanzhan, accessed March 15, 2021, tips eiaehan conanalyeta220/180528-55752042 Hm. “Net Prof of Lsted Companis inthe Liquor Industy in 2018 [in Chinese], ASKC! Consulting Co. Ld, accessed March 15, 2021, Iuypeitopaskel cominows!20 1905021632821 145653 cht 285 CNY = Chinese yuan renminbi; USS1 = 46.8679 on January 1, 2019. + Vunjutouiiag, "How dlangstackal Mada Young Pepi Fall Low wih Liquor fn Chinese], Sohu, accessed March 15, 2021, nip: sohu conva’307463607_250147 STractional Chisese ques entorpisas had along history of qr production and had beon rated as a naionalor provincial tima-hovouod enterprise. Tradiional Chinese iquor needed to be made from grains, including sorghun, wheat, and ce. Producion was characterized by the simultaneous use of solid-state ermentation natural epenress, mult-nicrobialcnferrentaion, sacchaficaion, and fermertaion The fnal produc! was.adistiled spit; however, unke other distled liquors in the world, Chnese iquo’ was distiled using ang guo—2 cinder wth a stil ager upper meth Distiled rational Chinese iquoe was slore in pte jars stead of cak bares ‘Fan Changsheng and Yang Jun, "Excavation of the Site of Liu Liquor Workshop in Jimian County, Jiangxi Province" [fn Chinese}, Archaeology. no 7 (2008) 618-525, 688-684 *LiduTown Chronicies’Competiton Commitee, ‘Niang Ji chap. 2n Liu Town Chrorices{in Chinese] (Nancharg: Liu Town People's Government. 2010), 206 Yang Junand Liu Stufwua ‘Lidu Wuxingtang Liquor Workshop Site: Exploring the Mystery of the Origin of Chinese Liquor [hn Chinese) CCutual Rees in Southem China, no. 4 (2003) 1-8: and Zhang Min and L Mejian, “The Oldest Large-Scale Liquor Workshop Stein My County Was Unearhed in Jangx [in Chinese), Xinhuanet, November 21, 2002. htpu/tech. sina com cr/ol/2002.1 1 24/0154151479 shim * Lu Xing, "Where Is the Value of the Most Expensive Light Bote Wine?” [In Chinese]. WeChat, August 17, 2020. iiips:imp web qq consis INVE teRFOHBTIG. ® Lidu Liquor (@ Lieu Liquor, "Demystifying the Reasors for Lidu Liquors Success" [in Chinese}. WeChat, December 12, 2018, iitpsimp wean gg carvsN7TGTVIKNEVSV7Eurd0. "Yuan Guoren, “Analysis of China's Liquor Incustry Structure and Development Prospects" [n Chinesel, Liquor Making Science & Technology. no 3 (2008) 113-417. 122 = Fu Nanping. ‘Liquor Industry: From Free Competition t> Olgopcly’ in Chinese], Soh September 28, 2002, tips business sohu comi?0(Bd.aricle203128420 shtml 2 Ghina Wine News, ‘Lguer Industry Review and Outook: The Past Golden Decade and the Decade of Upgrading and Adjustment” [in Chinese, June 26,2010, hps:Jfeng.cemle/7nocsj2gFo. “Wen diabao's Speach al the Stale Counc Integy Conference’ [rn Chinese, Xirhuanel, March 26, 2012, www gov.cvzg2012- 3:26\content_2100538 him. * Zhu Lij, Whle Wine Pasticzer Incident Trth Tracking: The Ghost in the Wine” [in Chinese], Xinhua 08, November 22, 2012, atone in a08 eom/aI20121 122110858526 shim "Weng Ltao, Chen Naoyun, and Lu Chang, “Anais of Inmet Public Oprion on Jiugui Liquor Pasttizer Incident” [f Chinese} Xnanet, December 1, 2012 ip! china cam ennews/2012-03/27roontent. 2409208 hm "New Standards for Liquer Plastcizers Wil Be introduced, and Conlnt Inicalers Wil Be Rela [n Chinese}, Cabin, Apil9, 2013, Intpfeompanies casn com/201%-04-08/100511682 hi "Ls" Xeomeng, “Liquor Manufacturing Industy Ressarch Report” [in Chnasel, Hoxun, December 21, 2017, nitrstook hexun eory2017-12-21/190047075 ben " Chen lin "New Middle Ciasss Tastes So Picky, How Can Malls and Brands in Now Fist-Ter Ciles Please Them?” [n Chinese}, \Winsnang, August 10,2017, htinews wish comhiril062/2617 him ° Food industy ig Data Fublie Opinion Canter, “Big Dala Analysis and Brand Compatiion Stategy Repot of Chinas Liquor Industry (2019F fin Chinese}, Chinese Food, Nay 10,2013, wi entod eroutiao38176 hi “Overview ofthe Developmen of te Liquor Industy in 2013 (Special Report othe 90th National Sugar and Wine Fat)" [r Chinese}, East Money. March 13, 2073, hips: /opic eastmoney combs. 2 "Why Situju Ae Wines Brewed by Time and Ingenuty” [im Chirese}, Justuo, Apri 15, 2019, www jushucs9.con/zjushuatinoS565, ® “Yeung People's White Wine Jiang Xiaaba | Have Wine, Do You Have a Stary” [in Chinese], Futunn News. September 5.2018, niips:inews flunn.comimerkevS057?5re"3 % Raceaon Order, “From 0 to 2 Billon, What Did Jiang Xaoba Do Right?” [in Chinese], Zhu. August 21, 2018, attps:fehvanlan 2hhucomp/79087915. = Ouyang Taohua etal, Li Du Winey: Can Experience Value Awalan the Thousand-Year-Olt Ancient Cella? {in Chinese) (China Management Case Sharing Certre and Dalian University of Technology, August 4, 2015), product ro. STR.0320, fps www emcee: dutonCasesiDetail 1961 2 Sales daiacolated by the authors ftom company documents. At the same time. sales of Chinese listed liquor companies in 2014 were as follows (n¥rilions): Meutal, 31.573: Wullangye. 21.011: Yanghe. 14.872 Being Shunxin Nongye id. 8480; Luzhou Lagan. 5.353. ‘Gujnagong, 4.651: nj, 3.916, and Jinshyuan 2.400. Data colected from Jantang Net, "Sales of 16 Liste Liquor Companies in2014° fin Chinese, Sohu, May 62015. hips:/wwwn sohu conia/13928880_ 180467 = wechat frequency represented the actin 0! Lidu's WeChat channels (WeChat official account and WeCat group), which was measured by the number ofeore paticinaing in WeChat group and VleChat offal account activites and the namber of WeChat ofc fccount artes that were read, 5 [ju Shenson “How Can Regonal Wine Companies Win the Sub-High-End ‘Survival Bate"? These 6 Ponts Nust Be Remembered? Jin Chinese, China Kuaixiao Forum, April 28, 20'9,hitps:/vzb|beizongten cotnead-179053-1-t html Network communities consisted of members who had conmon hobties and needs and were cennetied to each other through various netwerk apoicatons, such as WeCha group. Each community vas autonomous. “This dosumest is avorae for use ety by UTOMO SARJONO PUTRO i 2022