Pick a category. Any category.
Shaving? Vacuum cleaners? Luggage? Mattresses? Apparel? CPG?
Yes, yes, yes, yes, yes and yes.
In category after category, established players are being disrupted by upstart brands that seemingly came out of nowhere. Think Dollar Shave Club, Shark, Away, Casper.
Said upstarts have taken share for a variety of reasons and using a variety of strategies. In some cases, such as Dollar Shave Club (and later Harry’s), the marketplace was ripe for a reasonably-priced alternative to the wildly overpriced products sold by established players. Dollar Shave Club used hilarious viral videos to create interest, wisely repositioning entrenched razor blade brands as the enemy of the Everyman consumer.
In other cases, upstarts seized on some undeniable truth about the consumer. Casper’s “bed in a box” concept traded on the inherent discomfort consumers experience when trying out mattresses in a retail environment—and the hassles involved in getting mattresses delivered and set up in the home.
Consumer empowerment, the power of viral marketing, the demystification of overseas manufacturing, and other forces have converged to create an environment in which upstart brands can quickly take share. Add in the abundance of V.C. and private equity money seeking to fund the next big thing, and you get a clear picture as to why so many upstarts have taken so much market share.
I’d argue there’s an even more important factor at play: the democratization of quality.
Two years ago, a Patagonia executive talked about product parity in the outdoor apparel category in remarkably candid terms:
“Construction, performance and material specification have gotten to a point where 80% of what’s out there functions reasonably well and can help you through whatever it is you are doing outside.” –Lisa Williams, Chief Product Officer, Patagonia, Racked.com, 2015
Today, we see a similar phenomenon across countless categories. Product brands continue to trumpet the nuanced differences between their products and the competition’s. All the while, those differences become less apparent—and less relevant—to consumers.
All things being (apparently) equal, more consumers are choosing lower priced, easier, hipper, “feels like me” brands over established players.
It’s even happening in healthcare. Services like primary care are increasingly seen as commodities. Consumers—including parents making healthcare decisions on behalf of their kids—are prioritizing convenience and price over a caregiver’s qualifications or a healthcare brand’s esteem in the medical community.
FOUR STRATEGIES FOR FIGHTING BRAND DISRUPTION
Category and brand disruption have quickly moved from anomaly to inevitability. As an established brand, what’s your best play? Here are four strategies our clients and contacts are using to stay relevant and viable.
1. Tell a more enlightened brand story. Consumers see quality products as table stakes. And sooner or later, consumer reviews will sort out winning products from the rest anyway. Instead of betting the farm on the quality of your products, complement great products with an emotive brand story that you tell loudly and proudly. Be sure to root that story in the deeply held beliefs that your company and brand share with your best customers.
Even in price-driven venues like Amazon, brand values matter. We recently conducted a quick consumer study for a client. Amazon buyers who took part in the survey cited “I’m proud to use the brand because they support my values” as the #1 criteria they used to evaluate brands. While the sample size was relatively small, the findings do serve as a reminder that consumers care about what brands stand for—especially when price and perceived quality don’t create clear separation in the consumer’s mind.
2. Embrace disintermediation: go D2C. Brick and mortar channels continue to shutter. And that momentum is cultural, not generational. Younger audiences see many in-person retail experiences as mere friction. And older consumers have jumped on board Amazon and other online retailers with remarkable velocity. While Millennials do indeed make up the largest share of Amazon Prime customers at 39%, Gen X’ers follow closely at 34% and Boomers are 26%*.
If your brand is still dependent on brick and mortar channels for a sizable percentage of revenue, brace for the worst (assuming you’re not seeing it already).
Better yet, get serious about Direct To Consumer (D2C) marketing and sales, with your brand’s website—not Amazon—as the brand’s flagship store. As we’ve suggested in previous Active Insights articles, the real win for brands is to own their relationships with their end customers, rather than ceding them to Amazon or any other channel partner.
3. Fight fire with fire – Upstarts like Purple (mattresses) are using content and paid social media plays to build brand affinity, and ultimately, to drive significant revenue. Recent Google data suggests that when it comes to branded keyword searches, Purple is outpacing a host of online mattress brands, including category leader Casper. And Purple’s followers on YouTube dwarf those of Casper, Tuft & Needle and Leesa.
If you’re not doing so already, take a lesson from Purple and other upstarts: get serious about using content and paid promotions to drive brand reach and affinity. Per L2:
"The rise of social media enables otherwise unknown brands to amplify their presence on various platforms, creating an opportunity for overshadowed brands to gain maximum visibility outside the Amazon bubble. Catchy YouTube mini-series, Facebook promos, and other mobile-friendly content are just a few ways these brands can garner attention and as a result become more memorable than their juggernaut opponents. Because many purchases made on Amazon are heavily influenced by the reviews section, brands can equip their social media audiences to sound off positively there." --September 20, 2017
4. Disrupt the disruptors by launching your own upstart brand – If you’re a premium brand, consider parlaying your product design expertise, supply chain muscle, and channel knowledge into an upstart brand of your own. Launching your own upstart brand need not cannibalize your share at the high end of the marketplace. It should, however, enable the enterprise to quickly win new share in the lower tiers of the marketplace. In many categories, that’s where younger consumers live—and where older consumers lurk to see what products they can buy to feel younger than they are.