What big brands must do to counter the rise of small brands

by | Mar 18, 2019 | Branding with impact

I recently read a great blog post by Anne Ricci from via Marca  entitled, Rise of Small Brands….and What Big Brands Should Do About It. I took a lot of many valuable insights from her post and with her permission I am sharing her post with you. 

 

Top 25 manufacturers responsible for 59% of sales but only 2% of category growth!

 

A recent McKinsey study really got me thinking………. “…the top 25 manufacturers are responsible for 59 percent of sales but only 2 percent of category growth. Conversely, 44 percent of category growth has come from the next 400 manufacturers.” *

This quote reflected a similar competitive dynamic many FMCG brands in Australia and New Zealand are also experiencing – the rise of the small brand. And they are making a significant impact on market share.

 

 

Why are small brands growing and taking share from established, market leading, trusted brands?

 

1. Small brands are often closer to their consumers and understand a specific unmet need or problem better.

If you think about it, the founders are actually the brands first consumer having experienced the unmet need or problem firsthand and then developed a brand and product to solve it.

2. Small brands offer truly new & unique product benefits that are targeted to a tight audience with specific needs.

Small brands are very happy targeting niche consumer segments and the supply chain that supports them are designed around the product’s specific needs.

Unlike big brands, they don’t generalise their offer to hit volume & profit hurdle rates or to fit within existing capabilities. Small brands build their offer to perfectly suit a specific need, no matter the size.

3. Small brands often have an authentic backstory about the founder’s intentions that drives instant trust among today’s skeptical consumer.

There are real people behind these brands who stand for a promise or a purpose that consumers believe and buy into. They don’t have to deal with the underlying skepticism consumers currently have towards big business intentions.

Big brands are being pushed into the bland middle ground.

 

While small brands drive growth from the niche opportunities, big brands have been pushed into the bland middle ground.

Big brands usually occupy the middle ground, trying to appeal to as many people as possible to drive the scale the business needs. But standing in the middle often means you don’t stand for anything really meaningful. 

The collective might of small brands are picking off big brands share because they do meet specific needs, they do offer unique product benefits, and they do live and breathe an authentic brand purpose.

The fact that a small brand stands for something specific is what is attracting consumers away from the big brands.

How has the rise of the small brand affected big brands?

 

Have these new smaller brands left you occupying the bland middle ground, with a brand that means only a little to a lot of people?

By asking three simple questions and being brutally honest with yourselves you can identify where you may need to evolve your brand proposition to stand for something that is once again unique, meaningful and authentic.

1. Is your brand still unique or superior to your broader competitive set?

The first step here is to revisit your competitive set definition.

It has quite likely changed as consumers needs are changing and new competitors have come in with product attributes and benefits to meet those new needs.

You should not only define your competitive set as your direct substitutes but also the potential indirect substitutes that still meet similar needs or occasions as your brand. E.g. Swatch is an excellent example of a brand that considers itself more than just a watch that tells the time. It has a much broader competitive framework of arm jewellery that matches an outfit or reflects a wearers personality.

Once you have determined this new competitive set, now think about the product attributes or benefits that are unique or superior to your brand. What do you do better than anyone else on the list?

If small brands have shifted your playing field significantly, you may need to do some significant work to rebuild this point of difference. And you should start that process by asking what are the most important needs of your consumer?

2. Is your brand still relevant and meaningful to your consumers?

Are you meeting their current needs better than your competitors? Or can you identify new unmet needs or deeper consumer problems that your could brand could solve for?

The fundamentals of marketing are pretty simple. Consumers have needs and problems and it is a brands job to fulfil those needs or solve those problems. Therefore a deep understanding of your consumers is critical.

You need to be able to uncover these needs and problems and identify which ones your brand can solve for, better than your competitors.

Nowadays, these needs are not lying on the surface and easily identifiable. In today’s complex world, you have to dig deep, listen to consumers and even more importantly observe consumers to find their real motivations and problems.

The ones that are driving their purchase and consumption behaviours. This is one reason why small brands are seeing such success. Their founders are often the consumers who have discovered these problems during their day-to-day.

 
 
 
 

Halo Top struck gold when the brand leveraged a deeper insight to solve a real consumer problem

Take Justin Wolverton for example. Once a lawyer and now the founder of Halo Top ice cream, a brand which has grown to be a serious contender to Ben & Jerry’s.

The low-calorie ice cream was developed when health conscience Justin realised that freezing Greek Yoghurt may be a healthy cold treat, but it was not delivering to his indulgence needs like a tub of Ben & Jerry’s would. So Justin created a low-calorie, premium ice cream to meet that surface need. And the brand performed well.

However, the brand exploded when Halo Top uncovered a much deeper, real problem …..the guilt you feel when you have hit the bottom of the tub and realise you have devoured a whole tub of ice cream, perhaps in one sitting.

The brand solves this problem by being very clear about the low-calorie count in the whole tub, therefore wiping away the guilty feeling.

 

3. Is your brand story and purpose authentic, credible, believable?

Consumers today are skeptical, especially about big business intentions. They have a wealth of information at their fingertips and a voice to call BS on brands they think are trying to pull the wool over their eyes in the pursuit of commercial gains.

With it becoming more challenging to build a brand with unique functional benefits, more and more companies are striving for emotional, purpose-led platforms to create more meaningful propositions and stronger consumer connections.

Stronger Consumer Connections.

Some brands are doing this beautifully, but many brands are trying to occupy a space where they have no credible reasons to claim ownership.

Scratch the surface, and you will find the so-called “purpose” is purely for marketing purposes and when the rubber hits the road, is not something the entire organisation will support if it means a hit to the P&L.

Big brands must ensure any new purpose-led platforms ladder directly from your established functional benefits or reasons to believe and that these platforms are supported by a significant and consistent commitment throughout the entire organisation.

Big brands need to respond to the combined threat of small brands if they want to stay relevant and competitive.

By asking the above questions, answering them honestly then leveraging the insights and resources at your fingertips you can evolve your brand to make sure it still occupies its unique, meaningful and authentic place in your competitive set.

 

Guest Author’s Bio : Anne Ricci is an ex-Global Marketing Director who founded Via Marca – Marketing Strategy & Capability to help businesses build brands that matter and marketing teams that thrive.

For more information on Anne visit her website www.viamarca.com.au