Small brands loom large in Consumer Goods
June 18, 2019
June 18, 2019
Small consumer goods brands “live out loud,” selling niche propositions with purpose and personality. They don’t aim to appeal to a broad base. Instead, they woo consumers who share their values.
It’s working. In the United States alone, since 2013 more than US$17B in annual sales has shifted from large consumer goods companies to nimbler digital players.
This is not surprising when you look at the numbers: Sixty-three percent of consumers prefer buying from companies with a purpose they share, but two out of three consumer goods CMOs say their brand lacks clear purpose and values.
63%
of consumers prefer buying from companies with a shared purpose
2OUT OF3
consumer goods CMOs say their brand lacks clear purpose and values
Large consumer goods companies can get back to growth by creating, acquiring and developing small niche brands with a purpose. Success depends on providing these brands the advantages of a large company—namely scale and resources—while protecting them from the bureaucracy of big-company culture.
Micro-trends and local differences are something to be celebrated in this new environment.
Niche, value-led brands are more than a defensive position against disruptors. They allow consumer goods giants to rethink their relationship with a changing consumer base, one in which trust and transparency are playing an increasing role.
Creating a hybrid portfolio of large and small brands, with operating models that bias for agility, is essential to beating disruptors.
There’s an agility gap to close. Sixty-two percent of digital disruptors say their operating models can respond quickly to changing market conditions. Only 15 percent of today’s industry leaders think the same of their own operating models.
62%
of digital disruptors say their operating models can respond quickly to changing market conditions
15%
of today’s industry leaders think the same of their own operating models
Companies that transform to address the new reality head-on will most likely look at multiple areas of their marketing operating models, infusing Applied Intelligence, reworking their agency ecosystem and becoming more agile across the board.
Moving forward, consumer goods companies will need a hybrid portfolio for growth—a mix of large and small purpose-filled brands with different consumer bases. They can help speed their journey by keeping a few things in mind:
Rethinking the business model is the first step toward success. But simply trying to mimic small brands won’t work. Large consumer goods companies need to find the raison d’être for each brand in their portfolio—and it should shine through in everything they do, from product to promotion.