Iconic brands are finding themselves in a position they haven’t been in for decades. They’re becoming followers. This piece from Axios looks at how brands like Jell-O, Kraft Mac & Cheese, Oscar Mayer, CoverGirl and others find themselves under assault from upstart competitors that are more in-tune with consumer desires (e.g., by introducing plant-based ingredients), launching with updated product designs and doing business outside of traditional distribution channels.
The trends are concerning to any established brand. Upstarts have captured “31% of revenue share growth within the last four years.”
This is the new landscape brands in every category are facing or will soon be. CPG brands appear to be affected and suffering the most, but no industry is safe. Each is up for grabs.
Industry Dynamics That Lead to Instability
Barriers to entry are down across the board. Thanks to media fragmentation and shifting consumer media behaviors, upstart brands can reach consumers just as effectively as the established ones with big media budgets. They start by reaching a targeted set of consumers and build from there, which plays into changing dynamics of consumer buying power.
Consumers have more information than ever, which means their preferences are being affected by countless inputs. This pervasiveness of information has created a consumer marketplace where universal preferences are on the decline, and are being replaced with customized, personalized preferences. Consumers are empowered to choose the product that’s just right for them because they can.
More Fragmentation or the Return of Consolidation?
So what’s a brand to do? Will established, iconic brands be forced to become smaller players? Can upstarts become anything more than niche brands? Is the future of business one of fragmentation or will power be consolidated in the hands of a few brands once again?
What’s a Brand to Do?
Whether your brand is part of the establishment that is under assault or an upstart working to dominate an industry one niche at a time, you have to wonder what it’s going to take to survive. It seems a tangible benefits argument to consumers is losing its luster. There is so much choice in the marketplace that categories are becoming less and less differentiated when it comes to tangible benefits.
The biggest opportunity is in the intangibles. Rethinking how businesses communicate and operate is something upstarts have done far better than most of the world’s established brands. They’ve communicated a larger vision and purpose to their customers and have made that vision and purpose part of their businesses, and when all other tangible benefits are equal, those intangible ones hold the power to sway.
Established brands have relied too much on their products alone to maintain their leadership positions, but with differentiation on the decline and choice on the rise, brands, not products, will win the day.