March 9, 2017 / Point of View
Five Lessons to Learn From Small CPG Brands
We used to live in a world where bigger was better. Big brands, big budgets, big companies and big campaigns dominated the consumer packaged goods (CPG) landscape, making it impossible for emerging brands to challenge these giants.
And then small happened. Driven by lower barriers to market entry, media and retail fragmentation, and direct-to-consumer models, emerging brands came to disrupt nearly every category. As consumers’ tastes evolved and small companies were able to adapt, product proliferation skyrocketed and the CPG landscape was changed forever.
Today, big doesn’t beat small anymore. Over the past four years, small and mid-sized brands have taken 2.7 share points from the big players, shifting away more than $18 billion, according to IRI and Boston Consulting Group. Furthermore, Catalina reports that 90 percent of the top CPG brands lost market share within their category. While there has never been a better time to start a business for a small CPG company, established brands are struggling to break through.
So what are these emerging brands doing differently, and what can marketers learn from their success? Here are five lessons you can apply to your brand, big or small, to navigate this era of smallism.
Let true utility do the talking
In this new era of marketing, it’s not the brand that screams the loudest - it’s the brand that offers something genuinely useful for consumers and grabs their attention. People are more attracted by the utility of the product rather than by conceptual messages, and branding is shifting from creating imaginary worlds to making real life better. Small brands know this well. They are meticulously fine-tuning their products’ quality, design and customer experience to meet their audience needs. They are finding unmet needs in their categories and investing in product development and innovation to deliver solutions better than anyone else.
Providing real utility to your consumers and solving actual problems in new and inventive ways will help you cut through the clutter. Whether it's a better brand experience, a smart twist on your product or improved packaging, pinpoint a space where you can deliver real value and then show it to the world. That, not words, will win a spot on consumers’ shopping lists.
Go back to your origins
From inspiring stories about a company’s founders to the product’s provenance, emerging brands are building an authentic connection with consumers. These stories increasingly have greater influence on purchase intent, as consumers want to learn more about the source of the products they consume. Real people and their voices are becoming the interface between consumers and products.
Dang Foods, a company that produces whole-food based snacks, is a great example. From its 100 percent Thai coconut ingredients to Mama Dang’s one-of-a-kind recipes to the founder’s story about naming the company after his mom, Dang understands that its company’s origin is what makes its brand unique.
For small businesses, this sounds easy. They are the ones who built the brand, and they live and breathe it every day. As a business gets bigger, the story can get lost. Going back to your own version of the Mama Dang story will help you gain trust and meaning. You might discover that many of the answers you’re looking for were right there in your beginnings.
Build real partnerships with influencers
Much of the credit for smaller brands' ability to break through goes to the power of influencers and digital communities. But influencer marketing is not new or exclusive to big companies. In fact, 60 percent of brands used influencer marketing in 2016, according to the content marketing platform Chute. But for small brands, it’s not about using influencers. It’s about partnering with them in ways that benefit both sides. This means less emphasis on follower count, paid posts or impressions, and more focus on how they can work together to achieve a mutual goal.
Forging a symbiotic relationship with influencers (and even other brands) who genuinely connect with your products will help you win consumer attention in the economy of trust. Remember, the key is mutual benefit and collaboration.
Be closer to your consumer
Small brands are inherently closer to their customers; oftentimes they are their consumer, and that can create all sorts of advantages. They are responding more quickly and nimbly to product trends by discovering insights in near real time. In fact, every major trend in the food industry in the past year was initially untapped by a smaller company.
Take RX, a whole-food protein bar developed by two CrossFit enthusiasts who crafted their entire brand around their customers. Being so close to the fitness community and understanding their real needs firsthand helped them develop a unique product and message that resonated extremely well with this audience. Today, their bars are sold in 20,000 retail stores, gyms and fitness studios, and they keep ahead of trends by staying tightly connected to their consumers.
Immersing into your consumers’ lifestyles, connecting with them in their natural environments and listening directly to their demands and recommendations can help you spot opportunities you were unaware of, making it easier for your brand to discover untapped demand.
Focus on the essential
Start-up brands have to innovate, operate and grow with fewer resources. This situation teaches them an essential lesson: determine what’s vital and authentic for your brand, and eliminate everything else. This is what brand essentialism is all about. It means be single-minded and focused. Define your essence with precision, and follow it with clarity and simplicity. Be a brand for someone, not everyone. Focus on what makes you unique and do it better than anyone else.
Being bolder using fewer actions will help you truly differentiate your brand and allow your consumers to get a clearer idea of what you stand for. Remember, you can’t do it all, so try to do less, but better.
Individually, none of these small brands present an existential threat to the top CPG giants – at least not today. But collectively, they’ve started a movement that has the entire industry trembling. The preference for small and new will only increase in the years to come, and consumer tastes will continue to shift, favoring the brands that can quickly adapt.
Just remember, you don’t have to be a start-up to be disruptive, and you don’t have to be small to be nimble. Sometimes embracing small changes can help you compete big.
# # #
Maria Pazos is an associate director of strategy at ad agency Colle McVoy. Originally from Colombia, Pazos has more than a decade of experience in developing brand strategy for some of the world’s most well-known brands, including Nike, Coca-Cola, and Energizer. As a strategist with global advertising and marketing experience, she advises top marketers in brand strategy from positioning and creative to communications and media planning.