Why Legacy Brands are Losing Market Share to Emerging Brands in CPG
To start, let’s look back at the retail landscape 25 years ago…
Brands focused primarily on “push” marketing in the various brick and mortar retail channels. As a refresher, “push” marketing is defined as a promotional strategy in which a brand attempts to get their message in front of their potential customers without them having a desire or interest to buy the product or learn more about it. This was an optimal approach because there were likely less than five brands that were competing for the whole share of the market. A brand could creatively “push” customers into their offering based primarily on price levels. The brand didn’t know much about who actually bought their product or why they bought it outside of promotional cycles. The harder the push, the more the brands seemed to grow through scale.
Fast forward to 2018…
Those same brick and mortar stores have 30+ brands competing for the share of that product category (likely over 100+ if you shop online). There is a now a paradox of choice that is creating anxiety with customers. The barriers of entry in creating consumer product businesses are low with the Internet and social media marketing. This has enabled the ultimate competitive landscape. So, how do consumers decide who gets their share of their budget? Instead of one out of three to five of the total brands push marketing during that week, you have 5–10 pushing at the store-level (probably all of them online in various iterations). That is causing paralysis analysis if the customer is activating with the brand at the time of purchase. They need to find their customers before this moment.
That is why brands in 2018 can’t just be about a good product! Product is no longer king like it used to be. A good product is simply the entry fee for competing in the market. A new brand today focuses much of their attention on the brand’s story and creating an ultimate customer persona that can be target marketed against with today’s social advertising tools. This is a complete paradigm shift from when legacy brands were created 10, 20, 30+ years ago. This enables the new emerging brand to activate with the right customers before they get to the point of purchase. That allows the consumer to make a more educated decision and cut through the noise.
Today’s emerging brands actually KNOW THEIR CUSTOMERS! Let’s let that sink in big brands…
Emerging brands today speak directly to their customers. They don’t rely on brick and mortar store signage and associates to play telephone game with their customers. They actually have the direct commerce data to understand their customers. Emerging brands also focus on gaining feedback loops from social media and marketplaces like Amazon. They understand that this type of interaction is paramount because the market tells you if you will be successful, you no longer get to dictate that from PUSHING!
