Across categories, emerging brands are challenging established brands
Young consumers seek brands
that make them feel special
by Katerina Sudit
Managing Partner, Executive Director
One of the largest challenges impacting marketers today is the fundamental commoditization of established brands. Heritage brands are being surpassed by emerging brands, affecting almost every category, from luxury to spirits to auto and more. What consumers want, what they value, and where they choose to spend their dollars have all meaningfully evolved.
So how do brands and marketers respond? First, you have to understand how and why this is happening.
The erosion of “big”
While many major categories are witnessing softening or declines in sales, what’s especially telling is the lower adoption rates of major heritage brands by a younger generation of consumers who are seeking something quite different in terms of the brands they purchase and associate themselves with. For example, you’ve got craft beer stealing dollars away from the main stalwarts, as well as gourmet burger restaurants driving business away from fast food giants.
What once were the most positive associations with big brands—heritage, efficacy, and long-standing trust with customers—have evolved into more negative associations. Now “big” means commoditized, mass-produced, faceless, and to some degree, less trusted. For many consumers, the big brands are now highly interchangeable, all providing the same or at least similar functional benefits and offers. Thus consumers have become a bit promiscuous across their big brand choices.
Today’s social media and commerce climate enables niche brands to capitalize on this consumer sentiment. These niche brands are not handcuffed with the same rigor and protocols for production, distribution, or marketing. They typically enjoy lower production costs, an efficient direct-to-consumer distribution model, and ease of marketing awareness through social media channels—which are effective as a major discovery engine for millennials.
Some larger brands have attempted to buy into the niche segment through dedicated acquisition strategies. But the volume contributions of these smaller offerings won’t replace the eroding share of the core or foundational brands.
The special in the small
The trend toward niche and artisanal brands is not just about the power of “newness.” New has been around forever—think line extensions, formulations, models, etc. Instead, the migration that marketers are seeing is less about chasing the shiny object and more about walking away from “big” brands that are viewed as “not for me.” And this phenomenon is driven by two main consumer factors:
§ The heightened expectations consumers have of brands
§ The values that consumers want to be associated with
Today’s consumers are a time-starved, multi-tasking generation with high expectations for instant gratification. They expect a problem with an airline to be solved immediately through a dialogue on social media. They expect to be able to purchase a brand when and where they want to. They expect brands, in exchange for the broad data exhaust they emit, to understand them at a personal level and cater to their personal needs.
Consumer today don’t just want bigger, smaller, better, faster—they want the intangibles, the things brands never had to give them before. They want to feel heard, they want their lives to be easier, and they want something made just for them.
Most importantly, they want to feel special.
Niche brands feel small-batch, curated, unique, careful, and, importantly, special. These are all qualities consumers feel entitled to—they don’t feel that they need to go for “mass” when they can have “special.”
What brands should do about it
You don’t have to be small to win. Instead, consider what the disruptor brands do that drives success. Their ultimate goal is to create a category of one: special and unique. Brands like Netflix, Uber, Spotify—these are brands that have broken the mould, and have essentially created their own categories based on contemporary principles that map to what consumers want and what they expect. And that is:
1. Humanization Open-source your brand. Open a dialogue with your consumers, in social media and in person. Invite them to give their thoughts, wants, and wishes to you, and have your brand respond with humanity and personality. Consumers want to be heard, and brands need to allow consumers to help shape who they are and who they become.
2. Frictionless experience Find the friction points consumers experience in the category and solve them. If consumers hate the wait—eliminate the line. If consumers want content on demand—syndicate your offering. Consider any potential frustration points and build solutions for friction instead of better, faster, smaller. Lastly, ensure you can be found, experienced, and purchased anywhere and everywhere possible—don’t create friction.
3. Personalization Leverage data to understand your consumer at an individual level, and use that understanding to personalize your message and your offering. Consumers have given us all the data breadcrumbs to know their preferences, habits, and purchasing patterns. Follow the breadcrumbs and ensure you serve them the right message, at the right time, in the right moment.
4. Agility Adapt and react to the changing landscape, culture, and consumer sentiment. Don’t fight the tide—instead, find your place in the swell. And like many things, the mechanics of agility can actually be planned. Put a process in place for how your brand can react to and leverage moments in culture.
Value Find your service and purpose for consumers—what can you do for them, not what you sell to them. Embrace a service mentality; help consumers curate, discover, navigate, and balance their lives in a meaningful and impactful way, instead of just serving up your product or offer. In a world of ad blocking and limited attention spans, the brands that earn consumers’ attention are the ones that provide value to their lives.