New competitors cause disruption worldwide
Young and purpose driven, they reshape categories
The BrandZ™ Top 100 Most Valuable Global Brands examined in this report often face fierce competition from brands that do not appear in the ranking because they are too small or not publically traded. Characterized as disruptor or emerging brands, these competitors exert increasing influence worldwide and across categories.
True disruptor brands do not fit neatly in established categories. More typically, a category forms around a disruptor brand as it attracts followers and, inevitably, imitators. Amazon and the evolution of e-commerce is a clear example. Disruptor brands are not necessarily the first movers, but they are the best movers. Fortunately for established brands, disruptors do not appear often.
Emerging brands are a more common phenomenon today. They share many characteristics with disruptor brands, but they do fit into established categories. Emerging brands are relatively young, started during the explosive growth of the internet, and even since the introduction of the iPhone 10 years ago.
Less driven by usual business needs to report quarterly on rising profits and sales, emerging brands typically begin with a different set of priorities, asking: What does the consumer need? How can the brand fill that need without causing harm to individuals or the environment? They attempt to improve the consumer’s life by removing friction.
They are about making money, but they are also about more than making money. Some measure success not by achievement of scale, but by fulfillment of brand purpose. Even with limited distribution, some gain fame and manage to punch above their weight. Like luxury brands, they set market trends and inspire imitation. For example, without selling a lot of cars or making a profit, Tesla demonstrated a future for electric vehicles and surpassed Ford and GM in market value.
Variations on emerging brands are appearing worldwide in categories as diverse as technology and consumer products. In fast-growing markets like China, India, and Indonesia, entrepreneurs have paired marketing expertise and higher quality standards with deep local market knowledge and insight. This combination has enabled them to create products and communication that resonate with authenticity and purpose.
Purpose is fundamental for emerging brands, which often are founder led. And purpose can provide an advantage relative to large established brands. Some established brands may enshrine purpose in a founder’s vision from decades ago, but unless that purpose is refreshed and made relevant, it can sound inauthentic and seem retrofitted onto the business.
In contrast, emerging and disruptor brands generally start with purpose and connect it with a related social issue or trend. They develop relevant products and services that fit into an existing category (or into no category). Uber introduced a different approach for transporting people—or things—from one place to another. The existence of Uber—and brands such as Ola in India, and BlaBlaCar, a Paris-based global carpooling service—persuaded car pioneer brands, like Ford, to experiment with other mobility businesses.
Purpose and passion can sometimes attract a community around the brand. For some brands, community is so basic that it empowers the business model. Waze, the mapping app, relies on its users for crowd sourcing real-time traffic information. Tesla knows who owns its cars, and Tesla owners can connect with each other. Airbnb works because a community of owner and renters interact.
These brands operate nimbly. Snapchat originated as an app for images that disappeared quickly, enabling people to share information and protect privacy. Following its IPO, Snap declared itself a camera company and released its first product, Spectacles (eyeglasses that take photos). To become more agile, some established brands are creating internal investment groups expected to act with greater speed. Some are acquiring their disruptive competitors to preempt disruption.
Emerging and disruptor brands usually have a positive attitude and a high tolerance for risk. They accept failure as a learning experience rather than something to minimize in a quarterly earnings report. The brands also are talent magnets. Funds sometimes are available through crowd sourcing. And many funders want to be part of the startup scene.
The brands rely on data and, if they are not actually in the technology category, they often are technology-enabled, as exemplified by Blue Apron, the online service that changed the way people think about shopping and meal preparation. The brand curates menus and delivers pre-portioned ingredients, a subscription model Birchbox for the palate.
These characteristics describe a wide assortment of brands that are in various stages in their lifecycle. Some have already achieved great scale and are brands that could soon appear in the BrandZ™ Global Top 100. Other less well-known brands still lack significant scale but have abundant ambition. As these brands achieve notoriety, building a brand becomes important for communicating the company’s differentiating advantages and building loyalty.
A global phenomenon
In a global economy, disruption can come from anywhere. Increasingly, established brands in Asia are becoming emerging brands in the West. Huawei, ranked No. 6 in the 2017 BrandZÔ Top 100 Most Valuable Chinese Brands, is well known outside of China as a business-to-business telecommunications technology provider. However, it is just becoming well known as a maker of smartphones to rival those of Apple and Samsung. Chinese smartphone brands Xiaomi and Oppo are also gaining attention outside of China.
Similarly, Indian smartphone brands like Micromax and Lava, or the digital payment system Paytm, potentially can increase their presence internationally with a competitive value proposition. India’s Patanjali, established just over a decade ago, markets a wide range of fast-moving consumer goods that emphasize their ayurvedic heritage and have effectively challenged major multinational consumer products brands in India. Brands like these can emerge in the West.
The Indonesian cosmetic brand Wardāh specializes in products with a holistic view of inner and outer beauty. Asian brands with this notion of beauty are increasingly appearing on Western cosmetics shelves. The Chinese traditional medicine brand Tong Ren Tang was established in 1669, during the early years of the Qing Dynasty, which hardly defines it as emerging. However, the brand is aggressively opening stores outside of China.
Emerging and disruptor brands will continue to appear across categories. Some will be unfamiliar, others not. Twenty years after its IPO, Amazon is an enormous company with a market capitalization of over $460 billion. Having disrupted traditional retail with e-commerce, business-to-business technology with cloud storage, and logistics with its own delivery business, Amazon now is aiming to disrupt fast-moving consumer goods with automatic replenishment, and grocery retail by eliminating its key pain point, checkout.
of Emerging Brands
Brands that are truly original and disruptive-that cause a business model paradigm shift-are understandably rare. Such brands do not fit into traditional product categories. Instead, when their success inspires imitators, categories form around them. Examples of disruptor brands include: Amazon, Google, and Facebook. Increasingly brands are emerging that meet most of the defining characteristics of disruptor brands and have tremendous impact on the categories in which they compete. Among the characteristics defining emerging brands are:
1. They often are founder led and purpose driven.
2. They attempt to improve the consumer’s life by removing friction.
3. They may not be the first mover, but they usually are the best mover.
4. They are usually about technology, but not always. Many are technology-enabled.
5. They are about making a profit, but not only about making a profit.
6. They measure success by the scale they build, but also by the difference they make.
7. They attract communities; community is almost part of the business model.
8. They put customer experience first.
9. They punch above their weight.
10. They are magnets for talent.