Disruption Insight | Brands
For decades, two structural barriers protected FMCG leaders: limited distribution because there’s only so much shelf space; and limited airwaves because there are only so many media players. With the rise of e-commerce, anyone can get a product distributed to a consumer much cheaper, easier, and faster than ever before. Because of YouTube and other media channels, anyone can get the word out about a new brand. These technological changes dramatically reduced the marginal cost of distribution and awareness building. Consequently, even if you are the market leader you need to worry about new brands entering the market faster and more frequently. Categories are fragmenting because of these reduced barriers to entry and brands need to build more flexibility into their businesses. Reliance on existing operations and business models can actually be a constraint. In contrast, it’s important to rely on brands, the most non-linear, flexible part of the business. The brands are a shock absorber to the change happening in the category. They create loyalty and time to react.