What Traditional CPG Companies Can Learn from Disruptors
This post was originally created by Spredfast before Spredfast and Lithium merged and became Khoros.
A dramatic shift in business has been underway for over a decade as the digital era has ushered in a new playing field for companies in every industry. Some household names have become a distant memory as disruptor brands like Airbnb and Netflix shakeup conventional business models—and consumer expectations. The CPG industry is no exception.
“Consumer packaged goods are big business — valued at more than $2 trillion — with much of that market share dominated by CPG powerhouses like Unilever, P&G and Nestlé,” notes TechCrunch. And this big business has been coming head-to-head with a rise of startups who are rewriting the rulebook of how to sell goods—from healthy snacks to cosmetics to razors and more—with the intention of knocking market leaders from the throne. Longstanding, established brands can not only survive this new environment, but grow stronger by adapting to three strategies challenger brands have nailed from the start.
Be a market maker
Disruptive innovation—when an upstart product or service eventually displaces established competitors—is more than marketing lingo. It’s the guiding principle of this new breed of company taking over. And it should be the ultimate aspiration for ambitious leaders: to identify a problem that is so ingrained in consumers' minds that they don’t expect a solution. When a company solves a problem at that level, it creates a new perspective of what’s possible, and how things should be.
Take, for example, the direct-to-consumer subscription service embodied by Dollar Shave Club, which cut out drugstores and changed consumers’ very definition of convenience. DSC’s approach undermined industry champs, and it’s 2016 acquisition by CPG giant Unilever proved the value of the model. It’s no surprise to see more CPG startups, like Harry’s, NatureBox, and more, follow this path, offering straight-to-your-door delivery, recurring purchasing options, and, often, a brand story about the value of bypassing the middleman. This type of story casts startups as the trusted insider, bringing transparency to consumers that was previously unavailable. “Disruptive marketing shakes things up by changing customer perceptions about not just the company—but the industry as a whole. And here’s the important part. Because they’ve changed our perception entirely, we come to associate new, better and more positive feelings with the company and brand that started it.”
Embrace the digital customer experience
Not everyone can be a market maker, but every company can embrace the digital customer experience. Companies like Casper demonstrate that even actions that seem impossible to replicate online, like shopping for a mattress and all the physical comfort tests that process usually entails, can be taken over by an e-commerce model. Casper’s success, fueled by expert content marketing and social care strategies that go above and beyond, proves that the digital path is open for products that once required physical stores. CPG brands should take this lesson to heart, and consider what products could be given a new life with a direct-to-consumer approach.
No matter if your business model is direct-to-consumer, your marketing must be. As traditional marketing tactics are breaking down, CPG companies must shift their focus from goods to consumers. Broadcasting one message to the masses is no longer a viable option. In our digital age, brand communications don’t have a chance at making an impact if they aren’t telling a story tailored to your audience. Creating these types of ads take work. For every campaign, marketers must develop targeted strategies to reach the people they care about, with a message that resonates. But how can you know what messages will resonate if you don’t have insight into what the people buying, using, and talking about your products are saying? This is the problem giant CPG companies that sell to retailers like Target and Walmart, rather than to consumers directly, face.
No matter if your business model is direct-to-consumer:, your marketing must be.
Use social to go direct-to-consumer
The solution to not having direct access to your consumers? Social listening. Social media is the biggest focus group in history, and the only focus group that offers real-time results and nearly unlimited amounts of information. With the massive set of unique consumer data that social offers, marketers can surface strategy-informing insights on everything from purchasing patterns, consumer sentiment, potential influencers, and product feedback—not to mention, opportunities to engage and solve problems for your customers.
Social allows you to hone in on and understand your target audiences, and it also allows you to capture their attention. All brands can learn a lot from looking to the social-first marketing strategy of Quip, an electric toothbrush subscription service described by Fast Company as a “Birchbox for your mouth.” Social offers invaluable entry points into brand offerings, and allows marketers to connect with consumers at every level of engagement, from awareness to consideration to purchase and into advocacy.
I first came across Quip while scrolling on Instagram, and was struck by how well an ad for a toothbrush could blend into my feed. This is no accident. Quip’s sleek, minimal design contributes to its natural Instagram appeal, but the style and composition of the photography is specific to the shared aesthetic of a certain type of account that thrives on the network, complete with flat lays, #shelfies, and a prerequisite amount of millennial pink. The team behind Quip understands that successful marketing requires taking the network into account, not just the ad. I’m not the only one that noticed Quip popping up in my feed: A nod to discovering the startup on social appears in multiple press articles, including the most recent “I Tried That Toothbrush You See Everywhere Online, and I'm Never Using Anything Else Again,” in Pop Sugar.
Consumers have more options than ever when it comes to buying products of all sort. And that means now’s the time to tip the scales back in your favor by emulating the strategies that have rocketed challenger brands to the top.