Commentary

What CPG Giants Can Learn From Burgeoning Start-up Brands

Over the past decade the CPG landscape has evolved from being dominated by a few leading power houses to being rich and varied, ripe with start-up brands that are increasingly gaining market share and becoming beloved household names. But even as smaller brands grow toward a more mass market, the way they behave continues to set them apart from the longstanding CPG power brands they come to eventually compete against, and it's helping them win when it comes to consumer loyalty. So what is it that they do differently?

First and foremost, they are lifestyle brands from the onset. The people who created the brand are the target audience — passionate and focused on resolving a real pain point. They aren’t repackaging themselves to have lifestyle appeal or shifting their brand messaging to appeal to a psychographic rather than a demographic. Instead they have emotional appeal from their onset and as a result their audience remains connected with them even as they grow. In addition, their marketing remains genuine, grassroots and personal. Even as national distribution kicks in, their marketing efforts remain “personal.” Take beverage brand BAI, for example. They rely on their website and social channels to talk to their customers, inviting them to various events and in-store sampling. 

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Second, they sell differently than the CPG giants. They focus not on getting into the likes of Walmart but on convenience stores and start-up friendly retailers like Whole Foods, where they can tell their local story, offer entry exclusives if they want to and be hyper targeted. This targeted approach has big impact. It's personal and, therefore, naturally generates loyalty and conversation from consumers who feel that they have found the brand for them. Siggi’s yogurt is a perfect example of this. They started small and local and with the help of Whole Foods they are now a national success. 

These smaller brands also aren't subject to the demands of big-chain retailers who oftentimes make deals contingent upon packaging changes, or marketing tactics they see as beneficial to their bottom line, but that don't necessarily jive with the brand's own identity. If you’re not willing to play ball and potentially change who you are, you may risk losing those valuable three inches of shelf space. As a result, many start-ups reject this pressure and instead maintain autonomy, spending their precious ad budgets in the way they want to and remaining true to who they are and how they want be represented. 

Finally, start-ups have the mentality it takes to thrive in today's market. Simply, it’s an attitude that allows them to fail fast and fail often. They are innovative, agile, and, through their deep relationships with their customers, they can take in feedback and react to it without being scared. As a result, they can break away from category norms, create cheaper versions of their product and put it in the market quickly, try limited runs, novel flavors, be part of the fad rather than miss it completely, and more. This plays right into the hands of consumer tastes and keeps them hyper relevant. 

So what can the CPG giants learn from all of this? It's time to change from within — and I’m not talking about huge organizational change. It's about creating agile teams with start-up mentalities to make a difference in key areas where it will have the most impact. Get these teams to go out there and see what’s new, what’s happening in culture and how the industry and categories are evolving, report back and share with the teams. Then start testing and learning, get these products into the digital market and gather the feedback. The key really has to be a willingness to think every day, “What would it look like if we started over and how would we behave?”

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