Large-scale global brands – those which are well placed within the $1.2 trillion consumer goods industry – have found themselves subject to a competitive alarm clock in some unlikely places: namely, Indonesia, India, Brazil, and China. The top brass of many well-established brands have heard the ringing of the alarm bells for some time… and over the past five years, a significant amount of ground has been lost to smaller, local, home-grown brands.
Responding effectively to this change in trends has proven difficult, but hope is far from lost.
Emerging markets, especially in Asia and the Middle East, have long been strongholds for CPG (consumer packaged goods) companies such as Unilever, Nestle, Colgate and their peers, which are backed up by seriously influential companies. In China especially, this market has seen almost 10% growth across the past decade, and in Brazil and India, around 5% growth has been de riguer. However, many big ‘power brands’ have been losing market share to small and local rivals.
China and Indonesia have been especially hard hit – the top 3 big consumer goods brands have dropped over 5% of their market share – a surprising fact, seeing as the Chinese and Indonesian markets have a fast-growing middle class. However, once factors such as double digital CPG growth, fragmented mass media, and complex ‘last mile’ delivery of products (a result of complex infrastructure) are taken into consideration; the picture starts to become a little clearer.
In these markets, there is still plenty of power in smaller brands. Consider, for example, that in 2017, 75% of the top three brands across most of the categories in India, China, and Indonesia were new, small, or local businesses. Good examples would be Chando skincare in China and Vini deodorant in India; both entered the top 10 in their respective markets within just five years of launch.
Big, multinational consumer brands need to examine and understand this kind of growth to successfully compete on the new world stage, and here at Haus of Hendricks, we’ve got the branding strategy you need to get up to speed.
How Smaller Brands Have Gained the Competitive Edge
Smaller consumer brands are better placed to form hyper-targeted products as well as have the contacts and placement to form positive infrastructural links, to better distribute their products locally. International supply chains, formed to produce and move large volumes of products with a broad and global appeal, appear highly inflexible by comparison. Smaller brands are casting out narrow and precise research nets, and benefiting from real-time and direct insights into niche consumer groups. This unfiltered and swiftly-gained information is then used to refine hyper-relevant products… and again, big R&D processes appear slumbering in comparison.
What’s more, smaller companies have an advantage when it comes to consumer engagement – especially with regards to social media. Free from the need for a ‘stamp of quality’ granted by a global company backing, they rely on the consumers to build their brand trust in real time, making use of the time-honoured effect of word-of-mouth.
In order to compete in this new environment, international brands need to consider ways to become more agile and pliable, and develop ways to build trusting, personal relationships within smaller consumer groups. They need to metamorphose into what’s known as ‘a living business’; smart enterprises capable of making use of data to deeply comprehend, anticipate, and evolve to meet the needs of smaller segments of their consumer base. What’s more, they need to adapt alongside their consumers, to grow as they grow, and to use branding strategies that put customer needs and expectations at their heart.
That’s where Haus of Hendricks comes into play. We can help you hone your branding or rebrand completely to target these changing customer bases. We’ve got the skills and experience your brand needs for ongoing success. For now, however, we’ve pinpointed three distinct methods by which large or medium-sized international brands can better compete with small, home-grown, and hyper-focused companies in emerging markets.
1) Feature local brands in your product mix and embrace the increased complexity they provide.
Despite the fact that most larger incumbents owe their scale to big brands, in order to gain success in the future, they’d do well to piece together hybrid portfolios which feature local brands alongside global ones. Crucially, although such brands may well remain smaller than their bigger counterparts, current trends suggest that, in the end, they will contribute significantly to overall company growth. Embracing operational complexity, and recognising its importance in having wider, diverse offerings, is set to become key.
In order to support newly complex portfolios, large incumbents need to set about putting global assets at the service of local and smaller brands. One way to do this is via a modular technique, mixing together assets as required in order to serve a new brand.
2) Adapt and adjust expectations regarding failure and brand life cycles.
One of the key mantras for large global companies has always been to build brand equity for long term goals… and this should not come as any surprise, when one considered the vast up-front investments that go into global brands, and the decades-long pay-off that’s anticipated from them.
This has bred a culture of risk avoidance, often to the extent that many large companies haven’t even considered launching a new brand in many years.
Directly contrast this with small, local, home-grown companies: they get to the market swiftly, they adapt to direct consumer feedback, and they invest in line with generated revenue. To compete against smaller brands, big, well-established companies on the global stage must accommodate more experimental operations which tolerate movement and
change. By doing so, it is unquestionable that some realignment must take place; brand failure rates will most likely rise, but by launching brands more open-mindedly, the brands can be profitable in shorter bursts, with the flexibility for long-term growth once established and embraced by consumers.
3) Place bright ideas at the centre once more.
Getting close to local consumers and getting empowered teams on the ground generating new and sparky ideas is key. Scale can be successfully utilised by leveraging access to data in service of the ideas that fly, and rapid testing can be facilitated to hit the market running. Most (big) companies had plenty of experience of this in the early days… it’s just these marketing muscles most likely haven’t been exercised for some time.
Often, this can happen through M&A. There have been many examples of big companies acquiring smaller ones, along with their brand portfolios and assorted talents, in recent years. However, acquiring small brands is just one advantage available to large companies. Facilitating and encouraging the flow of new ideas via internal, existing systems, and via relevant external connections remains absolutely critical for success in emerging markets.
It can also just as effectively happen through intelligent and creative branding strategy, and utilising branding which brings the consumer experience closer to what you can offer. This is about building relationships, establishing trust, and thinking outside the box to hit the high notes of consumer loyalty. It is, in essence, what Haus of Hendricks does best.
The good news? Incumbent global companies still have the capacity for success in emerging markets, even when the landscape favours local brands. It just requires nimbleness, agility, the willingness to connect with the consumer base, and an ability to engage with what those consumers need. At the end of the day, the winners will be those brands which adapt and evolve with speed, conviction, and an open mind.
- How long has it been since you’ve looked at your branding strategy, and is it in serious need of an update?
- Are you able to sit down with experienced branding experts, and discuss your needs and hopes for breaking new markets?
- Are your strategies set up for long-term implementation, and are you able to divert funds into strategy and M&A to make this happen effectively?
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Haus of Hendricks brings luxury branding to multidisciplinary projects, enriching businesses with design solutions that radiate success. In the pursuit of visual engagement, we channel the poetic, foster innovation, and throw open the doors of possibility.
With results-driven creativity and artful design, Haus of Hendricks curates high-end branding, marketing and organises events that inspire great change. From conception to completion, we forge narratives that bring customers to your door, and provide graphic design, social content, and luxury packaging that sparks the imagination and cultivates success.
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