Brand new order
In today’s saturated market, it takes something special to stand out from the crowd. Here’s how.
These are challenging times for consumer products companies as they strive to stay grounded in an increasingly complex world characterized by rapid and accelerating change.
What’s behind this revolution? Largely, it is plugged-in consumers who, bristling with smartphones, tablets and other mobile gadgets, have become a powerfully influential and independent-minded shopping force.
Mobile technology has turned the old order on its head: what worked last year, or even last month, may not work now.
For retailers and consumer products manufacturers, markets that have always been reliable revenue generators are suddenly looking vulnerable. Disruptive solutions have become the new norm.
Mobile is changing the pathway to purchase.
The extent and implications of this “brand new order” were made clear in a survey of 285 senior consumer products executives
worldwide by Ernst & Young.
In the report, Disrupt or be disrupted, three-quarters of respondents said they needed to make significant changes just to maintain historic margins, while two-thirds felt under pressure to rethink their operating models.
“That’s a significant amount of change,” says Patricia Novosel, Americas Consumer Products Leader at Ernst & Young.
“With finite resources to allocate, companies must make difficult choices and trade- offs over where they should focus their attention and capital. These decisions are extremely complex and business leaders must increasingly rely on data and analytics to give them the support they need and the confidence to make choices under extreme uncertainty.”
Howard Martin, Global Consumer Products Leader at Ernst & Young, agrees. “This highly disruptive environment, which we call the ‘brand new order,’ presents companies with huge opportunity but also heightened risks.”
Challenge every assumption you make.
Jeff Davis, President and CEO of Orabrush, says all the data points toward social and mobile as the two areas where businesses need to make sure they have a strategy, because that’s where shoppers are heading in increasing numbers.
His own response to this brand new order is so disruptive that he has basically turned traditional marketing upside down.
Orabrush, a tongue-cleaning device that fights bad breath, is based upon a social media e-commerce platform that uses
YouTube advertising to create awareness and drive sales.
“We call it the reverse marketing model,” Davis says. “We create online awareness first — creating demand on a global level through social media advertising — and then distribution second.”
Davis says Orabrush recently reached 50 million views of its YouTube channel-based “cure bad breath” video, and sales have topped 2.5 million in 100 countries. All this happened in 18 months, powered by the 20-person company based in Salt Lake City.
Laura Becker, a 22-year veteran of Procter & Gamble (P&G), where she is General Manager of Global Business Development, says her company is actively responding to the rapidly changing
consumer products landscape.
One strategy for remaining nimble in the race to market is to partner with outside companies, a practice Becker says is behind such P&G success stories as Swiffer, Febreze and the Glad joint venture with rival company Clorox.
“That’s one of the ways we’re trying to get the speed and agility in the current market environment: recognizing that, as big as we are, we won’t think of everything ourselves,” she says.
In addition, Becker says P&G has to get back to big innovations.
“We want more of the Tide Pods [small packets of concentrated detergent] — the disruptive innovation that really changes a category [or] creates a new category.”
The company is also tapping into the critical role that mobile media plays in the battle for consumer awareness. “It’s changing the pathway to purchase,” she says.
Sometimes sheer quantity is enough to grab consumers’ attention.
Brazil-based Chilli Beans designs, manufactures and retails designer sunglasses and watches, with hundreds of outlets in Latin America, the US, Europe and elsewhere. Not bad for a company that began business out of a kiosk in São Paulo in 1997.
For Gustavo Bernhoeft, CEO of Chilli Beans USA, the answer to today’s fastchanging, sometimes fickle consumer products market is a unique business model that includes spoiling customers with a phenomenal range of merchandise.
“We release 40 new styles of sunglasses every week to all 500 stores,” says Bernhoeft, who also dazzles customers with ten new watch styles and five new prescription frames each week.
Another strategy is to downsize. Billy Cyr, President and CEO of Sunny Delight Beverages, believes his company has benefited from a changing landscape that has forced some big players to shed less successful, peripheral brands.
“I think of us being in the rehab business,” says Cyr, who
describes Sunny Delight as a “castoff” from P&G. In 2007, two years after the spin-off of Sunny Delight, Cyr’s company acquired the Fruit2O and Veryfine brands from Kraft.
“We are the beneficiaries,” he says. “The brands have in
essence fled the big companies for places where they get more focus, more attention, and as a result do better.”
His advice to consumer products companies trying to adjust to the brand new order is to forget the way things were done in the past, and instead question everything:
“Challenging every assumption you make is critical to success.”