Who Has the Power to Disrupt?
Technology is fuelling the rate of disruption and providing the basis of new ways of engaging consumers. Businesses can disrupt markets by reaching consumers in new ways and reinventing category engagement around service and convenience.
Alternative business models enable a greater number of consumers to access the category and solve problems for consumers through new routes to market. Even previously staid markets, such as those for mattresses or towels, are not immune.
It is far easier to launch a new brand today with limited capital thanks to shifting consumer behaviour, low barriers to market entry and a plethora of digital connection mediums. Insurgent brands find success by focusing on new consumer problems or needs established companies aren’t solving today.
A foundation from limited capital drives start-ups to think creatively and focus on what they can control, which is a simplified solution, packaging and brand values.
Without large scale marketing budgets, many focus on creating a fanbase or community of consumers. They often focus on one product and a niche consumer segment and build their business from there.
Homegrown brands trade on local knowledge. Because of this, one of their chief strengths is their ability to connect with consumers—empathy is at the centre of their success. They know and understand every nuance of their consumers, as they share their lives in a way multi-nationals cannot.
When combined with a high degree of customer service, this is even more powerful. Intimacy with consumers, alongside close relationships with partners and suppliers, enables local brands to customise their products to meet consumers’ needs through innovations in packaging, materials or financing.
Like insurgents, local companies often focus on a specific niche segment. Price can also be a differentiator, especially in emerging markets. Local brands often compete at a lower price point, offering value to the consumer. They achieve this by lower overheads and stronger networks and connections in the market. Notwithstanding this ability to add value, local brands today increasingly compete at all price-points.
Local brands can serve traditional retail better, because they may be better positioned to serve a large network of small stores. By working with local sources, they are also able to more genuinely sell authenticity to consumers.
Incumbents are the large multi-nationals which dominate consumer categories. Whilst they may not be as nimble as insurgents, they have market share, resources and a known brand name on their side.
In the battle to win the hearts and minds of consumers, incumbents are under increasing pressure. In a fast-moving environment, many incumbents have been caught off-guard, enabling even renovation and innovation to be “disruptive” to their business.
At the same time, incumbents have significant strengths from established equity, scale and partnerships to decades of industry knowledge and a strong cross-market view. Yet it is often those strengths that disarm incumbents and create inroads for insurgent or local brands. The complexity of day to day operations or over-confidence drifts the business away from recognising or reacting to the new realities of consumer behaviour.
To understand more about how to reinvent consumer markets download our white paper How to Be a Disruptive Brand: Reinventing Consumers Market.