Feature

Big brands strike back

In the second instalment of this two-part series, David Taylor discusses what big brands can do to fight against the insurgents.

Big brands strike back

In a previous column, we showed how the threat to big brands of smaller, fast-growing "insurgent brands" varies by category and geography, with the biggest risk in consumer goods. We also highlighted the drivers of small brand growth as product quality and naturalness, backed up by a more agile and responsive operating model.

In addition, we suggested that forecasts of big brand decline are overly pessimistic. Big brands can survive and thrive as long as they revitalise, according to 66% of the marketing directors we surveyed. In this second column, we propose how big brands are fighting back, covering both brand strategy and operating model.

Relentlessly renovate the core

First and most fundamentally, big brands need to sharpen their positioning and use this to inspire and guide a revitalised mix. They need to renovate the core to respond to new needs in order to maintain and build the "trust advantage" that should come from being a large, well-known brand. Ben & Jerry’s, for example, has expanded its range to respond to new needs, including the launch of a dairy-free version. PG Tips, meanwhile, has moved into the herbal teas category and sharpened its visual identity to enhance impact.

According to our new research, Ben & Jerry’s and PG Tips are more trusted than Halo Top and Pukka to deliver product quality in their respective categories, reflecting the work done on revitalising their mixes. This trust advantage includes millennials, despite common claims that they always prefer smaller brands.

In contrast, established peanut butter brand Sun-Pat and popcorn company Butterkist have much weaker trust scores compared with the insurgents (Propercorn and Whole Earth), especially among millennials, with the smaller brands also catching up in sales terms. This weaker position seems to reflect less effective renovation: artificial ingredients, more sugar and packaging that looks less natural in comparison with insurgent competitors.

Reignite a passion for insight

To help inspire a relentless programme of renovation, big brands need to boost insight capability to keep in touch with evolving consumer needs. This is especially true in consumer goods, where many companies have followed the cost-cutting model of 3G Capital (buyer of Heinz, Kraft and SABMiller). Marketing leaders need to refocus on being the champion of the consumer and creating "demand-led growth" the way that successful small brands do. And this means getting close to real-life consumers, not just mining mountains of data. "Get out and meet people; go to every trade show, every sampling event," Steve Kearns, managing director at Cawston Press, recommends. "You don’t get research like it."

Be an ‘agile giant’

In terms of operating model, big brands need to above all be more agile – a real challenge given the high-volume manufacturing, heavy structures and onerous reporting needs. Practical solutions from our research include small-scale tests with retail partners to get rapid, real-life learning, using third-party sourcing to experiment with smaller-volume products and weekly team check-ins to speed up decision-making.

Unilever shows how big brands can be responsive to local opportunities and leverage global scale. Global directors now have more control over local delivery of the global portfolio strategy, blending high-quality global mixes (eg Magnum) with strong local brands. They can also recommend acquisition of smaller brands to fill portfolio gaps, such as the super-premium US gelato brand Talenti. This approach, along with offloading the declining spreads business, has helped Unilever deliver industry-leading total shareholder returns of around 60% over three years.

Leverage scale: mental and physical availability

Big brands must re-embrace the benefits of bigness. "Size should be nothing to be afraid of," Nestlé chief executive Mark Schneider observes. "In fact, size gives you a whole lot of good things." First, this means driving superior reach to create mental availability. A key opportunity is to blend digital/social and conventional media, as many insurgents do: Dollar Shave Club’s viral YouTube film received a lot of press coverage, but the brand also invested in TV advertising.

With imagination and focus, big brands can create distinctive experiences at scale that small insurgents can only dream of. Nike has successfully fought off insurgents such as Under Armour with a "brand ecosystem" including innovative products, live events such as Run London, flagship retail stores, ecommerce and mobile apps.

Big brands must also leverage superior physical availability. This means maximising share in the fast-growing ecommerce channel. For most, this means partnering online retail specialists such as Amazon. For example, Procter & Gamble is an early adopter of Amazon initiatives including the Dash reordering buttons and it bought 1% of UK online grocery store Ocado to learn about ecommerce.

Big brands should also rebuild physical distribution that remains key for reach (half of US consumers never buy online, for example). Small brands often enjoy more than their fair share of shelf space as retailers like their contemporary, authentic, premium-priced propositions and personal touch. So big brands need to win back the shelf space they merit by rapidly renovating the core, including on naturalness and health. Superior retail analytics can also help big brands by optimising pack/price architecture by channel, for example.

In conclusion, big brands are not doomed to die, but they must revitalise to survive and thrive. Here are the key takeaways:

Be inspired by the insurgents
Small brands have delivered a wake-up call to big brands that have become complacent and too focused on cost-cutting. Big brands need to refocus on consumer insight and "demand-led growth".

Remember and refresh what made you famous
Look back and look forward to craft a sharpened brand positioning that helps to focus investment and inspire a revitalised mix.

Rediscover the advantages of scale
Leverage scale more effectively to drive reach and create unique "ecosystems" that blend products, experiences and digital services into unbeatable offers.

About the research

The Brandgym research was carried out in May-June 2018 via a global quantitative survey of more than 100 senior marketing professionals and research with 800 consumers in France, UK, India and the US.

David Taylor is group managing partner at The Brandgym