How global FMCG brands can learn from niche brands: winning tactics

Katie Rothschild

A number of FMCG brands have a stronghold within the BGB table, such as Gillette (#24), Pampers (#28), and Kellogg’s (#39). These are global household names that possess a combination of strong heritage, positive family associations, and the trustworthiness that is all-important for brands that are bought on a daily basis and consumed instantly.

However, it is becoming increasingly apparent that the success of smaller, niche brands is starting to chip away at the market share of these global giants and shake up the traditional approach of FMCG marketing. Niche brands cleverly make use of their nimble size to tap into new trends, be first to market, and win new audiences through visual and verbal storytelling. The big guys are taking notice.

Niche brands focus on a particular market position, demographic, or unmet consumer need, and with this focus comes deep understanding of consumer’s needs and wants. What can established global businesses learn from the success of these brands, and what growth opportunities do they represent?

The following two themes are the key marketing strategies employed by niche brands:

1. Go to market strategy: Capitalizing on being ‘The Little Guy’
2. Brand and company ethos: leveraging the shifting trends in consumer needs and aspirations

A common thread that runs through each of these themes is their appeal to millennials, a group that will represent USD $200 billion in annual spending from 2017 and thus wield incredible influence. They are interested in what’s new, and respect authenticity over authority, relevance over reliability, and innovation over tried-and-tested. The marketing tactics of niche brands play into these expectations and enable them to credibly connect with millennial consumers on a more emotive, authentic level.

1. Go to market strategy: Capitalizing on being ‘The Little Guy’

We’re witnessing a staggering leap in technology that can launch a new brand into consumer’s hands overnight, and at a fraction of the cost paid by global brands for traditional marketing. Niche brands can harness this combination of new technologies and non-traditional advertising and sales channels to deliver cheap and relatively fast go-to-market strategies. Viral campaigns, guerrilla-style marketing, and soft launch scenarios are made possible via Amazon and social media sites such as YouTube, Facebook, Instagram and SnapChat. Niche brands use online sales to “pre-launch” products and even define their key demographic / target audience, after which they can tailor their marketing. For the millennial consumer, technology is integral to how they shop, and more than 50% are more likely to trust blogs, sites, and applications for advice over their friends.

Niche brands are also more agile, and have the ability to spot market trends and tap into (sometimes quite esoteric) consumer insights, turning these into new products or range extensions in short order. Smaller brands can evolve and change with shifting market conditions. A niche brand can remain relevant by staying on the front foot, never letting a reliance on global distribution networks stand in the way of innovation or losing sight of their brand ethos.

Established brands may not be able to fully emulate the small-scale agility of niche brands, but they can use the shift they have created in consumers’ expectations to rethink and reinvigorate their brand, becoming more consumer-centric and ultimately accessing new audiences.

Careful planning is required to avoid “me too” or knee-jerk reaction launches to counteract niche brands’ entrance into the market. All too easily, established brands can miss the mark and seem inauthentic or too late to the market be seen as uniquely innovative. Through a combination of refocusing efforts on more specialized audiences, refined messaging, packaging design, and new sales channels, global brands can leverage the challenge niche brands have set for them.

Gillette addressed this issue in response to the incredibly successful launch of Dollar Shave Club (DSC), with the launch of Gillette Shave Club. While the DSC subscription-based service didn’t pose a real threat to Gillette’s 70 percent share of the global blades and razors market, this challenger brand did force Gillette to rethink their ability to reach price-conscious consumers. By using new distribution channels, Gillette were able to deliver a quality razor in a way that they perhaps hadn’t considered possible without eroding brand value.

2. Brand and company ethos: leveraging the shifting trends in consumer needs and aspirations

Consumers are increasingly interested in a brand’s purpose; their socially conscious and environmentally responsible commitments. By identifying the positive associations that such brands can create, consumers derive satisfaction from supporting these companies and the positives they bring to society and the environment.

Socially Conscious

The socially conscious consumer has an appreciation for how things are made and, especially when it comes to consumables like food or disposable goods, the authentic craft that has gone into their creation and even their health and wellness properties. Millennials focus heavily on brand experience over pure consumption, which ties into the desire to connect with brands that deliver an “authentic” experience. This may mean hand crafted or artisanal (e.g. craft beers), socially focused food brands with a direct link to the growers, and health-positive spins on traditional foods such as coconut yogurt and oat milk. 84% of millennials say social opinions drive their purchase decisions; so making it easy to find “expert” opinions on products is key.

There is a growing desire to return to traditional values, support family-run or oriented businesses, authentic and artisanal production methods and a rejection of buying from nameless, faceless corporations. While the big corporates may give back, somehow the smaller brands are more believable. Niche brands can talk openly about their company ethos; how they treat their employees and the tangible ways they give back to the local/global community. The social impact of their production is something to be celebrated.

Environmentally responsible

Brands that leverage their environmentally friendly credentials must be transparent about the impact of their production, ingredients, or even disposal methods. There is a growing emphasis on low-impact or closed-loop production, products made from recycled or natural. Niche brands have taken ingredient lists and brought them front and center on packaging, proudly displaying “what’s not inside” or the percentage of naturally-derived or organic ingredients.

While the Pampers brand is undoubtedly the global leader in disposable diapers, they’ll also need to tap into the growing demand for environmentally friendly diapers owned by niche brands. “Green” brands such as Naty, Earth’s Best, and BAMBO Nature are leading the way in creating environmentally friendly products. Celebrity actress Jessica Alba has also launched a fast-growing and hugely successful niche brand (The Honest Company) delivering “not only effective, but unquestionably safe, eco-friendly, beautiful, convenient, and affordable” products. Pampers’ top competitor Huggies has capitalized on this opportunity and launched their own “Pure & Natural” range of disposable diapers in 2009. While Pampers currently have the largest share of the market, focusing on the learnings of these niche and established brands will help them put their own green stamp on things.

It is obvious that niche brands can deliver valuable learnings for global household names. Whether resetting their compass towards a more consumer-centric approach to brand building and innovation by tapping into shifting consumer demands for socially and environmentally-conscious brands or finding new distribution channels and ways to market. Growth comes in many different forms, and as we have seen the millennial consumer represents a huge opportunity for brands that can understand their needs and wants. Even small shifts in how brands are packaged and communicated can help an established brand to be reassessed and secure its future relevance and growth.

Senior Client Director