Consumer brands are in a difficult spot. While each company faces a unique combination of challenges due to its history, its industry, and its target demographics, there are some universal issues converging to threaten the relevance and appeal of established brands. If they’re going to survive, they need to dissect and analyze these challenges, then come up with a plan to compensate for them—or in some cases, avoid them altogether.
Converging Factors
These are just some of the most important factors affecting how consumer brands operate—and how they’re perceived by their customers:
- Demands for transparency. First, consumers are making more demands for transparency. We live in the information age, and consumers are used to being able to find any information they need with a quick search or a social engagement. When companies withhold information, or worse, lie about information related to their products or internal operations, customers become suspicious. This means companies have to spend more money and take more risks on actions like publishing how they source their ingredients or explaining how profits are distributed.
- Demands for sustainability. Approximately 82 percent of S&P 500 companies are currently publishing corporate sustainability reports on a regular basis, in response to consumer demands for more sustainability. The thing is, sustainability takes many different forms, and there’s no one “right” way to approach it. Making investments that allow your business to consume less energy, or produce fewer emissions, can be costly, and updating your corporate hierarchy to be more inclusive can also result in dramatic internal shifts.
- The complexity of the supply chain. The supply chain is also growing more complicated and for many independent reasons. More resources are sprouting throughout the world, which provides access to new suppliers, but also increases competition and makes decisions more complicated. And new technology, while capable of improving overall productivity, can be expensive and time-prohibitive to adopt.
- Siloed internal departments. Silos within businesses are also becoming more common, as an unfortunate side effect of corporation size and, ironically, the availability of communication. Now that we have near-instant access to our coworkers, it’s possible for more people to work from home, and people spend more time communicating. However, because chat rooms and project management platforms are often segmented by department, it fosters greater communication within groups and less communication between them. Silos are the end result, and they can lead to brand inconsistency and gaps in employee knowledge.
- The complexity of compliance regulations. Compliance regulations are becoming more strict all over the world, which for consumers is often a good thing—it means tighter rules and greater oversight for the products they consume on a regular basis. But for most companies, those increased requirements come with increased costs, which means some products need to be transformed and others need to be abandoned, due to a loss in profitability.
- The pace of competition (and the threat of disruption). Resource availability has opened the door to more competition in many industries—along with the threat of disruption. If a smaller, nimbler company comes into existence in your space, they may be able to adopt technology more freely and/or innovate in a way that allows them to undercut your prices or appeal to a broader sector of the market. Since these changes often happen quickly, existing companies don’t have the time or resources to respond at the same pace. Some companies defend against this by acquiring small, nimble companies to take as their own, but this option isn’t available to small- and mid-sized companies.
- Resentment toward the establishment. Consumer trust has fallen in nearly every category over the past few years, especially toward corporations and politicians, in part due to the corporate greed that led to the financial crisis of 2008. Brands have a much harder time winning (and keeping) customer trust, which means they have to spend more time and money to establish it. They also have to downplay their image as a corporation, making themselves seem more approachable and human.
Can Established Brands Survive?
So do established brands have the potential to survive this combination of threats?
The short answer is yes, though the path to survival may look very different for two different companies. For example, one company may avoid some of these key challenges by breaking up into smaller subsidiaries, or focusing on product categories that require less attention to compliance. Another might invest heavily in sustainability and consumer relationships, increasing customer loyalty to the point where they can take on more expenses. Ultimately, there’s no right or wrong way to respond to these challenges, but if your consumer brand wants to survive and stay relevant, it’s going to have to acknowledge them.
