Can small brands compete?

SUMMARY: The idea that small brands can compete with bigger brands by spending less money and using budgets more strategically is the biggest line of BS out there.

95% of new products introduced each year fail. Up to 80% of new product launches in the consumer packaged goods industry fail. According to Harvard Business School professor Clayton Christensen, each year more than 30,000 new consumer productsare launched and between 80 – 95% of them fail.

In a recent paper, the Ehrenberg-Bass Institute for Marketing Science pointed out that, for every Dollar Shave Club, there are more than a few 800Razors. In fact, because so many new brands never achieve a size large enough to be tracked, capturing the failure rate is impossible.

Unfortunately, the belief endures that these small brands are doing something right, and this “something” is a function of being a small brand that can launch sales through innovative social media campaigns. After all, you keep reading about these “viral” brands online.

Looking across thousands of product launches, Nielsen observed three common causes of innovation failure that often don’t get the attention they deserve:

  1. Neglecting to address a broad consumer need
  2. Failing to provide a good product experience
  3. Providing insufficient marketing support

I would add “the belief that you can compete in a crowded market with small marketing budgets.

I get a lot of clients who want it all but when I ask about their marketing budgets there is silence. Nobody wants to spend money to build brands they want instant overnight success.

Here’s a great example: A supplement company run by health experts is trying, on Facebook and Instagram, to launch their liquid-filled multivitamin. The problem is that it’s expensive. When signing up, you’re automatically enrolled in a subscription and, when you compare it to other multivitamins, its list of ingredients is lacking. Somehow they feel that they can compete via Instagram.

We all like to read the stories about someone who started a business in their kitchen that was just picked up by Wal*Mart, but that’s a huge long shot. Great marketing starts with a willingness to spend money to break through to consumers who are tuning out ads. Granted, there is an accountability issue regarding spending marketing dollars. Still, bigger, more entrenched brands are fighting to hold onto share, and you’re not going to play in the same field unless you are ready to spend money.

Can small brands compete?