Rising Above the Competition: Playbook for Emerging Brands To Succeed in a Crowded Market

Introduction

Breaking into a crowded market and confronting legacy market leaders can be a daunting prospect for new brands. However, even in such markets, new entrants can strategically gain a foothold by building a strong brand that overcomes the norm, making it easier to acquire new customers. Rather than just mimicking the business model of market incumbents, these newcomers can find their niche by offering unique values that resonate with consumers’ changing expectations and lifestyles in a way that legacy brands, encumbered by longstanding positioning, may struggle to do.

In this report, we present a playbook to help a new consumer goods brand stand out from established competitors in a crowded market.

This report is sponsored by The Good Charcoal Company, a producer of sustainably sourced, healthier and cleaner charcoal.

Playbook for Emerging Brands To Succeed in a Competitive Market: Coresight Research Analysis

We present five strategies for new consumer goods brands to make inroads in a crowded market in Figure 1, and explore each in detail below.

Figure 1. Five Strategies for Emerging Consumer Goods Brands To Break Through the Crowd and Succeed in a Competitive Market

Source: Coresight Research

 

Develop a Differentiated Product Offering

In retail categories, the product delivers the promise of the brand, and for new entrants, differentiation is essential to building share. In most markets, a new brand must offer an innovative product with features and benefits that make it a more compelling choice than legacy products or brands.

When successfully leveraged in marketing campaigns, product differentiation creates a distinct brand identity in the minds of consumers, supporting brand awareness and consideration. Effective differentiation also helps a brand operate at a higher price point due to the perceived value that the product offers.

Product features: Unique product features such as advanced technology, distinctive design or innovative functionality are important to gain a competitive advantage and enhance the end-user experience.

• Homecare startup Blueland offers cleaning tablets that dissolve in hot water to create a concentrated cleaning solution for dishwashing and laundry. Unlike conventional cleaning products, this format eliminates the use of single-use plastic packaging and conserves storage space without compromising its efficacy.

Performance and quality: Customers desire products that offer superior performance and meet their quality expectations. If a new product outperforms the available market substitutes on these two criteria, it builds credibility with customers, leading to positive word-of-mouth marketing, repeat purchases and a loyal customer base.

• The Good Charcoal Company offers charcoal made from pure acacia, which is denser wood than oak and hickory. As a result, it burns hotter, cleaner and more evenly than products from other brands on the market, according to the company. Additionally, with a longer burn time than traditional charcoal products, consumers can lower their environmental footprint by using less charcoal for each barbeque session. The Good Charcoal Company has established partnerships with major retailers such as Home Depot, Kroger, Sam’s Club, Shoprite, United Grocers and Target to distribute and market its products.

Source: The Good Charcoal Company

 

Packaging: Packaging plays a crucial role in product differentiation, as it is often the first point of contact between the consumer and the product. Effective packaging can distinguish a product from its competitors and make it stand out on store shelves (or on an e-commerce site), increasing its appeal to potential buyers.

Packaging can differentiate a product in several ways, such as through its shape, size, color, design and labeling. Unique and eye-catching packaging can also contribute to a memorable and distinctive brand image, making it more likely that consumers will recognize and choose that product over others.

Customer service: By offering exceptional customer service, a company can differentiate itself by providing added value to customers beyond the core product or service. The company can distinguish itself by creating a unique customer experience, which includes offering customized product recommendations, personalized support and proactive outreach to address customer needs.

It is important to note that product differentiation is not a one-time exercise, but rather, a continuous undertaking: companies must consistently innovate and improve their products to sustain their competitive advantage and stay ahead in the market.

Choose the Right Channel To Sell the Product

Many consumer product startups begin life as digitally native vertical brands (DNVBs), taking the online DTC (direct-to-consumer) route when they first go to market. By building their own e-commerce-enabled websites (with Shopify commonly used to do this), brands can quickly make changes in pricing, positioning and brand communications. In bypassing the traditional wholesale route, brands also gain more control over the customer experience by marketing and selling directly to consumers, and retail more of their margin.

However, some products may inherently be more suited to shelves in physical stores than pages on a website. We explore such product categories below.

Products with a lower value-to-weight ratio: Due to the bulky nature of such products, the cost of shipping, in many cases, exceeds the cost of the item itself. By marking up goods sold online to cover higher fulfillment and delivery costs, new brands in this category may run the risk of pricing out a portion of their customer base. If a brand does choose to absorb the fulfillment and delivery costs, margins will take a hit, putting into question the long-term sustainability of the business.

Impulse-buy products: Products that consumers may not consciously plan to buy but decide to purchase at the spur of the moment can be prominently displayed in stores to increase the likelihood of sales. Stores allow for immediate access to such products, which can satisfy consumers’ desire for instant gratification (versus waiting for delivery when ordering online).

Products with mass appeal: Products that cater to a wide range of consumers, including household staples such as cleaning products, personal care items or paper products, may see higher sales through the traditional retail channel than online for a number of reasons. For example, as core grocery-store categories, nonfood consumables to some extent “piggyback” on the common preference among food shoppers to select their own grocery items in-store, rather than have them selected for them when they buy online. Proximity of grocery stores and other formats (such as drugstores) and frequency of purchase are other factors favoring in-store over online in staples categories.

High-touch or sensory products: Products that require a high degree of sensory interaction, such as cosmetics or fragrances, perform better in the physical retail channel because consumers can touch, smell and test the products before making a purchase. Retail stores also offer the opportunity for brands to interact with shoppers through product demonstrations.

The brick-and-mortar channel also remains popular among many shoppers despite the recent acceleration in e-commerce. Many DNVBs that primarily sell through their own e-commerce sites are expanding their offline presence by selling through retailers such as Costco, Target, Walmart and other supermarkets, grocery stores and restaurants. Coresight Research found that 26 of the 43 digitally native CPG brands we cover have opened physical stores, showrooms, pop-ups or physical shelves within cooperative retailers.

A Coresight Research survey conducted on March 27, 2023, found that the highest proportions of US consumers prefer to purchase food/beverages and grilling/barbeque items (including charcoal) in physical stores rather than online, compared to other product category options provided to respondents (see Figure 2).

Figure 2. US Consumers’ Channel Preference for Buying Products (% of Respondents)

Base: 400 US respondents aged 18+, surveyed on March 27, 2023
Source: Coresight Research

 

Jonathan Odell, Seasonal Merchant (Seasonal Hardware) at Sam’s Club, told Coresight Research that to secure a place on retail shelves, the vision of the retailer and the brand should overlap and align toward common goals and milestones, which will help to establish synergy and build upon it. Odell noted that at Sam’s Club, when evaluating products on the sales floor, three criteria are important: quality, value and solution. Aligning all three of these elements is optimal for an item/supplier. Besides offering an exceptional product, it is crucial for new brands to convey the overall brand story to consumers, which requires extensive collaboration between the brand and retailer for effective marketing.

Build a Strong Social Media Presence

Social media is an important tool to build brand awareness, engage with target audiences and establish brand identity. By making social media an integral part of their marketing strategy, new brands can express their message, mission and values while also providing a platform for customers to express their own opinions and engage with the brand. Unlike traditional advertising methods, social media platforms often have low advertising costs, making the social channel a cost-effective option to reach a wider audience.

Odell emphasized that new brands should take advantage of social media platforms such as YouTube, TikTok and Instagram as well as collaborate with influencers to showcase their product attributes and functionalities to influence consumers’ shopping decisions.

The steady rise in the time consumers spend on social media reflects the importance of these platforms in their daily lives. According to the Coresight Research US Social Commerce Survey 2023, conducted in April 2023, 68% of US consumers use social media as part of the shopping process—for discovering, researching and browsing products or for making purchases—representing a slight increase of 3 PPTs (percentage points) from our 2022 survey. Furthermore, 62% of all respondents reported that they have bought products via social media.

Brands need to identify the platforms on which their target customers are most active and create engaging content that resonates with them. According to our survey, Facebook and YouTube are the two most popular social media platforms that consumers overall use as part of the shopping process, but TikTok is gaining ground among younger consumers (see Figure 3).

Figure 3. Top Five Social Media Platforms Used as Part of the Shopping Process, Breakdown by Age (% of Respondents in Each Age Group)

Platforms ordered by highest to lowest popularity overall
Base: 1,345 US respondents aged 18+ who use social media as part of the shopping process, surveyed in April 2023
Source: Coresight Research

 

New brands can also use influencer marketing to gain exposure, build brand credibility and reach their target audience. Building a passionate influencer community can help brands leverage the trust that influencers have cultivated with their followers.

Influencers can share their opinions with fans as well as create sponsored content such as posts, stories or videos that showcase a brand and its offerings. They can also help brands drive sales by sharing discount codes, offering promotions or featuring products in their content to encourage their followers to make a purchase.

Indicating the popularity and reach of influencers, our survey found that 54% of all respondents follow some type of influencer on social media, up 12 PPTs from last year.

Walk the Talk on Sustainability

The pandemic accelerated the growth of environmental sustainability concerns among consumers, employees and investors alike. As consumers become better informed of the impacts of unsustainable production practices and consumption habits due to the ubiquity of information, they demand action with greater urgency from businesses. At the same time, a sustainability focus can signal to investors that a brand is committed to long-term thinking and is not solely focused on short-term gains. Investors are increasingly conscious of how their own reputations are affected by the brands they support. By prioritizing sustainability, new brands can increase their appeal to investors looking to make a positive impact with their investments, while attracting environmentally conscious consumers.

A Coresight Research survey of US consumers conducted on October 3, 2022 (part of our US Consumer Tracker series), found that sustainability is a key consideration for many consumers when evaluating where to shop and what goods to buy: over one-third of respondents indicated that sustainability affects where they make purchases to some extent. The importance of sustainability is roughly consistent across essential and discretionary product categories (see Figure 4).

Figure 4. US Consumers: The Extent to Which the Issue of Environmental Sustainability Affects Which Retailers or Brands They Choose To Purchase From (% of Respondents)

Base: 400 US respondents aged 18+, surveyed on October 3, 2022
Source: Coresight Research

 

The Coresight Research EnCORE framework provides a five-component model through which brands and retailers can begin to frame their approach to sustainability and internalize a sustainability strategy (shown in Figure 5).

Figure 5. The Coresight Research EnCORE Framework for Sustainability in Retail

Source: Coresight Research

 

Aligning with the elements of our EnCORE framework, we explore four sustainability practices below that consumers want brands to prioritize.

Reduction of plastic waste: Consumers are increasingly concerned about the environmental impact of plastic waste. Retailers and brands should reduce their use of single-use plastics and offer more sustainable packaging options such as biodegradable, recyclable or reusable packaging. Around 30% of US consumers in our October 2022 survey consider reducing the use of plastics as the most important type of environmental sustainability for brands.

Responsible/ethical sourcing: Consumers want to know that the companies they are buying from are sourcing products responsibly and ethically. Consumers refrain from buying products that contribute to the destruction of biodiversity, deforestation or pollution. Brands that provide detailed information about their sourcing practices and are more transparent about their internal and external supply chain operations are more likely to gain consumers’ trust.

Many consumers place a high priority on purchasing products from companies that demonstrate a clear commitment to responsible and ethical sourcing practices. More than half of all respondents in our March 2023 US consumer survey said that ethical and responsible sourcing practices comprise a “very” or “extremely” important consideration when purchasing a product—and 72% of respondents are willing to pay more for a product they know has been responsibly sourced or produced (see Figure 6).

Figure 6. US Consumers: Importance of Ethical and Responsible Sourcing Practices When Purchasing a Product (Left) and How Much More Would They Pay for a Product That They Know Has Been Responsibly Sourced and/or Produced (Right) (% of Respondents)

Totals may not sum to 100 due to rounding
Base: 400 US respondents aged 18+, surveyed on March 27, 2023
Source: Coresight Research

 

Water conservation: Brands should look to recycle wastewater and minimize their impact on local water resources. Installing meters and tracking water usage throughout operations and the supply chain can help brands identify the greatest opportunities to cut water use. Water-efficiency treatment systems that return water for reuse after purification also reduce water usage—in addition to cutting costs. Our October 2022 survey revealed that around 20% of US consumers believe that water usage should be prioritized by brands when considering sustainability.

Reducing carbon emissions: Brands should find ways to reduce carbon emissions across their operations, such as by replacing fossil fuels with renewable energy sources, using fuel-efficient vehicles and incorporating smart routing technologies, applying energy-saving measures, and investing in carbon offset projects.

Emerging brands need to make sustainability a focal point of their strategy planning and be more transparent with their sustainability initiatives to all stakeholders. They should develop a plan around the sustainability issues that they can have an immediate and direct impact on while establishing a longer-term strategy and vision comprising specific sustainability goals. By emphasizing their commitment to sustainability initiatives, new brands can create a sense of purpose that can lead to long-term customer loyalty and advocacy.

Help Communities by Giving Back

Emerging brands should take steps to be value- and community-driven businesses; they can appeal to consumers by aligning with social causes. Buying from socially responsible companies makes shoppers feel good, knowing that their purchases are making positive contributions to their community/wider society. This sense of pride upon purchase encourages customers to make more purchases, building loyalty. In addition, consumers will be more likely market community-driven brands by spreading positive messages with their social networks and recommending the brand to friends and family.

According to our March 2023 survey, if given a choice between two similarly priced products, around 70% of consumers will likely choose the product from the company that gives back to their local community.

Figure 7. US Consumers: Likelihood of Choosing a Product from a Company That Gives Back to Their Local Community* from Two Similarly Priced Products (% of Respondents)

*Such as through sponsored events or fundraising for local organizations
Base: 400 US respondents aged 18+, surveyed on March 27, 2023
Source: Coresight Research

 

Participating in community initiatives gives brands a chance to connect with customers on a personal level, such as by:

• Donating a portion of their revenue/profit in a set period or from the sales of a specific product to charity.
• Partnering with local and nonprofit organizations to address community issues such as poverty, food insecurity, education, health or environmental challenges.
• Participating in events that focus on charitable giving, such as Coresight Research’s annual 10.10 Shopping Festival (which, in 2022, partnered with 14 charities, including Soles4Souls and National Breast Cancer Foundation).
• Engaging in civic activities such as volunteering or advocating for policies that promote community welfare.

Food insecurity—where households lack access to adequate food to lead active, healthy lives—is a leading social issue in the US. The back-to-back disruptions of the Covid-19 pandemic, high grocery inflation and a potential recession have led to a severe and lasting increase in food insecurity. According to the US Census Bureau, approximately one in 10 Americans experienced food insecurity at any one time in 2022, as shown in Figure 8. Persistent grocery inflation—which saw its largest year-over-year gains in over 40 years in August 2022—and soaring costs for other basic needs have exacerbated food insecurity. Additionally, some mitigating factors, such as stimulus programs and expanded Supplemental Nutrition Assistant Program (SNAP) benefits, that previously cushioned food insecurity are no longer available.

Figure 8. Food Insecurity: US Adults Who Reported That There Was Either Sometimes or Often Not Enough To Eat in the Past Week (% of US Population)

Source: US Census Bureau

 

Emerging startups can take an active role in hunger-relief initiatives to generate goodwill with consumers and local communities while doing good.

• The Good Charcoal Company partners with communities across the US to support and sponsor free weekly barbeques to help Americans experiencing food insecurity. In September 2022, the company announced the campaign “#8Pounds4Good”, committing to donate profits from each 8lb bag sold on Homedepot.com in 2022 to charitable organization Feeding Georgia Families.

Engaging in community philanthropy shows that the brand is dedicated to the wellbeing of those it serves, enhancing the brand’s image, building a loyal customer base and increasing brand exposure to potential customers who may not know about the brand.

What We Think

Entering a crowded market as a newcomer can be challenging. However, with the right strategies and mindset, new brands can not only succeed but also establish themselves as leading players in the market. Devising an innovative product, choosing the right distribution strategy to reach consumers and leveraging social media to build awareness are essential steps to gain competitive advantage. However, brands must serve a greater purpose outside of the standard transaction to truly engage consumers on an emotional level; this includes embracing environmental sustainability and helping communities by giving back.

Implications for Brands

• New brands should develop a go-to-market strategy that involves selecting the right distribution channel based on the product’s attributes. Certain products, such as those that have lower value-to-weight ratio, rely on impulse buying, have mass appeal or require high-touch or sensory experience, can gain more benefits by using existing retail channels than online. Additionally, by partnering with a traditional retailer, new brands can leverage the retailer’s existing customer base, brand recognition, distribution network and market channels to promote their products.
• Brands can use social media influencers to market their products. While macro-influencers have greater reach, micro-influencers tend to have higher engagement rates because they are regarded as ordinary individuals with interests and lifestyles comparable to those of their followers, thereby establishing greater levels of trust and authenticity. Additionally, micro-influencers are often less expensive to work with than macro-influencers or celebrities. This can be especially beneficial for new brands or smaller companies that have limited marketing budgets.
• As part of the growing sustainability trends, consumers want to know exactly what goes into the products they use to ensure they are free from chemicals and other harmful ingredients. They also want to know the origin of the ingredients to ensure that the products they buy are created in sustainable conditions. As such, brands need to raise the bar on transparency by accurately labeling products with both ingredient and sourcing information.
• By prioritizing commitment to enhance community wellbeing from the outset, emerging brands can build a favorable brand image and establish themselves as responsible and conscious members of society.

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This free report is sponsored by The Good Charcoal Company, a producer of sustainably sourced, healthier and cleaner charcoal.