6 Ways Mass Brands Can Compete in a D2C World

Emily Cristoforis, Director of Strategy

Emily Cristoforis, Director of Strategy

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For small startup brands, using a direct to consumer (D2C) model is a necessity. No doubt many of these brands have dreams of being sold in the aisles of Target or being acquired by a global conglomerate. But without the infrastructure, capital, and reach of a big brand, D2C is the only way to get into consumers’ hands.

But while these D2C brands may have dreams of grandeur to the scale of mass CPG players, we’re seeing the envy go the other way too – CPG brands increasingly seeing these D2C players as threats, and seeking out ways they can reach and resonate as deeply with their consumer base.

Here are 6 lessons that CPG brands can learn from D2C brands, along with some examples of how actual brands have implemented them.

#1: Extreme personalization and customization

The Beauty of Life: Take Care: care/of Personalized Daily Vitamins

With a quick quiz about your hair, a consultation with a stylist, or even just filling in your basic information, D2C brands are leading the customization trend. Their ability to tailor every product for every individual’s unique needs is appealing for consumers and mass brands alike.

D2C brands like Prose haircare and Care/of vitamins are leading the way in how far a customized or personalized product can go in driving brand affinity. Both brands get to know you and your needs on a deeply personal level, formulate products specifically for those needs, and deliver them with the simple personal touch of printing your name on the label.

But for CPG brands, while being on shelves at every mass retailer has its advantages in greater distribution and reach, but this limits their ability to provide this hyper-customization. To be a mass CPG player, you need to deliver on the needs of the masses – not every individual. So, while a mass hair care brand can stock shelves with shampoo for dry hair, oily hair, for more volume or more shine, it’s up to consumers to figure out what best suits their needs out of the 5 options available.

While the nature of CPG and mass retail poses major barriers to deliver on the hyper-customized products of D2C, big brands can overcome them to some extent. Rather than stocking shelves with a range of varieties, brands that implement customizable product architectures on shelf are delivering better on the value of customization. Through developing curated systems of products that work together that people can pick and choose, each product might not be tailored for you, but the collection of products can be.

Clinique SkinID is a great example of this type of customization on the shelf. By allowing each customer to select a product base (e.g. moisturizing lotion vs. hydrating jelly), and select active cartridge concentrates that address specific skin issues, shoppers can create their own bespoke skincare systems that they can customize how they use on a seasonal or even daily basis to fit their ever-changing skin needs.

#2: Niche lifestyle appeal

The Hims Erectile Dysfunction Ads Are Failing Their Target Audience - Artsy

While it’s true that by trying to speak to everyone, you end up speaking to no one, mass brands need to target a broader audience than more niche D2C brands to have that mass appeal. But the power of speaking directly to a specific group’s lifestyles, values, and tastes can’t be ignored.

D2C brands like Away, Hims, and Recess are great examples of reaching hyper-targeted audiences by speaking in their language through overarching visual language as well as comms – and not worrying so much about who they’re not reaching, or even who they might be polarizing through these touchpoints. Away’s millennial jetsetter appeal probably won’t attract many legacy Tumi consumers, and Hims slightly risqué tone of voice and stripped back visual take on men’s sexual health may put off the more conservative viewpoints… and that’s ok for these brands!

But how can big CPG brands foster mass appeal while speaking to and connecting with a targeted lifestyle?

The opportunity comes down to how they segment their consumers. When brands segment purely by demographics and functional needs, their messaging inherently stays at that level. But when segmentation incorporates mindset, values, and consumer tribes, that’s when they are able to break out of the mass constraints with messaging that leads with a strong POV, and speaks to a specific lifestyle through touchpoints, while still driving mass appeal overall.

Oatly is a great example of a mass brand with this targeted messaging approach. They don’t shy away from their point of view of being anti-dairy, in a relatable and human tone of voice and visual brand language. While they may never reach the super dairy lovers, they are able to drive awareness and consideration even with consumers who aren’t active in the dairy alternative market.

#3: Rapid growth through iterative innovation

EverythingTo Know About Daily Harvest - Daily Harvest Review

From how they launch to how they grow and evolve, the world of D2C brands runs in hyper-speed – especially compared to the lengthy timelines and internal red tape within mass brands. While this speed can be overwhelming, it also pays off for many D2C brands – especially as we look to their ability to innovate at the speed of the world we live in.

Brands like Daily Harvest or Quip have shown the benefits of quickly creating and launching new offerings, and use consumer response as a real-time, real-world consumer testing that creates organic brand growth. Using this approach, Daily Harvest has grown from a DIY smoothie brand to offering an entire line of delicious, healthy, and convenient frozen food options. And Quip has grown from a cool toothbrush to a brand ushering in the future of oral care.

For CPG brands, the bigger the brand is, the more intense and lengthy the internal processes are when it comes to bringing anything new to market. Rounds of R&D, market research, internal approvals, etc. means even a simple line extension might be years away.

But even the biggest brands can take a page from the rapid, iterative growth and innovation seen in the D2C world. Establishing smaller, agile teams can help to circumvent internal bureaucracy, and push the brand to take small, relatively low-risk steps that grow their footprint and portfolio organically over time.

Take Chobani for example. Over the years since their introduction of Greek yogurt, they’ve grown into new categories, benefits, shelves, and targets through a slow and steady introduction of new varieties and products. Not all of them have been successes, but those small failures haven’t stopped their growth – just the opposite. It has primed consumers to expect new things from the brand, and invites them to be a part of its growth.

#4: End-to-end control of experience

Casper. Dreams in a box. Direct to Consumer

By nature, D2C means the brand is the owner of the experience and relationship with their consumers – from first discovery to repurchase. While this control limits these brands’ growth to some extent, it’s also the key to their success and a driver of consumer love.

D2C brands like Casper were able to disrupt their entire categories through this direct consumer connection – from ordering through delivering, to opening the mattress and enjoying it for 8 hours a day. And Peloton takes the direct consumer experience even a step further through their branded content and community.

For CPG brands, being mass means giving up some of this control, and relying on retailers and distributors to provide the right experience with the brand. Even with the greatest strategy and toolkits in place, there’s not much a brand can do if a retailer doesn’t stock the shelves correctly, or a delivery gets lost in the mail. And these elements of the experience that are out of a brand’s hands still often cast a negative halo back on the brand.

But we’re seeing CPG brands beginning to overcome this by augmenting their mass distribution with brand-owned platforms that create direct connections. PepsiCo, for example, has recently launched the PepsiCo Pantry Shop – an online portal connecting consumers with PepsiCo products, through kits and bundles that add value for their portfolio of brands, and for consumers. While Pantry Shop may never deliver the sales volume of Target or Amazon, it’s a great example of a mass brand taking full control of the experience they deliver by creating its own D2C platform.

#5: Consumer-initiated relationships

Marketing Unboxed: Outdoor Voices is #DoingThings With Their Marketing |  Zaius

D2C brands are known for their ability to be Instagram-famous – with consumers seeking them out and adding them to their networks (vs. sneaking ads into their newsfeeds). That open door from consumers allows these brands to go deeper and connect more meaningfully.

Brands like Glossier and Outdoor Voices have mastered this appeal with consumers – with their social media presence making them feel more like experts, influencers, and trendsetters you want to be tapped into through the broad and value-added content they create and share.

This type of content and presence is a far cry from traditional mass brands, who come off very much as brands trying to make a transaction. While these fresh new D2C brands have the benefit of starting with a blank slate, established brands need to break free of the marketing associations consumers immediately have with them.

So how can CPG brands start to break their marketing-first associations? It’s about using digital and social platforms that extend the value and resonance of the brand, beyond the products it sells. For example, Whole Foods 365 Home Ec. Platform creates content with influencers about how to live a healthier life – from cleaning your home to eating right. And that content just so happens to feature 365 brand products being used.

#6: Leading with and staying true to core values

Why Who Gives a Crap's customers love to Instagram toilet paper - Newspaper  Club

Value-led brands aren’t limited to D2C – but these brands are more able to not just speak their minds, but operate by leading with their core values. Because D2C brands often come straight from the story and values of the founders themselves, they are able to use these founding values and stories to guide their business decisions for how they show up and grow in the world.

The power of leading with founding values can be seen in D2C brands across categories.Who Gives a Crap translates their core values of giving everyone access to sanitary health (and having fun while doing it!) into the commoditized world of toilet paper. This sets their brand apart from the mass brands — who compete around softness and ply — to a much more emotive and lifestyle space. On the other end of the spectrum, Everlane has disrupted the fashion space through their values of radical transparency – using that to not only set their brand apart and compete, but also to educate and engage consumers around the industry itself.

For mass brands,delivering on values often comes at odds with the profit-first operational model that big brands are held to. Big brands have defined values and founding stories somewhere in their brand book, but when it comes to making business decisions, those elements of the brand are minimally considered. If a decision comes down to profit vs. values, profit almost always wins out.

But big CPG brands can still deliver on key business objectives while remaining true to the founding values and story.REI for example closes their stores every Black Friday in service of spreading their core founding value of the importance of getting outside. When big brands define even just ONE core value that always has to be delivered on, and never stray from that, even if it means a bit less profit in the short term, it will pay off in the long-term.

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Emily Cristoforis, Director of Strategy

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