I get a lot of questions about what happens when a big company buys a small brand and whether that’s a good thing or not. The answer is it depends. Let me explain, big brands and retailers tend to commoditize the consumer and the products. This one-size-fits-all approach to everything dilutes what makes natural products unique.
Natural products are known for providing creative, innovative, and even disruptive solutions that meet the specific needs and wants of your key shoppers. Natural brands tend to be more closely aligned to their consumers. They are able to have a more intimate relationship with their shoppers. They listen to their shoppers who tell them how they like their product, what they don’t like, and what improvements or changes they’d like to see. They commit to only the best natural healthy ingredients. As a result, they tend to have a more evangelistic loyal shopper base. This is why natural products can traditionally sell their products for a premium compared to their mainstream counterparts – shoppers pay for quality and trust over savings.
Big brands tend to have a one-size-fits-all strategy focusing on appealing to the masses. They typically talk AT their shoppers and try to use marketing tactics and low prices to drive sales.
So how does this impact brands from the category management standpoint? First, there is a night and day difference between category management in natural versus category management in mainstream.
Mainstream brands and retailers rely heavily on category management to drive sales across every category. The advanced strategies that they rely on are the cornerstone of category management. They include inventory merchandising, product assortments, product placement, promotional strategies, shopper engagement, etc. A key aspect of category management is shopper marketing which tries to anticipate shopper buying habits and incorporate them into the strategies included in category management. Category management was created in part to reduce the wasteful spending natural brands rely on to get and keep their products on retailer’s shelves.
A lot of the natural brands that I talk with incorrectly believe that category management is simply pulling a bunch of canned reports and sharing them with retailers. This is NOT category management. Ironically, I developed many of the reports brands use today. These limited and basic reports lack insights and are simply meant to be a starting point to understanding category trends, etc., not the final analysis. My mission is to take the best in class strategies that actually help brands get their products into the hands of more shoppers and teach them to natural brands and retailers. This is “True Category Management” and is virtually nonexistent in natural.
Natural brands need to begin relying on True Category Management to help them compete effectively – prior to any acquisition. They need to become experts in their categories and on their customers. When natural brands get acquired, they should leverage the big brands capabilities to expand their ability to support the retailer while remaining laser-focused on what makes their brand unique. It’s critical that small brands do not lose their identity or get sidetracked from their core mission.
Big company acquisitions can help natural brands accelerate their growth as long as they don’t interfere what’s a natural brands ability to remain intimately connected with their key customers.