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How Even Small Businesses Can Integrate Innovation into Their Brand Strategy

Product Strategy
Photo credit: Наталья Евтехова - stock.adobe.com

Consumer brands have more opportunities to grow their businesses online, whether they’re selling through marketplaces like Amazon and Walmart, or through direct channels like social media and branded ecommerce sites powered by Shopify, BigCommerce, Wix and other platforms.

But there are three core macro trends that are making customer acquisition and retention more difficult. The first, most obvious, is increased competition. Up to 62% of consumers know that, thanks to the powers of technology, it has never been easier to start a business. They’re more eager to test these new brands, which makes standing out and winning loyalty more challenging for small business owners.  

The second trend is inflation and rising cost of living, which is inspiring consumers to find cheaper product options across categories like pantry items (33%), packaged snack foods (30%), bread (28%) and dairy products (27%), according to Insider Intelligence. The third is consumers’ heightened desire for in-store shopping experiences.

Collectively, these trends reaffirm that even the most digitally savvy CPG business owners and operators need to take a more holistic, omnichannel approach to growth in order to achieve a path to sustainable, scalable path. As they aim to differentiate in this moment of heightened competition, they need to prioritize innovation. 

“I hear the word ‘innovation’ tossed around in so many ways, but this is really key in CPG right now,” said Rose Hamilton, CEO of Compass Rose Ventures, a firm that consults CPG brands on their growth strategies. “In this category, innovation is about creating a new methodology for value creation for the customer.”

Hamilton shared that businesses, even small and growing consumer brands, can embrace innovation in three core ways: 

  1. Product innovation, which encompasses the way products are sourced, designed and packaged;
  2. Marketing innovation, such as brand development and product storytelling that reaffirm the unique value of the product; and
  3. Experience innovation, or all the ways consumers can use and interact with a brand and its products.
     

Product Innovation: Uncovering New Ways to Expand

If CPG brands want to stand out and win consumer wallet share, they need to build their product innovation story, according to Hamilton. They need to outline the unique values and benefits of their products, and outline why consumers should be willing to spend on them versus competitors.

Brands can then use consumer insights they gather over time to identify possible paths to product expansion — either into new product SKUs or entirely new categories. Listening labs, survey panels and one-to-one meetings with loyal customers can help leaders better understand customer needs and pain points and then uncover new white space for their long-term product roadmap. 

For example, House of Wise, which started as a range of CBD drops and gummies to address stress and sleep issues, expanded to include new product lines for fitness and sex drive. The company is extremely active on social media and has a direct brand community to gauge new ways the brand can grow and evolve. Skincare brand Bubble takes a similar approach, tapping its community of Gen Z consumers to inform everything from brand packaging to new product releases.

“Brands have to get permission to expand [into new categories],” Hamilton explained. “If you’re a perfume brand, are you going to have permission to create diapers? Probably not. But there’s enough crossover in wellness and beauty, for instance, because they’re both increasingly science-backed categories. If it’s a science-backed brand or individual product, then you have permission to extend as long as you have the results behind it.” 

Marketing Innovation: Creating and Activating a Breakthrough Story

While a great product is the foundation of every great brand, a great story is what helps brands stand out and get noticed. After you develop the core story of your brand and what makes it different and valuable, you can build a messaging framework to ensure this story is present and consistent as you use different channels to market to customers.

“A lot of brands know the secret sauce that they offer, but they don’t convey it well,” Hamilton explained. “Therefore, they’re not attracting the right customer because they’re not speaking their language. There’s a serious positioning and marketing retooling that needs to happen to unlock the founder story that will really help the brand differentiate.”

Hamilton recommended that business owners and team members who oversee marketing and social media conduct one-to-one interviews with customers so they get the qualitative insights they need to refine (or reaffirm) their messaging: “If you don’t have your messaging crystal clear, no one is going to understand what you do or why you do it,” she explained. “No one’s going to want to hang out with the brand and then you’re not going to scale.”

Once a strong brand is established, marketing and creative teams should develop their tactical marketing mixes to include channels that allow them to tell the company’s story effectively.

“There is a general playbook that still works across the board — it’s about finding the channel(s) [that are] the best fits for the brand positioning and the brand messaging,” said Calvin Lammers, VP of Digital & Media at personal care brand Nécessaire, in an interview with Retail TouchPoints. “If a brand is aiming for authenticity and transparency, TikTok has become the key platform for that organic, transparent messaging. You can’t put a highly designed TV spot on TikTok and expect it to work; it’s not what the channel was built for.”

Experience Innovation: Showing Up in a Way that Resonates 

“Experience” can encompass many things, but for small businesses, there is a big opportunity to find unique ways to integrate your brand (and products) into consumers’ everyday lives, according to Hamilton. This includes everything from events and activations to non-traditional wholesale partnerships.  

The more interesting and seamless these integrations are, the more memorable they are for consumers. For example, INBLOOM, the plant-based body nutrition company founded by Kate Hudson, accomplishes this by rethinking the traditional wholesale selling model and instead, forming partnerships with adjacent brands. Bluestone Lane sells a signature line of smoothies crafted with INBLOOM protein. During the 2022 holiday season, the brand worked with Barry’s on a “Holiday Survival Smoothie” that was sold in Barry’s Fuel Bar locations. All shoppers who made a purchase on the INBLOOM ecommerce site also received free access to a Barry’s workout class during the promotional period.

“Rather than going wholesale, which is a margin play, brands should look at their strategic partnerships,” Hamilton advised. “Find a brand that shares values like yours so you can create value. That intersection where smart brands get together creates a really great space to grow.”

How Even Small Businesses Can Integrate Innovation into Their Brand Strategy

by | Aug 24, 2023

Product Strategy

Consumer brands have more opportunities to grow their businesses online, whether they’re selling through marketplaces like Amazon and Walmart, or through direct channels like social media and branded ecommerce sites powered by Shopify, BigCommerce, Wix and other platforms.

But there are three core macro trends that are making customer acquisition and retention more difficult. The first, most obvious, is increased competition. Up to 62% of consumers know that, thanks to the powers of technology, it has never been easier to start a business. They’re more eager to test these new brands, which makes standing out and winning loyalty more challenging for small business owners.  

The second trend is inflation and rising cost of living, which is inspiring consumers to find cheaper product options across categories like pantry items (33%), packaged snack foods (30%), bread (28%) and dairy products (27%), according to Insider Intelligence. The third is consumers’ heightened desire for in-store shopping experiences.

Collectively, these trends reaffirm that even the most digitally savvy CPG business owners and operators need to take a more holistic, omnichannel approach to growth in order to achieve a path to sustainable, scalable path. As they aim to differentiate in this moment of heightened competition, they need to prioritize innovation. 

“I hear the word ‘innovation’ tossed around in so many ways, but this is really key in CPG right now,” said Rose Hamilton, CEO of Compass Rose Ventures, a firm that consults CPG brands on their growth strategies. “In this category, innovation is about creating a new methodology for value creation for the customer.”

Hamilton shared that businesses, even small and growing consumer brands, can embrace innovation in three core ways: 

  1. Product innovation, which encompasses the way products are sourced, designed and packaged;
  2. Marketing innovation, such as brand development and product storytelling that reaffirm the unique value of the product; and
  3. Experience innovation, or all the ways consumers can use and interact with a brand and its products.
     

Product Innovation: Uncovering New Ways to Expand

If CPG brands want to stand out and win consumer wallet share, they need to build their product innovation story, according to Hamilton. They need to outline the unique values and benefits of their products, and outline why consumers should be willing to spend on them versus competitors.

Brands can then use consumer insights they gather over time to identify possible paths to product expansion — either into new product SKUs or entirely new categories. Listening labs, survey panels and one-to-one meetings with loyal customers can help leaders better understand customer needs and pain points and then uncover new white space for their long-term product roadmap. 

For example, House of Wise, which started as a range of CBD drops and gummies to address stress and sleep issues, expanded to include new product lines for fitness and sex drive. The company is extremely active on social media and has a direct brand community to gauge new ways the brand can grow and evolve. Skincare brand Bubble takes a similar approach, tapping its community of Gen Z consumers to inform everything from brand packaging to new product releases.

“Brands have to get permission to expand [into new categories],” Hamilton explained. “If you’re a perfume brand, are you going to have permission to create diapers? Probably not. But there’s enough crossover in wellness and beauty, for instance, because they’re both increasingly science-backed categories. If it’s a science-backed brand or individual product, then you have permission to extend as long as you have the results behind it.” 

Marketing Innovation: Creating and Activating a Breakthrough Story

While a great product is the foundation of every great brand, a great story is what helps brands stand out and get noticed. After you develop the core story of your brand and what makes it different and valuable, you can build a messaging framework to ensure this story is present and consistent as you use different channels to market to customers.

“A lot of brands know the secret sauce that they offer, but they don’t convey it well,” Hamilton explained. “Therefore, they’re not attracting the right customer because they’re not speaking their language. There’s a serious positioning and marketing retooling that needs to happen to unlock the founder story that will really help the brand differentiate.”

Hamilton recommended that business owners and team members who oversee marketing and social media conduct one-to-one interviews with customers so they get the qualitative insights they need to refine (or reaffirm) their messaging: “If you don’t have your messaging crystal clear, no one is going to understand what you do or why you do it,” she explained. “No one’s going to want to hang out with the brand and then you’re not going to scale.”

Once a strong brand is established, marketing and creative teams should develop their tactical marketing mixes to include channels that allow them to tell the company’s story effectively.

“There is a general playbook that still works across the board — it’s about finding the channel(s) [that are] the best fits for the brand positioning and the brand messaging,” said Calvin Lammers, VP of Digital & Media at personal care brand Nécessaire, in an interview with Retail TouchPoints. “If a brand is aiming for authenticity and transparency, TikTok has become the key platform for that organic, transparent messaging. You can’t put a highly designed TV spot on TikTok and expect it to work; it’s not what the channel was built for.”

Experience Innovation: Showing Up in a Way that Resonates 

“Experience” can encompass many things, but for small businesses, there is a big opportunity to find unique ways to integrate your brand (and products) into consumers’ everyday lives, according to Hamilton. This includes everything from events and activations to non-traditional wholesale partnerships.  

The more interesting and seamless these integrations are, the more memorable they are for consumers. For example, INBLOOM, the plant-based body nutrition company founded by Kate Hudson, accomplishes this by rethinking the traditional wholesale selling model and instead, forming partnerships with adjacent brands. Bluestone Lane sells a signature line of smoothies crafted with INBLOOM protein. During the 2022 holiday season, the brand worked with Barry’s on a “Holiday Survival Smoothie” that was sold in Barry’s Fuel Bar locations. All shoppers who made a purchase on the INBLOOM ecommerce site also received free access to a Barry’s workout class during the promotional period.

“Rather than going wholesale, which is a margin play, brands should look at their strategic partnerships,” Hamilton advised. “Find a brand that shares values like yours so you can create value. That intersection where smart brands get together creates a really great space to grow.”