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Direct-to-Consumer Challenger Brands and CPG

Written by Patrick Hagen | November 15 2023

Uber, Airbnb and Warby Parker are three prominent brands that serve vastly different consumer categories. However, they share two things in common:

  • All are based on a form of direct-to-consumer business model.
  • All are considered classic examples of challenger brands. 

The digitization and democratization of the marketplace has opened the door to direct-to-consumer challengers like these – companies that could not have existed just a generation ago. But what’s the marketing strategy that makes them work?

The 2 Keys to Direct-to-Consumer Marketing

Direct-to-consumer (DTC) marketing, or disintermediation, involves bypassing partners in the traditional supply chain like wholesalers, distributors and retailers. DTC is effective for two primary reasons:

 

1: Control

In a DTC model, the brand has control of the customer experience from end to end, creating opportunities to communicate more effectively and deepen brand loyalty. DTC brands also have access to rich, first-hand customer data that other businesses can only dream about.

 

2: Margin

Margin is the magic behind disintermediation. Cutting distributors, retailers and other intermediaries out of the supply chain leaves more profit for consumer brands and opens the door to more aggressive pricing strategies.

The 2 Keys to Challenger Brands

Challenger brands are defined by a desire to break through existing conventions and challenge the “that’s just the way it is” thinking that often drives an industry. They have ambitions that are bigger than their resources would seem to allow and they are prepared to do whatever is necessary to fulfill that ambition. Challenger brands have been successful for two primary reasons:

1: Social media marketing

Challenger brands can’t afford to spend huge dollar amounts on general-awareness marketing campaigns. Instead, they focus on nimble social media marketing and influencer strategies and make fast, data-driven decisions. They seek to outsmart rather than outspend the biggest brands and quickly build a loyal following.

2: Ready-made marketplaces

Online marketplaces like Amazon, Etsy and eBay give aspiring brands access to huge audiences and virtual “shelf space” they could never hope to obtain in a traditional retail channel.

DTC Challenger Brands in Consumer Packaged Goods

In simple terms, the consumer packaged goods (CPG) industry encompasses goods that consumers use and replace frequently. Everything from food and drinks to cosmetics and cleaning supplies are considered CPG items. It’s a massive industry, valued at approximately $2 trillion annually in North America.

Not surprisingly, the consumer packaged goods industry has seen a number of direct-to-consumer challenger brands take on the established mega-brands. Many have achieved great success in a short period of time, some even crossing over to become common sights on retail shelves:

  • Dollar Shave Club and Harry’s Shave Club have taken significant market share in little more than a decade.
  • Siete Family Foods went from a family experiment with grain-free tortillas to a $280 million enterprise in nine years.
  • Fenty Beauty, founded by pop star Rihanna in 2017 as an online-only shop, is now a global brand valued at $2.8 billion.

Packaging Solutions for the Consumer Packaged Goods Industry

Taylor has been putting the “P” in consumer packaged goods for decades. We provide nearly every type of CPG labeling and packaging solution imaginable including:

 Whether your brand is an established player found in retail stores nationwide or a direct-to-consumer challenger that’s just getting started, we have a packaging solution to meet your needs. Contact a Taylor representative to learn more. 
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