How traditional brands cope with challenges in fierce competition
Bain Company has released a new issue of the Asia Pacific Consumer Goods Market Research report. The report suggests that although it is not uncommon for emerging brands to seize market share of mature brands, mature brands have not completely lost ground in all markets of any category, nor have they lost ground in all categories of any market. On the contrary, many large mature consumer brands are still able to achieve impressive performance when facing the impact of emerging brands.
Bain Company studied the market share changes of mature brands in 23 consumer categories in 11 Asia Pacific markets from 2018 to 2022. In the study, Bain Company combined different categories and markets to form 253 scenarios. Among them, in 44% of the scenarios, mature brands were snatched market share by emerging brands (defined as an overall market share decline of more than 1 percentage point); Mature brands maintained a stable market share in 28% of the scenarios, while in another 27% of the scenarios, their market share increased (defined as an overall market share increase of more than 1 percentage point).
From a market perspective, Malaysia, the Philippines, and India are the markets with the best performance of mature brands. China, South Korea, and Singapore provide the most favorable development environment for emerging brands. Taking the Malaysian market as an example, in the 23 categories tracked by Bain Company, mature brands achieved market share retention or improvement in 74% of the categories; On the contrary, in the Korean market, mature brands have experienced a decline in market share in 70% of categories.
Xing Weiwei, a global partner of Bain Company, believes that this trend may be related to the development dynamics of channels in various markets. Countries represented by China have developed e-commerce channels and a complete network of third-party suppliers, creating a favorable environment for the growth of emerging consumer brands. However, in some countries, including the Philippines, the penetration rate of e-commerce is relatively low, and traditional channels still dominate. This channel environment is more conducive to mature brands maintaining their competitive advantage.
From a category perspective, Bain's analysis suggests that emerging brands are generally the strongest in the beauty and personal care categories, while slightly inferior in categories such as alcoholic and non-alcoholic beverages, food, and home care.
Xing Weiwei stated that although the market, category characteristics, and macro environment have played a certain driving role in the success of mature brands, the most important factor is still the way they manage categories and brands. Mature brands that have successfully increased their market share are adept at absorbing the most effective strategies of emerging brands and utilizing their own advantages. They have the advantage of scale and can cleverly avoid common pitfalls that plague large organizations, such as complexity and lazy thinking. In addition, they also demonstrate the ability to innovate, invest, and execute.
For example, when driving product portfolio growth, successful mature brands will systematically explore unmet consumer needs and start innovative research and development based on emerging trends in the seemingly insignificant early stages of development. Some mature brands have absorbed the methods of emerging brands and applied them on a large scale. Through these methods, mature brands resonate with consumers and utilize their scale advantages to quickly establish distribution channels, enhance brand awareness, and increase cost-effectiveness.
David Zehner, Chairman of Bain's Asia Pacific Consumer Products Business, stated that not all mature brands are unable to withstand the impact of emerging brands. Many mature brands have successfully maintained or even expanded their market share in fierce competition. The reason for the strong development of these brands is that they integrate their own advantages with the strategies of emerging brands, effectively responding to threats and consolidating their market position.