Bigger Is No Longer Better When It Comes to Consumer Brands

Bigger Is No Longer Better When It Comes to Consumer Brands

August 29, 2018 Off By administrator

For a century now, mass-market consumer brands have been convincing us to desire the stuff everyone else has. We’ve been buying products — Starbucks coffee, Gap jeans — designed to appeal to as many people as possible and to give consumers around the world the exact same experience.

But we’re done with that. We no longer want to settle for what everyone else has, and technology is making it so we don’t have to. Upstart companies, such as personal stylist Stitch Fix and 3D printing service Shapeways, are helping to define a new era aimed at giving each of us exactly what we want: products and customer experiences built for one, not for many.

“The demand for personalized goods — and the need for mass customization — is a trend with staying power,” says Vicki Holt, CEO of Protolabs, an on-demand production company. “At a time when businesses need to differentiate their products, command premium prices, and establish their relevancy with consumers, mass customization makes as much sense today as the standard black Model T Ford did at the dawn of the industrial age.”

This shift in consumer markets is part of a larger trend that venture capitalist Hemant Taneja and I identify in our book, Unscaled. It’s not just that startups are disrupting established firms. It’s that AI and a wave of AI-propelled technologies are allowing small, hyper-focused innovators to effectively compete against broad, old-school economies of scale. We call this “unscaling.” Because AI learns about individual customers, it allows small companies to profitably make products that address very narrow, passionate markets — even markets of one.

The old strategy of beating competitors by owning scale — big factories, massive distribution networks, shelf space in stores — has in many cases become a liability and a burden. In the razor and shaver markets, for example, Procter & Gamble, with all its magnificent resources, has lost market share to more nimble upstarts such as Dollar Shave Club. By renting capabilities from vendors and contractors, getting to market quickly, and targeting a narrow segment with an entirely new user experience, the direct-to-consumer players can steal significant share from incumbents.

Stitch Fix offers a glimpse into how a more personalized consumer experience can work. The company, founded by Katrina Lake in 2011, melds AI and human input to offer customized style to anyone. The products Stitch Fix sells are mass-produced, but the style and fit are tailored to individual customers.

We no longer want to settle for what everyone else has, and technology is making it so we don’t have to.

New Stitch Fix customers start by filling out an online style profile, telling the service their size and shape and a bit about their lifestyle, answering questions such as “What’s your occupation?” and “Are you a parent?” Then the company sends out five clothing items chosen by a stylist, based on that profile….

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