The impact of disruptive start-ups on traditional branding

A tale as old as time: new innovation comes along, a development so crucial we forget how we ever lived without it. It was roads and steel, drive-throughs and frozen dinners. It was radios and colour TVs. Then it was the internet and Apple.

We become so comfortable as things are, we forget life before the luxuries of a given time period. We move on from the brands that supported us as their competitors’ technologies and influence pass them by.

These evolutions used to feel natural, predictable even. Branding and service developed gradually with the needs of society. Today, the world is more interconnected than ever, the pace of our everyday lives unrelenting. There is no time to get comfortable, not a second to snooze. The tortoise does not beat the hair.

Disruptive innovation threatens and compels established players in every sector. Major, market-changing breakthroughs are being implemented and adopted at the speed of wildfire, utterly compromising the existing practices of a business or its industry as a whole.

Cabbies didn’t foresee on-demand ride-sharing and car services, just as hotels didn’t consider consumer to consumer home rentals. Thrift stores and local craftsmen didn’t develop global e-commerce platforms for resale and handmade merchandise, just as restaurants didn’t band together to find delivery drivers available through the click of a button. While these businesses and their owners went on with their day-to-day, the actualization of such enigmatic realities were executed by disruptive start-ups.

Because of this, the branding of long-standing products and services must consistently be analysed, re-worked, tested, reconsidered, retested, and so on. Start-ups are giving old, tried-and-true services a run for their money on just two basic principles: their ability to shake up and dissuade an existing market while harnessing the attention of plausible new customers.

Read: Taking on an established brand

Despite the level of knowledge or affluence, modern consumers have the ability to research and factor in more information while in the decision making process. Their options are evermore transparent. Once a newer, more attractive brand with more to offer comes courting their pocketbook, or Apple Wallet, they’re as good as gone. Brand loyalty is over.

Companies who create an avenue to make everyday necessities simpler and more convenient to the masses through technology are able to offer more competitive pricing. The easier their innovation is to understand and adopt, the more unilaterally attractive it is to the mainstream. Lower costs to the customer means lower gross margins. But, with such great levels of use, effective start-ups are still turning the existing market and yielding higher returns.

Along with persuading those who would continue to use the before-standing services anyway, great start-ups simultaneously use their precedence as a resource to engage unreached market segments.

The largest untapped markets are also those with the most money to spend, Millennials and baby boomers. These juxtaposed yet paralleled groups often opt out of the existing mainstream standards. They don’t trust the institutions or have time for archaic processes. The two groups play one hand: a willingness to pay more for high-functionality and time-sensitive performance.

Read: Building an impactful brand - six tips

Start-ups that are able to create cost structures and competitive offers servicing both segments have the greatest advantage. The quantity of users accessing and enjoying the value of their services at the lower tier is balanced, and even exponentially propelled, by the those adopting their higher priced accommodations.

Take ride shares, for example. There’s always at $5 Lyft-line weekend deal, but a portion of those rides would cost more than $5. Many users take advantage of the promotion, while a smaller number continue to ride at a higher price to be by themselves in route to their destination only. The influx of weekend riders that normally would not take Lyft without the deal, in combination with those luxury car consumers who would have previously called a limo or town car company, outweigh the low margin of the discounted rides.

Traditional companies can rarely reach the mass and luxury markets at once like this. Even if their marketing efforts account for varying demographics, traditional branding typically targets just one monetary segment. Longstanding companies also hold a more firmly developed brand identity and position in the minds of consumers. Plus, they possess higher overhead and more  rigidly determined structure. Both rebalancing their resources and re-branding their image come with the possibility of defacing their name and existing values.

Technology is enabling the things we want to exist before we even we know want them. Once we do, we won’t trust an old dog to do new tricks. The way today’s start-ups can quietly and effectively strategize against industry leaders, building businesses based on convenience and need, is sending the longevity of conventional branding for a tailspin.

This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

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