By Jamie Rosenberg, Global Household & Personal Care Analyst at Mintel
"The term “hidden competition” refers to the idea that disruption often comes from outside the market, taking established competitors by surprise. Smartphones have become the evergreen example that has driven the near obsolescence of dozens of product categories, including wristwatches, paper maps, calculators and cameras.
Examples from the consumer packaged goods (CPG) category are also numerous and range from household care to beauty:
- P&G’s Swiffer floor cleaning system leveraged electrostatic non-woven innovations to make mops and brooms comparatively less convenient and less relevant for many consumers.
- Neutrogena has developed a competitive advantage through uses of AI and 3D printing to drive customisation. The company’s MaskiD uses smartphone cameras to capture facial measurements and skin data to create customised product recommendations. The company plans to take MaskiD’s customisation benefits to the next level with a custom 3D-printed mask.
- Partnerships can also drive hidden competition. In 2006, WD-40 partnered with a major pen manufacturer to launch its No Mess Pen. This innovation increased the usage of the company’s lubricant and expanded its consumer base.
As the pace of innovation accelerates, hidden competition becomes both stealthier and more severe in its ability to disrupt. But how do we prepare for a competitor that often goes unnoticed until it is too late?
Disruption is always on the horizon
Brands invest billions of dollars in order to understand their consumers. However, the focus is frequently on improving their current products around existing benefits. For example, cleaning brands will test consumer needs for a better degreasing formula or a stronger wipe in order to glean insights for incremental improvements. Rarely do brands consider consumer reaction to innovations beyond the short term sphere of focus.
Considering US consumers’ desire to reclaim a portion of days spent on household chores, it might be more prudent to learn consumer opinions of new flooring or countertop materials that repel dirt and water. These developments can shorten the ROI in incremental R&D spending because they reduce the number of cleaning occasions.
Looking over the long-term, household cleaning robots will be disruptive. Currently, these devices are financially out of reach for most consumers, but cost innovations are underway that could take robots from an expensive luxury to a mainstream household essential.
Look to the periphery
One way to anticipate potential disruptors on the horizon is by looking at the landscape of startup companies and newly patented technologies. This allows brands to be focused on a broad classification of consumer needs instead of focusing on current competitors.
Mintel Scout, a program designed to help our clients understand the startup community, is one way of keeping developments at the fringes of consumer aspiration. While these companies may represent the hidden competition, they are also potential partners and acquisition targets; for some established brands, they will be an opportunity. Perhaps more importantly, startups can foreshadow the long term trajectory of a product market because they are often conceived with disruption in mind.
Take the long view
We can’t predict the future, but when we use our imaginations to anticipate different ways that consumer needs can be met by disparate technologies from adjacent industries. Trends and events can be used as change drivers that form the building blocks of future scenarios to use in strategic planning. Scenarios can help us strategise against divergent ways that the future could play out and the startup landscape provides compelling change drivers that can be used in scenario planning.
What we think
Seeing past blind spots to anticipate the forces that could render products obsolete can be particularly difficult with a growing, profitable business. This is especially true for consumer packaged goods manufacturers where profitability requires scale and steady investments in manufacturing capacity. As the saying goes, it’s hard to quickly manoeuvre a large ship. It can be even harder to act on the idea of completely reimagining a currently successful business plan to avoid future obsolescence from unseen threats.
Developing the capabilities for a future-proof strategy doesn’t come overnight, but when strategists learn to think beyond beating their immediate competitors and use futures tools like scenario planning, then the hidden competition shifts from threat to opportunity."
Jamie Rosenberg is Global Household & Personal Care Analyst at Mintel, exploring trends and new business opportunities in household, beauty and personal care categories.