If the shock of political events and trends over the past 18 months has taught us anything, it’s that there is a strong desire for change in the status quo. Old ways of doing things are being smashed. The growth in popular movements has shown that just because something used to be valued and proven, there’s no possibility of anyone resting on their laurels anymore. In the consumer world, these trends are mirrored by the emergence of and growth in ‘Disruptor’ brands – companies and brands that break the mould in terms of a new business model or approach to a category. From Uber to Airbnb, we have seen these new companies totally change the way products and services are provided.
But what do consumers really think of disruptor brands? Do they have mainstream appeal or are they going to be confined to wealthy, urban hipsters who are lured by cool? Are newer, tech-led firms simply innovating the way in which a product or service is delivered, with some snazzy branding attached? Do long-established companies who have not changed their business models in years, have anything to fear?
Before we start, what do we mean by a disruptor brand? The definition is not black and white. For the last few years, well-known and respected publications like The Times and Marketing Week have published lists of the ‘ones to watch’: brands from almost every imaginable sector who are shaking up their marketplace, bringing consumers entirely new offerings or ways of doing things, usually with technology at the core.
So what is their impact and what can marketers do about it?
A new consumer study has got to grips with the disruptor phenomenon, to help brands understand what consumers really think of them, who is likely to consider using them, and why. The survey of 1,500 people covered a range of different sectors, (from financial services to healthcare, utilities to holidays), and a selection of some of the UK’s long established brands such as Barclays and British Gas, in addition to a range disruptors including Airbnb and Uber. Its main finding is clear – no company or business model is safe. Looking from the consumer’s viewpoint revealed that any current business model or brand can, and should, be replaced on an ongoing basis if it means creating value for the consumer.
Looking at the data in more detail reveals that disruptors are not only for the young and hip. 42% of those aged 65+ had used one or more of the disruptor brands included, and 20% of the segment most ‘into’ buying disruptor brands were over 55. The highest users of disruptors were in the 25-34 and 35-44 age groups, not the 18-24 year olds; indeed, 30% of 18-24 years olds had not used any of the disruptor brands. Households with an annual income of over £55K were key adopters with 74% of them using these brands. And, although their use increases with income, the top reason for choosing a disrupter brand is value for money. But ‘value’ will always encompass much more than price – it encompasses the ‘worth’ a consumer feels from using a brand and what it gives them overall.
As it was clear that demographics alone didn’t define disruptor use and consideration, Network Research created an attitudinal segmentation, splitting UK consumers into five clear groups based on their attitudes to, and usage of disruptor brands. Attitudes to a broad range of factors were included – from views on the environment, use of technology, ways of choosing products and services, alongside softer elements such as how they (and others) perceive themselves. These segments run from the ‘Tried and testeds’, who use disruptors the least, through ‘Mainstreamers’ and ‘Nonchalants’ to ‘Go getters’ and ‘Too cool for schools’, with use of disruptors increasing through the groups.
So what are the implications of this from this research for brand marketers? First up, it does depend on what sector you are in – sectors most ripe for disruption are holidays and travel, followed by consumer electronics and utilities. Banking, financial services and healthcare less threatened by disruption; consumers are less likely to trust a ‘Johnny come lately’ in these sectors.
Having said that, the survey found that no sector is completely safe – while awareness to usage ratios are lower for disruptor brands in banking financial services and healthcare, even within these sectors certain products are ripe for disruption. It highlighted that where there is already a consumer precedent, or perhaps a level of reassurance, to switching, consumers are much more likely to consider disruptor brands. The obvious case in point for this is insurance – generally speaking, consumers are much more likely to say they will consider disruptors in the insurance market (47%) than say for banking (36%). With the advent of open banking, and proposed greater choice in healthcare provision, these sectors definitely won’t stay safe.
Applying the segmentation to some well-known brands provides an indication of the study’s usefulness: For example, looking at the profile of Lloyds Bank by segment, almost 60% of current users are either ‘Tried and testeds’ or ‘Mainstreamers’. This compares to just 15% of Monzo customers. However, three in 10 Lloyds customers were in the top two segments most open to disruptors. So, what does Monzo need to do to poach these open customers, and in return, how can Lloyds retain them? In this way, the study provided powerful insights for marketers targeting the general consumer, and also for individual brands, both established and new.
It’s clear that it’s only by understanding attitudes, coupled with demographics, that the right targeting strategies can be put in place. This research and the segment profiles provide marketers and brand owners alike with a wealth of information about where it is best to spend your marketing budget and the types of messages you want to get out there. But whatever happens, it’s clear that change is here to stay.