How Brands Should Deal with Disruption

By Anne Field

A mural at the Netflix headquarters in Los Gatos, Calif., featuring actors from its original series. Producing and distributing original content was one way the media giant managed to stay ahead of a changing industry. Courtesy of Netflix

For the longest time, the mattress industry seemed impervious to the digital disruption rocking so many business sectors, from hotels to music. Then, in 2014, Casper Sleep introduced the bed-in-a-box, a mattress ordered online and delivered, neatly compressed, in a cardboard box. Initial orders were impressive and media coverage loud. After that, a slew of other online rivals, like Tuft & Needle and Leesa, entered the market with their own competitive versions.

According to Warren Kornblum, interim CMO at Serta Simmons Bedding (SSB), one of the leaders in the industry and seller of the Serta and Simmons mattress brands, Casper's success came as a proverbial wake-up call. Consumers, the company realized, found mattress shopping annoying, time-consuming, and confusing, and were, in fact, thrilled that there was an easier alternative.

So SSB stepped up its game, enlisting marketing as a big player. Working hand in hand with product development, it launched a new social media effort to establish the brand as a thought leader in the sleep space. In June, the company also introduced its own direct-to-consumer line called Tomorrow Sleep. "The first reaction of many companies in this situation might be to throw up your hands and say, 'woe is me,'" Kornblum says. "But it made us realize that, for many years, the mattress industry had been doing things the same way and speaking more to itself than the consumer."

Kornblum is in a better position than his counterparts in many other disrupted industries. In an interview with Architectural Digest, Casper cofounder and COO Neil Parikh estimates companies like his have cornered perhaps 10 percent of the market so far. That growth, Kornblum says, is stymied in part by the conundrum of how dissatisfied consumers return the mattresses, since the bedding arrives compressed and, once unfurled, can't fit back in the box. Still, the situation shows how vulnerable many industries are to digital disruption and the importance marketing can play in addressing it. What's more, if marketers do their jobs right, they can not only forge stronger relationships with customers but also detect trouble on the horizon that warrants action. "Marketing not only plays a role in this; it should play the key role," says David Reibstein, professor of marketing at the Wharton School of Business. "Marketing is perhaps the most important element in recognizing a disruption is coming."

Stay Vigilant

Certainly, as Kornblum knows, one essential response is to react expeditiously, rather than ignoring an impending threat. Perhaps the poster child for what not to do is Eastman Kodak. The venerable former photography giant famously developed digital photography, did little with it, then responded too slowly as the world of photography changed dramatically. It eventually filed for bankruptcy in 2012 before reconstituting as a smaller company. Ultimately, according to Reibstein, the primary fault lay with marketing, which didn't detect customers' gradual embrace of change and the transformation underway. "Front and center this was a failure of marketing," Reibstein says.

"Every company has to be a tech company."
— Joshua Shane, VP of business development and strategy at Viewstream

The key to avoiding such a failure, then, is paying attention. Dissatisfaction with a product or service tends to be out there well before disruption bursts onto the scene and takes hold, according to Reibstein. As a result, marketers can pick up clues, sussing out both what's coming down the pike that could affect the market — therefore requiring a strong response — and smaller anomalies that are likely to fade away.

Ironically, the marketer's most effective tool in watching for signs of disruption is technology, the very thing that most often enables disruption in the first place. "Every company has to be a tech company," says Joshua Shane, VP of business development and strategy at Viewstream, a San Francisco–based technology marketing firm.

Scouring social media continually for customer sentiment is important. To Shane, that's a no brainer. More important, he says, is moving away from traditional surveys and focus groups toward tech that can sift through data and analyze patterns in customers' behavior and understand how they interact with the brand. Doing so requires tapping sophisticated cloud-based platforms that have artificial intelligence (AI) capabilities built in. Without such technology, "You'll fall behind in getting insights that will keep disrupters from coming into your industry," Shane says. "The gap between those really taking advantage of these capabilities and those who don't is only going to get wider and wider."

Most importantly, an AI-capable system, drawing on data found in everything from loyalty card purchase-tracking databases to Facebook analytics, uncovers insights a human could not discern. "It will mine for otherwise buried behavior patterns by particular customer segments that could, in another year, bubble up and become a problem," Shane says. With that information, brands can take steps to address the issues before they get worse.

Maintain Relevancy

Many marketing experts point to Netflix, the Los Gatos, Calif.–based streaming media company, as the ultimate example of a brand that, by relying on data analysis, was able to reinvent itself before another player did the disrupting. Netflix, of course, launched its online DVD rental service in 1998 and, a decade later, was on the verge of being disrupted by video on-demand. In response, says Dustin Longstreth, chief marketing and strategy officer at CBX, a New York City–based brand agency, Netflix expanded into streaming third-party content before beginning to produce and distribute original series in 2013.

Its first major foray in original content, which put the company on the map as a high-quality content producer, was a 13-episode remake of the 1990 BBC series House of Cards. Part of the reason for the show's initial popularity, according to Viewstream's Shane, is that the marketing team leveraged big data by tapping the company's recommendation engine, which pinpointed potential viewers likely to be interested in political drama and then reached out to them.

Using data and AI-enabled platforms is important for another reason as well. It can help brands increase their relevance to customers, and that provides a significant protection in the market. For example, by using natural language processes and search analysis, marketers can determine more easily than ever how consumers search for products and services and find the triggers likely to engage them. Through the use of visual recognition, which allows them to pinpoint images that viewers are attracted to, they're able to zero in on customer preferences and then provide relevant content. Andrew Swinand, North American CEO at Leo Burnett, the Chicago-based advertising agency, points to a client for whom marketers analyze Facebook pictures of cars people owned and then offer up content related to that type of vehicle. If a picture shows someone, say, standing proudly by a Jaguar, the agency can provide articles about luxury cars. "If you've increased your relevance to consumers, you're in a stronger position no matter what happens," he says.

In addition, there's the matter of convenience, a key driver of consumer response. Such tactics are especially important in an environment where getting stuff quicker, faster, and with more ease is the name of the game. "Digital disruption usually comes in the form of finding an easier way to do something — increasing convenience," Swinand says. "So marketers must provide relevant information that's not distracting. Relevance is a sister to convenience."

Evolve with the Times

Brands also can respond to disruptive threats through a repositioning that taps major, relevant consumer trends. For its part, SSB decided to address bed-in-a-box upstarts by remaking itself into a "sleep company," says Kornblum, tapping growing interest in healthy living, especially in sleep, along with diet and fitness, as essential ingredients. "The part we can help with is the sleep part," he says. That's partly meant pushing out online content establishing the company as the go-to source for sleep improvement. It's also involved emphasizing products equipped with new technology, like sleep trackers that unobtrusively measure the quality of consumers' slumber, allowing people to see patterns in, say, how the quality of their sleep might be affected when they drink an extra glass of wine the night before.

The repositioning of SSB also meant working closely with product development. "We're attached at the hip," Kornblum says. In fact, he emphasizes the importance for marketers to break out of silos and work closely with other functions, like operations and product development.

As marketers step up their analyses of customer data and discern important patterns, they need to be able to share that intelligence with the rest of the company. "If you work in silos, others in the company can't take advantage of patterns that marketing finds," says Shane of Viewstream. "We have to be champions in our own organizations."

Do the Disrupting

Consumers these days, of course, tend to do a lot of research online before making a purchase. That's true for just about any product, from mattresses to cars. Consequently, marketers have to know where potential customers go to get their information and be ready with the right engaging content at every step of the purchasing process, or face the possibility of losing ground to more innovative and attentive brands. "You've got to provide a greater amount of content to the buyer than ever before and make sure they can get it as easily as possible," says Tracy Eiler, CMO at InsideView, which sells targeting intelligence solutions that help sales and marketing teams. The more engaged the customer is, Eiler asserts, the greater the opportunity for marketers to control the conversation and the brand's image before, during, and after a disruption.

Ultimately, no one can predict just how their industry could be upended. "I don't think anybody has a crystal ball with which they can clearly see the technology that's going to disrupt them," says Longstreth. But marketers who stay on top of trends, continually comb through data to see what's on customers' minds, and learn to face up to market changes are less likely to be caught off guard — and more likely address disruption successfully.