Unless you’re the biggest player in your market (think Coca-Cola, Nike, or UnitedHealth Group), then you have the opportunity to be a challenger brand and embrace the "underdog" label.
Many companies in the challenger ranks refuse, for one reason or another, to embrace that label, much to their detriment. This applies not only to corporate competitors of the big brands, but to small and midsize businesses as well.
With a few exceptions of close No. 2 brands like Pepsi or Avis, for example, companies are doing themselves a disservice in trying to act like they’re No. 1 when everyone—customers included—knows they’re not.
The Advantages of Being a Challenger Brand
There are compelling reasons to accept the challenger label. It allows you to embrace change and new thinking. It can also increase company morale, as employees rally around the challenger position and are encouraged to put forward innovative ideas. And from David vs. Goliath to Rocky vs. Apollo, history and popular culture have proven time and again that everyone loves an underdog.
Customers can relate to and understand the concept. Most people know what it's like to be an underdog at some point. Many have experienced the sweetness of being an underdog winner, and how that’s a lot more thrilling—and romantic—than being the expected champion (see: the 2004 Boston Red Sox, who ended an 86-year World Series drought).
You can’t beat leaders at their own game. Generally, people only have room for one No. 1 brand associated with a category. For example, Red Bull had “first mover” advantage in the energy-drink category—before the concept even entered the business lexicon—and became synonymous with it. Even if others taste better or deliver more of a kick, Red Bull stays on top. As long as other brands adopt a “me too” strategy instead of finding their own unique niche, they won’t win.
It allows you to embrace change and new thinking. Deciding you’re going to own the challenger brand label is like signing a contract: It’s a bold step that says, “We’re committing to a new kind of thinking because what we’ve been doing hasn’t been working.”
Getting your workforce bought into the challenger concept, by encouraging active participation in the development of your brand, opens up a mentality of doing things differently. Once they realize they have the freedom to brainstorm, you get brilliant ideas for pushing the business forward from all levels and titles. When you were still a “me too” brand, a lot of those ideas stayed locked up in people’s heads.
How to Market Yourself as a Challenger Brand
Differentiate yourself. As a challenger brand, you need to come up with a core position that is significantly different from the leader. Slightly different won’t cut it—you need a true and significant point of uniqueness.
Marketers are typically extroverted communicators, so they tend toward confident expression. The problem is that many of them think using different words equals differentiation. If you come up with colorful language to set yourself apart, but offer the same thing as everyone else, it will be exposed quickly. All the hip guerrilla marketing and slick packaging in the world won’t set you apart if your cola tastes bland. You have to differentiate on product or service in some way that’s discernible to your core market. Netflix didn’t open another chain of video stores and say they were better, but created a completely original way to rent movies. Instead of making another new soda, SodaStream pioneered a way to make your own at home. Marketers don’t need fancy words to sell these ideas, because new and interesting ideas sell themselves.
Connect with customers through social and CRM. When you solicit opinions on social media, you get frank ones. Often, the market leader isn’t doing a good job connecting because they’re just using social to beat the drum about why they rock. So you can gain an edge by finding ways to connect and learn about real needs, wants, and desires.
Fostering connections that fuel insights and surface needs helps create brand advocates. This can level the playing field in a cost-effective way. The leader will always have the resource edge when it comes to TV, print, radio, and out-of-home. On social media, however, everyone has a chance to put themselves out there and consumers can choose who they want to listen to. Leading brands also typically have more approval layers to get through that can hinder social dialog, especially when it comes to providing authentic responses in real time.
Utilize research, measurement, and data-driven decisions. As a challenger brand, you can reach markets with unique needs that aren’t being met by the leader because they’re catering to the common denominator. It’s often not cost-effective for them to go after market niches, or they may have simply gone unnoticed. Surveys, panels, concept testing, and ethnographic studies can help to identify entire sectors not being served optimally because of some assumption in the marketplace. Consider how FedEx got started by creating a more efficient overnight delivery service, or how Domino's focused on home delivery in 30 minutes.
'We Try Harder'
There is both freedom and opportunity inherent in making the bold move to identify as a challenger brand. You are instantly freed from the bondage of “me too”-ism, and able to carve out your own unique path. If done right, this move both empowers employees and strikes a positive chord with many customers who can relate to the ages-old struggle of being No. 2—and trying harder.
Bill Carmody is the CEO of Trepoint, an innovative marketing services agency, and was a founding partner and the CMO of Seismicom, a leading brand promotions agency. At Modem Media (now Publicis Modem), he was a pioneer in establishing the Internet as a promotions vehicle, including launching the first Web-based sweepstakes for CBS’ “March Madness.” Passionate about integrating marketing through wireless, online, sponsorship, events, and traditional marketing, Bill has presented at dozens of industry conferences and tradeshows across the globe.
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