The first thing to remember about all successful challenger brands is that what they exist to challenge is not the market leader, per se, but the status quo. From a competitive messaging and positioning standpoint, challenger brands derive power, not from comparisons to the leader, but from an idea that offers customers an affiliation, experience, or advantage the market leaders are not or cannot offer. And, by doing so, challenger brands avoid price comparisons and command a premium for their offerings. So, how do you know your brand is ready to take up the challenge? Ask yourself these three questions:
1. Does your brand embody a challenger’s hero story?
There are three basic character archetypes any challenger brand should fit into. Let’s take a look at them and their implications:
This challenger archetype makes an existing product or service, qualitatively similar to the market leader, but available to new or different audience. This could mean an offer of parity at a lower price, availability to a new demographic segment, a different geographic location, or all of the above. Think: Apple Computer (1977), Southwest Airlines, or Aldi foodstores.
This challenger archetype satisfies the same need as the market leader, but through a substantively different experience. That could mean a product substitution, a new distribution method or radically altered service paradigm. Think: the first iPhone, Lemonade Insurance, Amazon, AirBnB, and Uber.
This challenger archetype offers a comparatively similar product or service experience to the market leader but enhances the transaction by linking it to some form of community support or social responsibility. Think: Tom’s shoes, Bombas socks, Newman’s Own Foods, BoxLunch and (RED).
2. Do you relish your limitations?
Challenger brands are always hungry. While every company these days seems to need to accomplish more with less, challenger brands derive some form of defiant energy from the task. If challenger brands were boxers, they would be fighting up a weight class. That is not a sign of hubris, but rather a confident embrace of humility. It’s not about pretending to be the champion’s size, but rather using its size against it. So, getting beyond metaphors and analogies, what does that mean in real market planning terms? It means approaching budgeting with clinical precision. It means constantly measuring, analyzing and optimizing every small detail of your marketing and media plans so that every dollar and every effort generates maximum returns. It means embracing a more narrow positioning that can be more readily communicated and capitalized upon and a more focused approach to media planning. Ultimately, it means having the discipline to engage in only those activities and opportunities that support your strategy--and loving it.
3. Do you have an appetite for risk equal to your aspirations?
Any proverbial David will never beat Goliath playing Goliath’s game. David only wins by devising a new game, altogether. But making that move requires an appetite for entering unknown territories, taking risks. How much risk? Well, that calculus is always a function of the disparity in resources, awareness, affinity and scale between challenger and champion, as well as the time frame within which the challenger needs or wants to bridge, or even surmount, those disparities. So what risks have historically paid off for challenger brands? First, and perhaps most obviously, creative risk. If you can’t outsize the champion’s media budget, you have to outsize their ideas. Usually, this requires some form of novelty; breaking through with a unique creative campaign, a bold bet on a new form of media. Successful challengers have also found reward in taking strategic risks in their approach to distribution. Some take supply risks, limiting inventories or the number of outlets, betting scarcity protects margin. Some take affiliation risks, estimating exclusivity, or halo effect, of distribution partners increases desirability. Some take channel risks, offering a new previously unavailable form of distribution. Some challengers take product risks, creating an entirely new means for consumers to satisfy the need the champion does, currently.
Ultimately, challenger brands are a powerful mix of discipline and passion.
The truth is, most brands are, in a basic sense, challenger brands--existing in a challenging marketplace, trying to make the most of constrained budgets, limited internal resources and accelerated expectations for return on investment. Succeeding as a challenger brand, however, requires a higher level of awareness and market insight, a more disciplined approach to planning and prioritization, and a commitment to taking calculated creative and market risks. And the best of the best enjoy every minute of it.