Be a challenger brand in 2022

challenger boxer making his way through a crowd towards a boxing ring

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Snapshot : It’s been a challenging year. But for challenger brands, challenge is something you live with every day. In this article, we review the eight factors that drive the challenger brand approach, from breaking with the past to being ideas centric. See what lessons you can take from these factors to improve how you do marketing in 2022. 

It’s been a challenging year (again), hasn’t it? But challenges make you stronger, like learning from your mistakes makes you smarter

In the marketing world, there’s two types of challenges you deal with.

Firstly, there’s the challenges that happen to you.

Competitors change plans. Customers change attitudes and behaviours. Retailers and distributors decide to buy less from you. 

Person holding up an illustration of an angry face

You try to anticipate these. You set up mitigation plans and build in flexibility. But, you don’t have a lot control, and can only do your best to deal with them as they come up. 

But you do have some control over the challenges you make happen to others. And if they’re dealing with challenges you’ve set, they’re less likely to cause challenges for you. 

Clearly, it’s much better to be a challenger brand, than to be a challenged brand. And you’d expect the competitor who’d set the most challenges would be the market leader, right? 

But, that’s rarely the way it works out. 

The blessing and curse of market leadership

There’s always a market leader in every category. The competitor that sells the most products. But market leadership is a double-edged sword. Its a a blessing and a curse. 

It’s a blessing because customers are already buying you. Your focus is on keeping them loyal and less about finding new customers. Your size means you can negotiate better prices with suppliers and distributors. Sales are high, and profits are good. 

But, it can also be a curse. You want to defend your position. You’re almost always forced into a cost leadership competitive strategy to do that. You keep prices and costs low to maintain your size.

This means market leaders are often predictable. They’re slow to act and they’re conservative in their decision-making.

Market leaders do everything they can to keep the status quo. They avoid risks, and have too much at stake to go for big innovations.

(see our articles on e-Commerce barriers and getting creative approvals for examples of slow moving and conservative companies). 

In Clayton Christensen’s book, the Innovators Dilemma, he talks about a crisis point when market leaders are growing.

They become so focussed on what’s driving their current success, they become blind to the future needs of the market.

This short-term focus means they don’t look at future opportunities, and this makes them vulnerable.

That’s where challenger brands come in. 

What is a challenger brand?

Challenger brands are the number two, three or even smaller players in the category.

Unlike the market leader, they’re not locked in to cost leadership, and are typically more audacious and risk-taking in their approach. 

They almost always use focussed differentiation as their competitive strategy

The challenger brand name became popular after the publication of Adam Morgan’s book Eating the Big Fish in the early 2000’s. 

That book set out how challenger brands could think and act to drive rapid growth. They could position themselves as thought leaders, and drive customer engagement and loyalty

As per last week’s article on story types, challenger brands aim to “overcome the monster” that is the market leader. 

In this article, we look at the eight challenger brand approaches set out in the Big Fish book. We look at examples of how brands use them, and share relevant ideas you could use in your 2022 plan. 

Break with the immediate past

There’s a concept in psychology known as the curse of knowledge

It’s a cognitive bias based on the idea that as you learn more about a subject, it’s harder for you to imagine what it’s like not having that knowledge.

You forget not everyone knows what you know, and you lose sight of what and how non-experts think.

But this makes your thinking entrenched and close-minded. You’re committed to that way of thinking because of the time spent gathering the knowledge.

A close up of an own with a quizzical look on its face

You’re less open to alternative views, and think less about new or more innovative approaches. You make assumptions that what you know, is the way things are in your category. 

Market leaders have the curse of knowledge, What they did to get to market leadership becomes intellectual baggage. They’re locked in to a way of thinking and acting. They assume everything will stay the same.

Challenger brands on the other hand don’t have any of this baggage. They don’t start as experts in the category. They challenge assumptions. Challenge brands actively explore better ways to meet customer needs. This threatens what the market leader currently does. 

Home movies

Look at the way we watch movies at home for example. The market leader in home movies used to be Blockbuster. You went to their store and rented physical copies of the movies.

Famously, the idea for Netflix came about when the founder got annoyed by being charged Blockbuster late fees. 

They started with a new way to deliver home movies – first with an online mailing service and then with video streaming. 

Mobile phone on a table wth Netflix logo showing

This challenged the way Blockbuster delivered home movies to the point where video stores don’t really exist anymore.

Netflix is a great example of a challenge brand rethinking how to meet a customer need. They challenged a basic assumption – you had to go to a store to rent a movie – and made it better. With their service, you didn’t even have to get off the couch to get the product. 

The book calls this Intelligent Naivety

Intelligent Naivety

Challenger brands need to be open-minded enough to question how things currently work in the category. And they need the imagination to work out better solutions for customers. Why does the category have to be like this?, they ask. What could it be like if we started from scratch? 

There’s plenty of famous examples. Dyson and bagless vacuums. Apple and the touchscreen iPhone. But, go beyond those and you soon see more everyday examples everywhere. 

Budget airlines eliminating in-flight goodies to keep prices low. Meal delivery services where you order everything online. Electric cars that you charge at home rather than visiting a petrol station. 

This type of thinking demands a culture that encourages breakthrough ideas. Challenger brands think about how to motivate teams, organise how they work and arrange the right resources, environment and processes to think differently. 

Challenger brands think about creative thinking and build companies that run off creativity

Be a lighthouse identity

Once you start to challenging category assumptions, you see the category very differently from how the market leader sees it.

You think more about how the category could be in the future, and less about how the category is now. 

But you need to convert that thinking into a strategy and plan.

You need to create your brand identity, and as the Big Fish book calls it, make it a “lighthouse identity”.

The word HOW written out images of a lighthouse for each letter

This is an identity that clearly shows who and what your brand is, and creates an identity you project “intensely, consistent and saliently”. 

The lighthouse part comes the idea that once you set your identity, you keep it relatively fixed and constant. It shines out into the world and as the book puts it, customers use it to navigate. (as opposed to constantly changing your identity to go after customers). The identity is clearest as part of your communications, but it also runs though all parts of your customer experience.

Look at Red Bull and “gives you wings” for example. Their daredevil identity comes though in their Formula 1 sponsorship and PR events like the Stratos project where a stuntman parachuted from the edge of space.

Look at the famous Avis “we’re number two so we try harder” campaign from the 1960s. They gave specific examples of the higher level of customer service they did to bring their identity to life. 

The lighthouse brand identity means having a clear point of view on what they stand for and how they act. That view should be consistently clear to customers, who’ll value it, and see it as being uniquely part of your brand.  Customers will relate to the this identity and feel that “this is a brand for people like me”.

Become the Thought Leader

“Thought leader” has become a bit of a LinkedIn cliche these days, but back when Eating the Big Fish first came out, it was quite a radical thought. 

The traditional view of a business that “leads” the market is the one who sells the most.

But, challenger brands can be more influential in sharing the direction of the market, by being the first and the fastest with innovation and new ways of thinking.

They lead the thoughts of the rest of the category. 

Skull - Marketing Creative Selling

It challenges an assumption that scale is the most important thing, and instead suggests how do you things can be equally if not more important. Challenger brands influence attitudes and behaviours by challenging the way the category works.

For example, air travel used to be very expensive. But challenger brands like Southwest in the US, EasyJet in Europe and Jetstar in Australia changed the way customers think about air travel with cheaper, no-frills options. 

When challenger brand Apple launched iTunes back in the early 2000s, they changed the way customers thought about buying music. You no longer had to buy a whole album and could now buy individual tracks for $0.99. 

Being a thought leader means approaching a problem differently and finding a better solution that customers buy into. 

When Google started, it had plenty of competitors in the search engine market.

Those competitors saw search as a way to sell advertising space though, and bolt on additional content resulting in clunky cluttered search pages.

But Google realised this wasn’t what customers wanted, and their clean stripped down search page changed the way people think about search.

Google hone page on a Samsung phone lores

Create a symbol of re-evaluation

The next plank of the challenger brand approach according to the Big Fish book is to create a symbol of re-evaluation. 

This symbol becomes a brand asset, either tangible or intangible that acts as a short cut for customers to understand the brand identity. 

These assets could be something simple such as a brand logo or icon.  The book references the Nike Air Jordan jumping man symbol for example. Or it could be something much more experiential, with high public relations impact. 

Brand identity asset classification examples

For example, Red Bull’s Flugtag where they challenge people to come up with novel ideas for human-centred flight. This is a great symbol of the Red Bull “gives you wings” brand identity by asking people to literally build themselves wings.

You can also build the symbol into the way you deliver the product or service. 

Though we take coffee baristas for granted now, when Starbucks first came out, the idea of having staff rigorously trained to make coffee in the best way wasn’t widespread. Their barista training and methodology was a symbol of their passion for great coffee.

Or think about how Tesla has challenged how people think about electric cars. Electric cars used to be deeply unfashionable, looking like science experiments or dull but worthy like the Toyota Prius. 

But Tesla have shown electric cars can also be stylish and high performance. They use they design and technology of their cars as a symbol to make customers think differently about electric cars.

Sacrifice

There’s a well known quote from Michael Porter that the essence of strategy is choice. It’s not just what you choose to do, but what you choose not to do. 

Challenger brands have less resources. They have to choose not to do something so they can focus resources on the things that matter most. Their competitive strategy is focus differentiation, and that focus means they get rid of anything that doesn’t fit that focus.

For example, in the toddler milk market for children over 12 months, many brands use price discounting as a way to attract mums and stop them switching to using cows milk. 

But the brands who focus on quality never price discount. That would detract from their lighthouse identity. They sacrifice the short-term gains for the long-term gain of having the highest quality image. 

Apple are probably one of the best known challenger brands for sacrifice. They limit the number of products in their range, and aim to reduce features to make their products simpler and more stylish (part of their lighthouse identity), rather than add features to try and cover more benefits.

Deliberately divisive positioning

Sacrifice can also come out where you deliberately position a brand to NOT attract certain segments of the market. Some challenger brands use a divisive positioning to put off customers they don’t want, so they create stronger bonds with the customers they do want. 

Brands like Marmite and Laphroaig whisky for example have run campaigns that polarise opinion by saying this product’s not for everyone. Love it or hate it. It’s better to have a mix of people who love and hate your product, than a bunch of customers who find your product average. 

Challenger brands don’t go for the middle ground. They sacrifice it to own a very specific territory in customers’ minds.

Overcommit

When challenger brands for after a specific positioning, they go after it hard.

They dedicate all their resources – people, time and budget – to own that position, and go beyond what you’d think was a “normal” level of commitment. 

For example, in Made to Stick by Chip and Dan Heath, they talk about the US department store chain Nordstrom and how their position is around exceptional customer service.

Their challenger brand mindset is that they’ll go above and beyond what other businesses do to keep customers happy. 

For example, they tell a story about a customer who got a refund on a set of tire chains, even though Nordstrom had never sold tire chains.

Another story talks about a customer who’d bought a product at Macy’s, but came into Nordstrom’s to ask for it to be gift-wrapped. 

To get this level of commitment through a whole business, the culture needs to the there to make it work. It becomes how the business does things, and leadership teams need to be the initiators and the demonstrators of it.

It often means breaking assumptions about how businesses should work. Challenger brands think differently about conventional financial and operation planning and measures. They see the longer term gain in committing to their challenger brand position.

Enter Popular Culture

As a result of these challenger brand activities, brands often start to enter popular culture.

These sorts of breakthrough ideas and commitment to new ways of thinking and acting capture the imagination of the public. 

Challenger brands often become “hit” brands.

They’re seen as the most popular, used by the most influential people, and the most talked about. 

Eating the Big Fish came out before social media really took off.

Inside a concept hall, lots of confetti flying in air, with audience reaching out their hands towards it

But you can see in what the likes of Facebook, Instagram and LinkedIn have become, that challenger brands feature heavily in many of those channels. Brands and culture have become more closely linked together than they were in the past. 

Challenger brands become more popular because they’re associated with influencers who are popular. And those influencers get more popular, because they only endorse popular brands. 

Out of off all the approaches Eating the Big Fish talks about, this one is the most debatable. Certainly, some brands can and should do this. But you can still be a challenger brand, while your category or context might mean you never enter popular culture in the way they outline. 

Saying that though, challenger brands can’t match the advertising spend of the market leader. So, smart public relations especially connecting with influencers is often a more cost-effective way to make noise and attract new customers.

Become ideas centred

The final plank of the challenger brand approach is to have a pipeline of ideas to create momentum.

One idea isn’t enough to guarantee challenger brand success, you need to keep it going with ongoing new ideas.

Challenger brands don’t sit still.

They’re come up with new ideas to push the boundaries on their lighthouse identity and their overcommitment to delivering that positioning. 

Close up of a man's hands holding a light bulb that's illuminated

New ideas stimulate the imagination and stop customers from getting bored. They strengthen the challenger brand’s competitive position, and keep the customer relationship fresh. 

This means a business culture that champions breakthrough ideas. A business cultures that thrives on creativity and creates a customer experience that’s authentic, relevant and long-lasting.

Conclusion - Challenger brands

Challenger brands are brands that aren’t the biggest in the category.

They can’t outspend the market leader, but they can outthink and outplay them.

Challenger brands don’t accept the status quo.The status quo means the market leader wins. 

Challenger brands take more risks, move faster and use their lack of category “baggage” to be smarter and more focussed.

challenger boxer making his way through a crowd towards a boxing ring

We cover eight different ways to support a challenger brand approach in this article. Read Eating the Big Fish to see the full details on all eight approaches.

Being a challenger brand means being comfortable with challenge. Challenger brands don’t have it easy. You take on a competitor who’s bigger, got more money, and who your target audience already know.

But fortune favours the brave. It also favours the smart, and challenger brands need to outthink what the market leader does, and outplay them in the market. We challenge you to think and act like a challenger brand in 2022.

Check out our articles on how to be a more creative company and how culture drives breakthrough innovation for more on this topic. Or contact us, if you need help in becoming a challenger brand. That’s a challenge we love to take on with our customers. 

Photo credits

Entering the ring : Photo by Attentie Attentie on Unsplash

Angry face : Photo by Andre Hunter on Unsplash

Owl : Photo by Joe Green on Unsplash

Netflix : Photo by Kon Karampelas on Unsplash

Skull : Photo by jesse orrico on Unsplash

Google Tablet : Photo by PhotoMIX Ltd. from Pexels

Confetti : Photo by Pablo Heimplatz on Unsplash

Light bulb : Photo by Riccardo Annandale on Unsplash

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