The rise of successful challenger brands

February 13, 2023
B2B Consumer Brand strategy

In the world of business branding, the notion of a ‘challenger brand’ has gained significant traction. In fact, whole businesses are emerging (and succeeding) off the back of this ethos. So, what is a challenger brand? And how does a company succeed off the back of this brand strategy – not just as a launch mechanism, but on a long-term basis?

Defining a challenger brand

The term ‘challenger brand’ was first popularised in 1999 by Adam Morgan, Founder of eatbigfish, in his seminal book on competing with the market leader, Eating the Big Fish. The term describes, “…brands and businesses with ambitions that outstrip their resource; those who know they must apply a very different approach to strategy, positioning and company culture in order to compete with the established leaders.”

Today, eatbigfish publishes The Challenger Project, where they share insights, strategies, and case studies to encourage and support the next generation of challenger brands.

Different types of challenger brands

The world of challenger brands is complex, with ten distinct challenger profiles defined in Eating the Big Fish:

1. The Irreverent Maverick: Best described as “counterculture attitude in a box”, Mavericks engage their audience with attitude, character, and unconventional tactics (e.g. wit and humour) to challenge the leader. Example: Red Bull.

2. The Missionary: A challenger with a transparent sense of purpose, Missionaries actively challenge what they want to change, believing it to be ideologically wrong. Example: Lululemon.

3. The Next Generation: Next Generations challenge the relevance of the market leader to the current generation, positioning themselves as the right brand for the new generation. Example: Netflix.

4. The Democratiser: Democratisers take something that was previously exclusive, and engage their audience by making it broadly available to the masses. Example: Zara.

5. The Real and Human Challenger: A ‘real’ people brand in a faceless category, enabling the consumer to establish a connection to the people behind the brand. Example: Aussie.

6. The Enlightened Zagger: Deliberately going against the norms, Zaggers reject commonly-accepted trends, behaviours, and beliefs – provoking their audience with their surprising stance. Example: Happy Socks.

7. The Visionary: Challenging the mundane ways the category thinks about its nature and role, Visionaries set out a higher vision for the future and then turn that vision into a reality. Example: Uber.

8. The Game Changer: Not only do they change the way we think, Game Changers completely change the way we live our lives. Example: GoGet Carshare.

9. The Peoples’ Champion: Challenging the motives and interests of the market leader, the Peoples’ Champion stands up for consumers who have been exploited by that leader. Example: Youi.

10. The Scrappy David: The classic David vs Goliath, the Scrappy David creates a binary battle: good versus evil, big versus small, us versus them. Example: IGA.


The benefits of being a challenger brand

The mark of all great challenger brands is their ability to disrupt the norm and create a passionate following. Whether moved by indignation or idealism, consumers engaged by challenger brands transform from a state of apathy to one of vocal buy in. Having found their voice, they take to social media – offering young, resource-poor businesses reach otherwise beyond their means. This sheer volume coupled with the authenticity of genuine consumer referrals works its magic, creating a critical mass resulting in rapid growth.

The problem is that this initial wave of engagement will inevitably die down if the challenger falls into the same “business as usual” trap that befell its predecessor. The key, therefore, to ensuring ongoing benefits is not just to create a challenger brand as a launch strategy, but to be and remain a challenger brand at the core. To do so, a brand must continue to actively anticipate market shifts, innovate, and invest to keep disrupting the status quo and stay relevant.

Take Nokia, for example – a prime example of what not to do. Having initially ridden the wave of mobile phone success, the brand today is little more than a distant memory, with smartphones (the new and very much improved replacement) a fully-integrated part of everyday life. How did this happen? As the market leader, Nokia got comfortable and complacent, no doubt disbelieving that their brand could ever be overcome by a competitor’s product. The problem? Ultimately, they weren’t just competing product to product. Apple invented an entirely new, game-changing alternative (offering internet, emails, and apps), and – seemingly overnight – Nokia was excluded from the competition altogether.

The future of challenger brands

Regardless of which type of challenger profile a brand adopts, the key to challenger success is adopting that mindset for the long haul. By adopting an approach of disruption, innovation, and genuine service, challenger brands gain the ultimate marketing prize: passionate, vocal customers who engage wholeheartedly with the brand and actively spread the word on its behalf.

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