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What is a challenger brand? Is disruptive marketing the key?

3 min read

Back to Blog

3 min read

What is a challenger brand? Is disruptive marketing the key?

Author: Phil Birss
Posted in Branding on 2nd October 2017 9:00 am

What is a challenger brand?

What is a challenger brand? It’s every company’s ambition to become a market leader. With the finances to drive innovation via R&D and to fend off competition, and the prestige and clout to secure the best talent and to achieve economies of scale, it’s an enviable position to be in. Their competition, meanwhile, consists of challenger brands – companies dividing up the remaining market and vying with the leader for a cut of their share.

However, it isn’t easy to retain the top spot. As companies grow, they frequently atrophy, losing their innovative edge, becoming encumbered with bureaucracy and drifting from their core principles. Indeed, in David and Goliath, Malcolm Gladwell makes the case that the odds are actually often stacked against the giant and in the favour of their nimble opponent: the plucky underdog. And this is just what challenger brands can do, embracing new strategies and approaches that far outweigh their costs and tackling the weaknesses of major players in order to disrupt the market.

Uber is a definitive challenger brand, competing with incumbents on a city-by-city basis. Their well-honed playbook allows them to secure a foothold and to develop this into outright market leadership. This means getting a grip on both customers and suppliers: by offering riders cheaper fares and rewarding them for referrals; while attracting drivers with high initial rates and access to a fluid market of pickups, they are able to nurture both sides of the equation. Meanwhile, by insisting that drivers are self-employed, they minimise their cost structure; and by outpacing local legislators with lobbyists and price-led consumer campaigning, they are able to circumnavigate industry standards.

Google is another example. In the late 1990s, they were able to provide a significantly better service than their competitors (such as Yahoo!) by implementing a superior algorithm and maintaining a purity of purpose, focused on search (unlike Yahoo!, which developed its homepage as the frontpage of the internet, featuring news and weather among other items). Google has then maintained this leading position (81% of global market share), by continuously innovating its algorithm and diversifying its offering to include searchable maps, books, images and video as well as work tools and cloud storage.

What lessons can businesses take from these examples? Providing better service, or meeting unmet market demand, for example, can be extremely persuasive for customers. Amazon has championed this approach – prioritizing customer service, and particularly low prices, above all else, bankrolled by venture capital. Companies like PayPal and TransferWise, meanwhile, offer fluid, easy-to-use financial services, in contrast to the staid and frequently unwieldy services of banks (and often provide cheaper rates for transfers).

All of this hinges on messaging. Communicating expertise via thought leadership and content marketing, and client satisfaction via case studies and testimonials, can showcase your offering, your experience and your achievements, speaking to your customers in their language. This messaging, and CTA-based landing pages, can then be distributed via social, email and PPC as well as acting as an SEO traffic draws; and all this messaging can be amplified via PR. Incentivising customers to recommend your business to their contacts, meanwhile, has the potential to drive viral growth. Another content example is a clear statement of values: Amazon makes great use of its publicly available leadership principles, for example – and you can do the same.

There is a current trend for “growth hacking” – cheaply achieving exponential growth via viral marketing. One of the key challenges of this is that as channels become increasingly colonised by marketers, they will become less effective, so continuous channel innovation is essential for distribution to remain effective.

What won’t change, though, is the value of customer service. If it can be effectively communicated then fulfilling market demand and providing better service than incumbents will always win customers for challenger brands. Craft, communicate and compete.

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