How challenger brands position to beat the market leader

Why brand marketing has a reputation problem

Brand marketing is the tool a challenger needs most and trusts least. Its reputation problem is not totally undeserved. Brand marketing can often lack impact. It can often be unaccountable. And it can often be very expensive.

Those three charges explain why so many challengers retreat to activation alone. The cost of that retreat is covered in why performance marketing will not grow your brand, and the right balance between the two is covered in how to split a B2B marketing budget. The question here is a different one. When a challenger does invest in brand, what makes that investment pay?

The short answer is positioning, used not simply as an inspiration for communication but as an organizing construct for the whole business. The longer answer runs in four movements. Most brand campaigns fail in one of two predictable ways. Good positioning fixes both. It works by letting a challenger fight where it can come first. And a challenger gets there in three steps, each of which is covered in its own article below.

Why purpose-led and product-led campaigns both misfire

Most brand campaigns fail in one of two directions. Purpose-led campaigns climb so high up the benefit ladder that the message becomes a generic theme every brand in the category could claim. Product-led campaigns stay so low on the ladder that only people already shopping the category understand them.

The two failures also misjudge the audience in opposite directions. Purpose overshoots the market, with macro themes such as social justice and the environment that rarely influence purchase. Product undershoots it, with coded specifics that only people already in the category care about. One evokes the wrong emotion. The other evokes none.

The commercial evidence on purpose is clear. Purpose-led campaigns produce fewer positive long-term business effects than non-purpose campaigns, according to Peter Field's study of the IPA Effectiveness Awards Databank, which compared 47 brand purpose cases with 333 non-purpose cases.

The full diagnosis of both failures is in why purpose-led brand campaigns fail.

Why positioning fixes brand marketing

The answer is positioning, but not the fill-in-the-blank template style that is so common. Good positioning acknowledges competition, so it defines the unique value a brand delivers relative to that competition. It frames a long list of features and benefits into a simple story about the company. And it gives a brand a broader palette of emotions to work with.

Each of those has a classic example. Avis framed a service play around an underdog story when Hertz owned size. Braniff positioned itself as the funnest way to fly when every other airline was boring. T-Mobile, fourth in its market, blew up the rules and channeled consumer frustration.

It also pays. In the IPA Databank, 10% of campaigns that repositioned the brand produced very long price effects, against 3% of campaigns that continued with an existing range. Source: Effectiveness in Context, IPA Databank of 497 for-profit and 121 not-for-profit cases submitted between 1998 and 2016.

The three reasons in full are in why good positioning makes brand marketing work.

How a challenger comes first instead of competing head to head

Good brand marketing strengthens the link between a brand and a category, and once a market leader owns that link, in the buyer's mind and in market share, it is nearly impossible to dislodge. So good positioning helps a challenger fight where it can come first. Instead of competing head to head for the leader's position, a challenger limits comparisons with the leader by narrowing its competitive set, and frames a new space around its own strengths.

Avis became the first car rental that cared. Braniff became the first airline that made it fun to fly. T-Mobile became the first uncarrier. None of them out-competed the leader on the leader's terms. How that works, and what makes a new space hold, is in creating a new subcategory.

Where a challenger's advantage comes from

Coming first starts with unlocking an advantage you already have. There are six places to look.

1. Leverage a soft asset. Reframe the core offer for a broader audience by speaking to its intangible qualities.
2. Challenge category codes. Make the brand look, sound and feel like nothing else in the category.
3. Deliver new combinations of value. Escape the middle with a mix that draws customers trading up and trading down.
4. Make the category more inclusive. Bring new customers in with lower prices, simpler services and more inclusive messaging.
5. Create a new subcategory. Position as a new class of offering rather than a substitute.
6. Attack a category pain point. Become the consumer champion on whatever the incumbents neglect.

Each source, the case behind it, and the method for choosing between them are in the six sources of competitive advantage.

Why the whole organization has to align around the advantage

Positioning is not only a communications device. It is an organizing construct for the business. Challengers outsmart larger players by focusing their energy on the few areas that produce the greatest rewards, and strategic pillars are how employees understand those strengths and use them as a filter for decisions.

The pillars are built from the bottom of the benefit ladder up. Group features into the benefits they deliver, group those benefits into three to five themes, and write each theme as an instruction to employees rather than a description of the brand. Then use the pillars to decide what the business starts, stops and continues doing.

Coherence shows up in the numbers. Businesses whose capabilities are more closely aligned around what they do best earn higher EBIT margins, according to The Coherence Premium, Harvard Business Review.

How to build the pillars and take them beyond the marketing team is in strategic brand pillars.

Why the advantage has to be dramatized

Brands work because they spare buyers from rationalizing each purchase. A challenger lacks the familiarity that makes a leader the easy choice, so it has to cut through by dramatizing its differences across every customer and employee encounter.

The 5S model covers five areas: the source of advantage, story and messaging, style and symbols, signature moves, and staff, channels and partners. Articulation matters as much as identification. The Automobile Association called itself the fourth emergency service. HSBC called itself the world's local bank. Each phrase turned an operational advantage into something buyers could remember. How T-Mobile and Red Bull used the full model is in dramatizing your differences.

A challenger brand does not beat a market leader by winning the leader's contest. It wins by framing a space where it comes first.

The three steps in order

The sequence matters, because each step depends on the one before it. An advantage nobody delivers is a slogan. An advantage the business delivers but never expresses goes unnoticed. Only the three together give a challenger a space it can own.

1. Unlock your hidden advantage, using the six sources of advantage.
2. Align your organization around it, using strategic pillars.
3. Dramatize your differences, using the 5S model.

Adapted from How challengers can position for growth, a Creative Business Company whitepaper.