Any company, product or brand that is either No.2 or No.22 in its category or market has the potential to be a challenger brand. Think of the challenger as the underdog, the pirate, the rule breaker and you get the picture.

What makes the challenger unique is that it looks at the conventions adopted by the market (niche or otherwise) and seeks to disrupt the status quo by offering a new perspective on the category or the market as a whole. This can often be driven by technology or service level innovations, challenging the existing price-models of the category or simply by way of creating a compelling brand attitude.

Obvious examples of this are Nintendo Wii in the Gaming market, Lush beauty products and Diesel on the high street, Innocent and Redbull in the drinks market, SalesForce.com in the SaaS CRM space, Linux in the Open source software arena, EasyJet in the aviation industry and many, many more.

It’s worth noting that NOT all challenger brands are small companies who take the position of a scrappy David (i.e. as in David v Goliath). Challenger brands can equally come from start-ups or be incubated within large corporate entities. Google for example is challenging the domination of Microsoft with the launch of its Chrome OS and conversely Microsoft is challenging Google with the launch of Bing its new search engine.

Being a challenger brand is not an easy option and it’s certainly not everybody’s cup of tea. Management need to be fired up by their idea and vision. They need to be ready to take on the world, ready to create a unique brand identity, ready to sacrifice, ready to over commit and ready to take on the market in fresh, innovative and disruptive ways.

For the most part challenger brands are united by a distinct lack of muscle and resources vis-a-vis the market leaders. But rather than this being a weakness they have to turn it into a strength. Challengers are often outspent and out-distributed which means it’s critical they out-think the competition.

The challenger position is about attitude and momentum. It’s an ever evolving market position because it demands that you constantly need to re-invent and re-imagine your business to stay in what we call the “challenger moment”.

There are many benefits to being a challenger brand:

1: A united and galvanised employee/partner base.

Everyone comes to work with fire in their belly and a total belief in what the company stands for and where the company is heading.

2: Fast track share of voice and awareness in the market.

By taking the challenger position you are instantly more news worthy that all your immediate peers. The press will often defer to you when they want an alternative take on the stance of the market leader. This catapults the challenger to a place that might take forever to reach when following a more conventional approach.

3: Exit accelerator.

By taking the challenger position you can often make a conscious choice to directly attack the market leader and all they stand for. This can be done aggressively or subtlety. Either way by clearly defining your enemy you can quickly be a pain in the ass, so much so that the market leader prefers to take you out of the game via an acquisition than compete with you. For those companies seeking an exit, a challenger strategy can be very lucrative.

4: Profits in turbulent times.

Here is some hard evidence that challenger brands really do WIN when all around them are failing. And why the recession is the best thing to happen to any underdog or challenger brand.

At the end of May 2009 (Virgin Atlantic) one of the most famous of all challenger brands announced record profits. This was despite it being noted as the “worst ever” year for the aviation industry. Pre-tax profits doubled and sales of premium services rocketed at a time when other airlines had been reporting a big decline in business class passengers. In contrast on the same day, BA reported a £400m loss.

At the end of April 2009 (Apple Computers) another famous challenger brand announced record financial results for its fiscal 2009 second quarter.  “We are extremely pleased to report the best non-holiday quarter revenue and earnings in our history,” said Peter Oppenheimer, Apple’s CFO. In contrast Dell computers posted results that where a dramatic 48% down on revenues and Motorola and Nokia posted revenues for mobile phones down 46.4% and 19.3% respectively.

Nothing beats a good old recession to destabilise the market and shake things up.

5: It’s a lot of fun

Taking on the conventions of a market or category as well as the market leaders can be a fun and hugely engaging experience. Many entrepreneurs find this element gives them a personal edge and they become almost evangelical about the journey they are on. The challenger position is the thinking man’s marketing strategy as it requires you to be one step ahead of the game and the competition all the time.

For more information about the successful habits of challenger brands you can access our B2B marketing webcast. When you get redirected scroll down to the correct link "How the underdog beats the market leader" 

http://www.bethehurricane.com