How To Beat Challenger Brands At Their Own Game

There has been a lot written on challenger brands and how to succeed as one. But what if you aren’t a challenger brand? What if you are the brand that is being… challenged?

Category leaders often make the mistake of relying on their (typically) larger marketing budgets to play defense and outspend the emerging competition.

But this is like putting a Band-Aid on a broken leg. Yes, it will give a brand a higher share of voice and keep it top-of-mind with consumers, but it doesn’t fix the foundational issues that made it vulnerable to a challenger to begin with.

That’s why it’s critical for leading brands to take purposeful action to stay ahead of potential challengers. But what does that look like? Well, it turns out that the best way to defeat challenger brands is actually to think and act like one.

With that in mind, here are six ways that market leaders can emulate challenger brands to beat them at their own game.

1. Think of Your Consumers Like A Community

🚩 The most successful challenger brands show a profound understanding of their targets and an ability to connect with them on a deeper level. Challenger brands build those deeper connections by looking at their consumers as a community of like-minded people who feel something is missing from current offerings—and then stepping in to fill that void with a brand and offerings that are truly representative of their wants and needs.

👀 Challenger Brand That Does This Well: Gymshark. Gymshark is a workout apparel and accessory company successfully competing against market leaders like Nike and Lululemon. The brand got its start when founder, Ben Francis, saw a firsthand need for comfortable workout clothing specifically designed for weightlifters. When starting the line, he shared prototypes with fellow members of the weightlifting community and made product optimizations based on their feedback to ensure his offering fit their needs and that the brand represented them in an authentic, relatable way.

💡 Key Takeaway: Category leaders can benefit by thinking of their consumers as a community—and keeping a constant read on the pulse of that community, to ensure their offerings are authentically and empathetically meeting its needs.

2. Stand Out In A Big Way

🚩 With smaller budgets and a disadvantage in awareness and distribution, challenger brands have no choice but to stand out if they want to get noticed. By leveraging unique positioning, packaging, naming and marketing tactics that all tie back to whatever it is that they are “challenging,” they can quickly garner attention and start chipping away at leading brands. And once they get the recognition they seek, successful challenger brands know they have to double down on their differentiation in order to stay fresh and top of mind.

👀 Challenger Brand That Does This Well: Liquid Death. In a category where most brands take a serious tone, Liquid Death exudes humor, irreverence and straight-up silliness to break conventions and stand out in a meaningful way. While the leading water brands romanticize the purity and life-giving nature of their products, Liquid Death is all about… death—murdering thirst and utilizing aluminum packaging that aims to bring #DeathToPlastic. The brand also invites people to visit their website where they can “sell their soul” to join the Liquid Death Country Club or “kill some time” by “watching every dumb thing” they’ve ever made. Within a few months of launching, the standout-nature of the brand quickly earned it over 100,000 followers on Facebook, surpassing category giants like Aquafina. And the brand continues to double down on its successful approach with things like a beer-style commercial featuring kids and a “Greatest Hates” Spotify playlist featuring heavy metal music paired with lyrics quoting actual negative product reviews.

💡 Key Takeaway: Because most leading brands have been around for a while, they often enjoy high awareness—but they also face difficulty when it comes to standing out. That initial spark that attracted people to the brand can eventually wear off, losing its luster with today’s consumers who are easily lured by something new and different. This means category leaders must find ways to create new news that keeps the brand fresh and exciting—with things like new product introductions, refreshed packaging, exciting promotional partnerships, new ad campaigns and more.

3. Get Creative To Maximize Your Budget

🚩 As mentioned previously, challenger brands usually have smaller budgets, so they have to get creative when it comes to their marketing strategies and tactics. For example, they are known for expertly using social media to connect with their fans and attract new ones; partnering with influencers to help boost credibility and increase the reach of their message; and coming up with attention-getting PR stunts and events to garner free media coverage. When done right, tactics like these can be ultra-impactful yet far more cost effective than traditional media.

👀 Challenger Brand That Does This Well: Magic Spoon. Magic Spoon launched into the super-crowded cereal market in 2019. The brand sought to challenge category giants by providing better-for-you alternatives for millennials featuring nostalgic flavors and a nutrition profile that’s high in protein, low in calories and sugar-free. Magic Spoon relied heavily on both social and influencer content to spread the word about its unique new offerings. As the brand has grown in popularity (and market share) it continues to rely on cost-effective tactics like user-generated content, frequently sharing tagged stories and posts from social media followers.

💡 Key Takeaway: Even if you have a healthy budget, it’s always good to take a step back and challenge yourself to find ways to get more out of your resources. Besides the obvious benefits of doing more with less, it also forces you to experiment with new tactics and approaches that can freshen up your communication, increase the impact of your messaging and reach new audiences.

4. Stand For Something

🚩 Many challenger brands are born out of a desire to serve a higher purpose. They support causes like the environment, social justice, diversity and inclusion, world hunger, specific medical conditions, animal welfare and much, much more. Now more than ever, consumers want to choose brands with values that match their own. Standing for something bigger helps challenger brands build an authentic connection with their community of consumers, making people feel good about their products and turning them into brand advocates.

👀 Challenger Brand That Does This Well: Allbirds. Allbirds burst into the gym shoe market in 2016 by introducing a new category of shoes inspired by natural materials, and an ongoing mantra to create better things in a better way. Allbirds shoes have no flashy logos or performance features, and instead are simple, comfortable and most importantly made from natural Merino wool, rather than synthetic materials. The brand also uses recycled materials and measures emissions of everything from the raw materials to the end-of-life product.

💡 Key Takeaway: Leading brands can boost brand affinity by tying themselves to a cause their consumers care about. This elevates the traditionally transactional (and thus, easy to replace) consumer-brand relationship to an emotional level that creates loyalty and even advocacy. As an added bonus, being closely associated to a specific cause also tends to earn brands free PR and social media buzz.

P.S. Check out our article on how to maximize the benefits and minimize the pitfalls of corporate advocacy.

5. Never Stop Innovating

🚩 The whole premise of becoming a challenger brand is built on innovating something in the category. Whether it’s solving an unmet need, making a superior version of a product or creating an entirely different business model, challenger brands are there to disrupt, innovate and push their industry to be better. This innovation-based foundation is what allows them to seemingly come from nowhere to become a real threat to established category leaders.

👀 Challenger Brand That Does This Well: Peloton. Peloton got its start by bringing trainer-led spin classes to the on-demand, home-based environment. Although the original peloton bikes became quite popular, the brand realized that it wasn’t an exercise form that appealed to everyone—and therefore has continuously innovated to expand into things like treadmills, strength trainers and even apparel.

💡 Key Takeaway: It’s crucial for leading brands to establish a continuous innovation process in order to stay out in front of potential challengers. This helps ensure that the brand is regularly listening to consumers as well as tracking brand/category dissatisfiers, new unmet needs and emerging trends, technologies and ingredients—and then utilizing this knowledge to make improvements or introduce new products and services. Remember, if there is a need or desire for a new product and your brand doesn’t introduce it, a challenger brand will.

 

6. Be Nimble—And Pursue Perfection At Your Own Peril

🚩 The smaller size of most challenger brands gives them an advantage in terms of being able to move quickly—whether they’re launching a new offering, making product improvements, changing supply chain partners, shifting distribution strategies or altering their positioning and messaging. They also tend to have a startup mindset that pushes them to embrace transactional learning and get fresh ideas to market as soon as possible—perfection be damned.

👀 Challenger Brand That Does This Well: Trader Joe’s. Trader Joe’s has thrived by being nimble and embracing a perfectly imperfect vibe. The retailer spends very little on packaging (choosing to put that money towards product quality instead), so the packaging design isn’t always brilliant, certain cans and boxes might not stack just-right and pack colors may even be printed slightly differently for the same product. The brand has also created a treasure hunt mindset, inviting shoppers to discover and try new items every visit. Often, these new items are well-loved, but sometimes they miss the mark—but that’s just part of the exciting, perfectly-imperfect experience people love.

💡 Key Takeaway: Larger market leaders must fight for operational efficiency—removing the bureaucracy and endless approval chains that often tie up even the smallest of changes. They also have to battle against the paralysis that comes from needing to support every decision with endless research and proof points. Instead, leading brands must become comfortable with feeling uncomfortable. That is, decrease their risk aversion and increase their willingness to pursue transactional learning and make necessary improvements on the fly.

Maggie Huntwork is VP, Strategy at Seed Strategy, where she leverages her dynamic, cross-channel experience to help clients connect with consumers and build their brands

Edited by Adam Siegel. In addition to being the Editor of The Accelerator, Adam is a Senior Strategist at Seed Strategy where he draws upon his diverse experience in advertising, research and innovation to craft breakthrough creative and winning concept copy.

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