How to … punch above your weight

By Vincent Heeringa, November 28, 2006 @ 2 am

Kate Smith wants to kill big, dumb brands. Wanna help?

Idealog November/December 2006, page 111. Photograph by Stephen Langdon

‘We’re number two. We try harder.’

Remember that clever little ditty? Coined by an advertising executive it helped propel a no-name rental car firm, Avis, from zero to hero. Avis wasn’t actually number two—it was just one of many small US companies competing against market leader Hertz. But Avis had something the rest didn’t: a sprit of enterprise and determination that turned the company into the global force it is today.

It also signalled the birth of the ‘challenger brand’, as coined by marketer Adam Morgan. His book Eating The Big Fish became a marketing bestseller as managers worldwide latched onto the idea that being number two was possibly an advantage.

But here’s the rub. What if you’re not number two? What if you’re the big hairy Hertz? Or what if you’re not even in the running? Can you try harder too?

Oh yes, reckons Kate Smith, who heads up the New Zealand arm of eatbigfish, a consulting company. “Initially, challenger brands were defined by their market share. But now we see it more as a state of mind. It’s a state that any company can aspire to, no matter if they are number one or number 500 in market share.”

So how do you become a challenger?

Follow the credos

The first thing is probably to read the book (see ‘9 credos of a challenger brand’). The seven-year-old book still resonates with insights from the stories of no-name successes such as Swatch, Lexus and Absolut. These brands have adopted ‘lighthouse identity’, a driving ambition that doesn’t refer to the past or make comparisons with other products. They don’t even try to sell to the customer. They simply stand for something and believe that customers will follow their lead. Take Virgin, the rock’n’roll label turned airline, vodka, train service, insurance company and spaceflight pioneer. Virgin stands for irreverence and pragmatism; values that may alienate some customers but have attracted many others. More importantly the values generate an internal driver that constantly asks “Why do it this way? Can’t we do it better?”

The challenger brand is born

Challenger brands break with the past, determined to articulate a new direction. When Swiss watchmakers saw their dominance of the precision watch market being undermined by cheaper, equally reliable Japanese products, one response was to become more precise and more elite—and to continue the slide. Another was to perform a category-defying leap to Swatch, a disposable, plastic piece of fashion that had everything to do with 80s synth-pop and almost nothing to do with Swiss reliability.

Even when challengers can generate a heritage story, they’re determined not to. When Vodafone arrived in New Zealand in 1998 it could have played to its strengths as a large multinational, communicating confidence through buying power and technical prowess. Instead its quirky advertising and emphasis on customer service brilliantly reinforced the perception that Telecom was the gorilla and that Vodafone simply tried harder. That’s clever positioning in a country which hates the big guy.

“One of the implications of having a lighthouse identity is that you can’t be indifferent,” says Smith. “You have to decide what you stand for and stick to it.”

Search for blue oceans

By refusing to compete on traditional terms, challenger brands can create new markets or find uncontested areas to occupy. Take 42 Below’s irreverent approach with the gay market. Research into vodka has conventionally led distillers to opt for purity or provenance as key brand values. ‘Outrageously gay’ is not a category in your average ACNielsen household shopper survey. By defying convention and promoting attitude before product, 42 Below reaches well beyond vodka lovers to reach even non-vodka drinkers.

This ‘zag when everyone zigs’ approach is not just for the upstarts. Lion Nathan, the grandpappy of beer brands, is embracing the approach. Marketing director for beer Stephen Smith says that for too long Lion has obsessed about its main rival, DB, instead of trying to create rich territory of its own. “The big challenge for beer is not so much market share of the individual brands but the whole beer category, which has been declining for some years now.”

Smith (no relation to Kate) says Lion is seeking “clear, white space” for its brands, and refers to the groundbreaking book Blue Ocean Strategy as provoking Lion’s new thinking. Much like Eating The Big Fish, this book identifies category-defying brands, such as Cirque du Soleil and The Body Shop, as examples of how to avoid costly direct competition by creating ‘blue oceans’.

This approach is behind the relaunch of Macs Beer, the craft beer from Nelson. The craft category is niche and typically perceived as the domain of hairy men with a penchant for busty maids. The advertising typically emphasises heritage and provenance, showing pictures of people with scythes and phrases like ‘richly hopped’ on the label.
In other words, Monteiths—the craft beer leader.

Working closely with advertising agency Shine Advertising, Lion has relaunched Mac’s and ditched the clichés. Instead they’ve picked up on Mac’s quirky independence; the beer now looks contemporary, arty and surprising. Lion has carried the idea into new bar designs and into the sales strategy to ensure the beer is positioned not just against other craft beers but, they hope, in a category all on its own. (For more about the relaunch see Creative Showcase on page 87).

“A blue ocean strategy is all about making the competition irrelevant,” says Lion’s Smith. “When you operate in a mature market it’s too easy to become obsessed with the competitors. We haven’t had those kind of conversations for about six months now. I’ve never seen Lion so energised.”