Catch of the day

As someone who has spent the past 15 years immersed in the subject of challenger brands – writing two editions of the bestseller Eating the Big Fish specifically on this topic; becoming a founder partner of international brand and marketing consultancy eatbigfish, which specialises in this area; and setting up the Challenger Project, a research venture looking at how challengers succeed across different categories – it’s reasonably safe to assume that Adam Morgan knows a thing or two about upstart brands and how they square up to and succeed against the market leaders in their categories.

For Morgan – who spent 15 years working in agencies in Europe and America and first became interested in challenger brands in the mid 1990s, when he was planning director in TBWA/Chiat/Day in Los Angeles – writing the second edition of the book was as much about confronting accepted thinking about those challengers as it was about updating the text to include massively successful new kids on the block such as Google, Method and Innocent, as well as the stories of re-emergence, such as Apple.

He’s not convinced that people really understand what the concept of a challenger brand actually means. “If you look at conversations about challenger brands, people tend to say, ‘It’s about David versus Goliath. It’s about a little, feisty underdog, sticking their nose into the market leader’s face with some well-aimed barbs and trying to take a chunk out of them,’” he says.

A key reason for thinking that way, according to Morgan, is that this is exactly what some of the great and iconic challengers of the past did, whether it was Apple starting out, the Pepsi Challenge or the early days of Virgin Atlantic. “But if you look at the last 10 years of challengers, which includes everything from open source brands like Linux to the early days of Orange, to more recent entrants like Hulu, Skype and Zipcar – a whole bunch of very new and very different challengers – they don’t really fit the model of little, noisy, pugnacious underdog. They don’t really fit the Ryanair model.

“They’re actually representing a different way of trying to change the conversation in the category and they’re challenging something different. Very often, they’re not challenging the market leader directly. They’re challenging some aspect of the way we think about the category.”

For the past 10 years, Morgan and his colleagues at eatbigfish have been involved in an ongoing study that examines exactly how challengers succeed, usually against bigger, more entrenched competition. “They’re launching three or four years late into a category, perhaps where a big, established player already exists. So they need to change the question and change the conversation in their category in order to succeed.”

An example of this, he says, is Kodak’s printer division, which is going up against printer giant HP. “What they’re challenging is the money we’re all wasting on ink,” says Morgan. “They’re trying to change the business model around much cheaper ink. They are implicitly challenging HP, but not directly.

“You could say at some level it’s about state of market, but it’s much more about state of mind,” he continues. “Challengers are people whose business ambitions are bigger than their marketing resources and they need to boldly challenge something about the category in order to close the implications of that gap between their ambitions and their resources. And obviously they need to demonstrate rapid growth. They need to have demonstrated that this way of behaving leads to a much better financial return than simply following the market leader.”

Of course, not every brand can actually become a challenger. “Clearly one of the first things to consider is the nature of one’s product. Do you have a product that is differentiated in any particular way? It doesn’t necessarily have to be stronger in a conventional sense, but it has to have some aspect to it which one can play up theatrically very often.”

On this subject, he recalls researching the first edition of his book in 1997 and people telling him that product was dead, that all products were the same and that it was now all about brand. “I think that’s one of the big changes in the last 10 years: product is back in a very big way, whether because we’ve been influenced by what Apple has done with product – they’ve made it delicious in every kind of way – or it’s that we’ve been educated by Google about the power of being startlingly useful as a product. Product difference is very much back on the agenda.”

Brands that want to challenge, therefore, must have some product distinction that they can amplify, he says. But they must also be prepared to ‘sacrifice’ and ‘over-commit’. “You’re not going to be able to do all things and you’re not going to want to do all things,” he points out. “You need to give up certain kinds of messages and certain kinds of actions in order to really over-commit on the two or three things that are going to make the difference.”

The biggest difficulty for many brands is making the decision not to try to do all things, but instead to try to bind a certain group of people very strongly to them, he says. To create intense preferences, brands need to be very single-minded and they need people to understand and relate to one or two very clear things about them and what they offer.

“That means that you’re going to have to sacrifice a whole load of different messages and products. In interviews Steve Jobs says, ‘I’m as proud of things we haven’t done as the things we have done, because it’s the things we haven’t done that have allowed us to succeed when we have succeeded’.

“If you compare that with Yahoo!, which has done exactly the opposite, it’s a striking comparison of two very large brands, one of which has got enormous forward momentum and clarity, and one of which is kind of wallowing around, not really understanding what to do.”

Morgan does not believe that only smaller brands can think and act like a challenger. He points out that market leaders are increasingly openly learning from their challengers and trying to think like them. One example he mentions is sports-games developer EA, which he says now sees itself as trying to be the biggest sports brand in the world, competing against the likes of Nike, Adidas and Reebok, instead of being content to remain the market leader in the games category. “The ones that continue to succeed and flourish openly say, ‘We’re thinking like a challenger in order to stay No 1’.”

Those that want to grow, he continues, need to challenge consumer mindsets rather than their competitors. “The way you’re going to grow is by challenging consumers to think about the possibilities of your category in a different way and therefore expand their usage, their weight of usage and their frequency of usage. I think that’s profoundly relevant to market leaders.”

As part of his work with the Challenger Project and the books, Morgan has developed eight credos that attempt to look at a strategic path around being a challenger. “It’s important that we do have some principles in the world we’re going into, because everybody is saying the old marketing model is dead, without putting a new one on the table,” he says. “I think we can’t regard this as a journey without maps. We have to have some sense of a way forward. The credos are an attempt to lay down principles for anybody wanting to think like a challenger.”

Those credos include ‘Intelligent naivety’ , which is about stepping back from the way things currently are and examining whether some new dimension can be put into the category. “Even before you start thinking about what your positioning is, you need to make yourself open again and very few people are as open as they need to be,” he says.

Another credo is ‘Build a lighthouse identity’, which is about brands having a very strong sense of who they are and why. Another focuses on being the thought leader in the category, being the one that is seen as setting or resetting the agenda is some kind of way. “It may not always make complete financial sense, but it does create or recreate the conversation in the category.”

Sacrificing and over-committing are also included in the challenger credos. Morgan says that using communications and publicity to enter social culture is also a vital principle. “Of course we need to understand our consumer, but it is ideas and putting ideas out into the marketplace on a continual basis that’s going to give us momentum.”

Asked whether it’s easier or more difficult to be a challenger these days, Morgan is in two minds. “I think at one level it’s tempting to say easier, because the tools available to you with Web 2.0 to create conversation and to get noticed are more available,” he explains.

“Everybody says, you could just do a Cadbury’s Gorrilla and you’d be world famous. And of course it’s not quite as easy as that. There are 90,000 postings a day on YouTube and you’re just one of those brands going forward. Equally, the consumer is more time starved and more attention poor than they were even 10 years ago. And there’s a much greater proliferation of brands out there. To some degree it should be easier, but in fact the noise and the clutter and the attention that you’re getting from the consumer mean it’s even more challenging than it was before.

“I also think consumers are demanding much more of both the company and the product,” he continues. “They want products that really do things for them and are really useful, and they want companies to do what they say. It’s much harder to fake it.”

Of course, those challengers that succeed have to keep changing to stay the same. “Things that really startle us about challengers initially – a Burberry-pattern bikini on Kate Moss, or a lime green computer – we get used to very fast. The things that helped make a challenger forge a really strong relationship at the beginning lose the ability to sustain that kind of relationship.

“To some degree, every challenger has to evolve to stay the same. If you don’t move on, you get almost flash frozen – ‘I love that brand, I associate it with a particular time and place four or five years ago’ – and you become fossilised.”