What Makes a Challenger Brand?

In our conversations about how challenger brands can take on the big dogs in their categories, one question inevitably comes up: is my brand a challenger brand? The answer is almost always the same: most likely. By strict definition, the only brands that are NOT challenger brands are the market leaders. However, true challengers are defined by how they approach their 3 States: State of Market, State of Mind, and State of Readiness. Let’s dig a little deeper into each of these, starting with State of Market.

State of Market: Being a Non-Traditional Leader.

A hallmark of successful challenger brands is challenging the status quo. To disrupt traditional industry norms, challenger brands need to have a deep understanding of their position in the market, or their “State of Market.” This understanding allows them to take advantage of their unique position and carve out a niche for themselves in a crowded marketplace. Take Dollar Shave Club for example. When it burst onto the scene in 2012, Gillette was the undisputed king of the razor industry. The good folks at Dollar Shave Club took a different approach: sell high-quality razors directly to customers through a subscription service, at a lower price point than their competition.

Another brand that understood its State of Market is Warby Parker, which disrupted the eyewear industry by selling glasses online and cutting out the middleman. The company was founded by four Wharton School students who saw an opportunity to offer stylish glasses at a more affordable price point, but most importantly, they weren’t afraid to take on the likes of Luxottica, the Italian eyewear conglomerate that dominated the industry. Today, Warby Parker is valued at over $3 billion.

To succeed, challenger brands need to have a deep understanding of their position in the market. This allows them to take advantage of their unique positioning and differentiate themselves from the larger players in the industry. Dollar Shave Club and Warby Parker didn’t have the same abundant resources as their category leaders, so they focused on outthinking their competitors rather than outspending them.

State of Mind: Being the Best at Delivering Something Important to Customers.

Challenger brands are either the best at delivering something important to a specific customer niche, or they’re actively striving to become the best at delivering exactly what their customers want. Airbnb turned the hotel industry upside down by offering travelers the chance to stay in local homes and apartments rather than traditional hotels.

Founders Brian Chesky and Joe Gebbia saw a need in the market that wasn’t being filled at a time when people were looking for a more authentic travel experience. Peloton transformed the fitness industry by offering at-home workouts through a subscription service and built a $30 billion company on meeting their customers where they are – and during a global pandemic, that was in their homes.

State of Readiness: Be Prepared to Go to Battle.

The final challenger brand distinction is perhaps the most important of the three. State of Readiness refers to how prepared a company is to go to battle. Two great examples of this are Tesla and SpaceX, both founded by Elon Musk.

Musk’s success with Tesla exemplifies the importance of having a strong sense of readiness as a challenger brand. With a clear vision and unwavering commitment, Musk pushed Tesla beyond the auto industry’s status quo and disrupted the market. He recognized the need for an electric car that could be accessible to the masses and worked tirelessly to make it a reality. He didn’t let production issues or skeptical investors get in the way. A willingness to take risks allowed him to navigate these challenges and emerge as a leader in the industry. Tesla’s success highlights how a challenger brand can disrupt an established market by being well-prepared and having a strong sense of purpose.

With SpaceX, Musk’s ultimate goal is to make it possible for humans to colonize other planets. The difficulties inherent in privatizing space travel were enormous. Despite challenges that included several failed rocket launches, Musk remained committed to his vision, building a company valued at over $100 billion today.

But It Really Comes Down to Your Culture.

The ultimate catalyst for challenger brands is the company culture their leadership creates. By fostering an environment of excellence, purposeful ambition, and willingness, challenger brand leaders can create an environment where teams are safe to take unknown paths and search out ways of doing things differently.

Culture like that doesn’t just happen. It’s created by leaders who embody a pervasive sense of willingness, an organizational commitment to excellence, and purposeful ambition. Challenger brand leaders encourage their teams to think differently and inspire them to believe it’s possible to punch above their weight. When this happens, so do remarkable things.

Challenger brands can change their industries, and sometimes the world, by rewriting the rules of the game. So, if you’ve asked yourself, is my brand a challenger, we’d ask you to evaluate your own States of Market, Mind, and Readiness first, then challenger yourself to build the kind of culture that can bring it all together.

MIKE SULLIVAN is president and CEO at LOOMIS, the country’s leading challenger brand advertising agency and a top Dallas advertising agency for digital, social, mobile and user experience. For more about challenger branding, advertising, and marketing, leadership, culture, and other inspirations that will drive your success, visit our blog BARK! The Voice of the Underdog and catch up on all of our posts.

For more about LOOMIS, or to discuss how we can help your company succeed, CLICK HERE