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How to build a successful challenger brand

Certain mindsets and models increase the chances of creating products, services and brands that people want

We’re living through a period of massive change in the business landscape. Consumers have more choice than ever, which raises expectations for not only the quality and price of the products and services they buy, but also the purpose and promise of the brands they associate with.

Business owners and brand marketers have to deliver against these expectations in a crowded, noisy marketplace. Every company (and individual) is now a media company – communication, content and advertising channels are merging, and it’s getting harder and harder to stand out and be seen. Media consumption habits are shifting constantly – attention is now fragmented across dozens of channels where most advertising is ignored.

It’s harder than ever to drive growth in this new landscape. But not all businesses are struggling, some are thriving. These are challenger businesses that are fully fit for purpose for the world of today. Their brands, go-to-market strategies and marketing teams are designed to take advantage of all these changes, not avoid them. Most are small, young companies – start-ups, scale-ups and technology businesses. But those characteristics represent a correlation to their fast growth, not the causes of it.

A challenger is defined not by size or age but by the mindset and model it applies to growth. Any business can (and should) think and act like a challenger if it wants to drive fast, sustainable growth and remain competitive in today’s marketing landscape.

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So, what makes a successful challenger? This is the question we set out to answer when we launched Rival. We work with businesses looking to disrupt the category they’re in – both start-ups and established businesses (we firmly believe any business can be a challenger). We design challenger brands, we develop challenger go-to-market strategies, and we grow challenger capabilities in marketing teams. We also study successful challenger brands to understand what they’re doing differently to drive their hyper-growth.

We’ve developed a framework that we believe best defines what it takes to build a successful challenger brand and business. There are two parts to this framework – external (how a brand goes to market) and internal (how a business thinks and acts) and each part has two pillars.

  • Built for Impact: Valuable: Add value to their audience and differentiated: Own a point of difference.
  • Ready for change: Intelligent: Find arbitrage through insight and adaptive: Move fast and stay flexible.

Externally, challenger brands are built for impact. They break through, they stand out, they get noticed. They do this first and foremost by focusing on adding value to the audience they’re trying to reach. Much, if not all, of their marketing activity attempts to create content and experiences that their customers or potential customers will find interesting, entertaining, educational etc. They don’t assume that just because they create an ad that people will watch it. They attempt to earn every second of attention they get by adding value.

Red Bull is a classic example of this. Much of what they do to “market” their product isn’t marketing at all. It’s content and experiences that add value around what the brand stands for (giving you “wings” - ie energy, adrenaline, excitement).

A great product

Challengers also own a clear, sharp point of differentiation in their category. They recognise it’s not enough in today’s crowded marketplace to have a good product or service – you need to have a great product and service that’s distinctly different from what customers can get from competitors. Think about how much BrewDog stands out from other incumbent beer brands. They might not appeal to everyone, but they definitely set themselves apart in a crowded category.

Internally, challenger businesses are ready for change. They hire talent and cultivate cultures that are obsessed with finding arbitrage through insight – essentially working and spending smarter not harder. They embrace their size and budget constraints to drive creative, innovative solutions for how to grow. Gymshark has built a massive challenger apparel and lifestyle brand in large part by finding tremendous arbitrage with influencers on YouTube, Instagram and now TikTok.

Challengers also focus relentlessly on their audience: understanding their needs and how they can find a new, different, better way to deliver against them – and the market around them – as well as understanding where the opportunities are to zig while the competition zags. They are highly adaptive to the changing world around them. They prioritise speed – making decisions quickly in order to get to market first, but also to get more feedback, faster on what works and what doesn’t. They stay flexible and evolve quickly, getting smarter and stronger as they go. Monzo is a great example of this. They iterated their product and brand very quickly in the early days, working with their early customers and advocates through initiatives such as community.Monzo.com and in-person events.

This framework – built for impact and ready for change – is our attempt to synthesise over 100 years of our collective experience working in and for challenger brands. We’ve seen the importance and impact that these four pillars can have on business growth, but we also know there is so much more that goes into building a successful challenger. So, we treat our framework as a starting point, a hypothesis to test and evolve as we go, adding new ideas and findings from the work we do and also the research we conduct.

We recently launched Spark, a research collaboration with the marketing faculty at Imperial College London to help add to our understanding of what makes challenger brands successful. We’ll be releasing an ongoing series of reports on trends, tactics, and case studies from challenger brands around the world.

Our first batch of reports released earlier this month covers three trends: The rise of the "pufferfish challenger" – how modern media and distribution enable challenger brands to appear bigger, faster than they might otherwise be.

Traditionally, smaller businesses were expected to “act small”, blocked from certain ways to market, distribute or advertise their products and brands.

However, the growth of biddable and connected media channels offering access to “traditional” media, rapid delivery platforms changing supply chains and rapid brand fan growth platforms have broken the classic relationship between company size and actionable scale. With the right combination of tactics, smaller challengers are “puffing up” to deliver outsize impact in consumers’ minds – seeming more developed than they may actually be. We interviewed Ireland’s own Riley, a fantastic challenger brand in the feminine hygiene category, as a case study for this trend.

Branded platforms become brand communities: how modern brands are shifting from being storytellers with an audience to facilitators growing communities on digital platforms.

Effective brands build communities of engaged customers around them and new technologies, a shift in first party data’s importance and a push for more relevant brand purpose is poised to make community more valuable than ever.

We treat our framework as a starting point, a hypothesis to test and evolve as we go

oCommunities have expanded from the traditional use, where brands tell their stories to a group, to where brands can bring other people together around shared values or interests. A push to diversify the data held on engaged consumers has pushed these communities beyond traditional social networks and into newer spaces, such as Discord and emerging metaverse platforms – where brands have greater control on the experience they can provide and how they recruit, capturing more about users directly where possible.

Recruiting users to branded communities is integral to unlock their value at scale, and requires brands to be more specific or pragmatic about what they can stand for in consumers’ lives – ensuring they have a reason to foster a community in the first place. We include clips from interviews with challengers such as Xero, Autobooks and Omnipresent for this trend.

The great Covid crunch: how consumers are reconciling their current Covid concerns and behaviours with a postpandemic aspiration that may not have as defined a start point as they expected.

Postpandemic lives

A public that has been waiting for their postpandemic lives to start is discovering that there won’t be a “during” and “post” pandemic phase – instead, we are already creating what our postpandemic lives look like daily, with our choices in how we socialise, return to work, shop and travel. You’ll hear from the founder of Cali Cali Foods on how they’re navigating and capitalising on this trend.

Building a successful challenger brand is not easy in such a competitive, constantly changing market. But we believe there are certain mindsets and models that increase the likelihood of creating products, services and brands that people want to buy. We certainly don’t have all the answers, but we’re motivated and excited to be on this mission to figure them out, along with many other smart folks in our industry.

Eric Fulwiler is co-founder and chief executive of growth consultancy Rival