Challengers,
in any industry, have to work harder than the market leader – a point
succinctly made straight off the bat in one of the seminal books on ‘Challenger
Brands’, Eating the Big Fish by Adam
Morgan. It is epitomised by the tagline of one of the pin-ups of Challenger
branding, Avis, when challenging Hertz in the 1960s: “When you’re only no.2, you try harder. Or else.”
And Challengers
have to work smarter too; firstly,
to establish the plains upon which they can challenge the leader; and,
secondly, because they often do not have access to the same resources as their
bigger rival(s) – Challengers have, “greater
ambitions than resources”[1],
according to Morgan. And this is why market and competitive intelligence (MI
and CI) are integral to companies in Challenger positions – John Gumas, another
leader in the field, questions whether these companies are underestimating the
power of competitor analysis in his book, Marketing
Smart.[2]
Challenger
brands are, by definition, not the number one and nor are they niche; they have
a mindset whereby ambitions exceed resources, and an acceptance of the
implications of this gap; and they are pursuing a high growth strategy.[3]
They are not always, but often are, small- to medium-sized enterprises (SMEs)
and, if this is so, it is unlikely that they employ full-time market analysts
as large companies tend to do. Indeed, Morgan also draws the link between
Challengers and ‘Guerrilla Marketing’ – you can read my piece on how three
infamous guerrillas would have advised SMEs to approach MI and CI here, with all of these
points relevant to Challengers too.
I have read,
insatiably, the work of the thought-leaders[4] on
Challenger branding, and outline below some of the areas where MI & CI can
best contribute to the central tenets of the Challenger approach:
Can you mount a challenge?
First,
and foremost, a company must know that
it is a Challenger, and how credible its challenge is. “What’s our market share?” is one of the
questions that every analyst is asked, all of the time. Market analysis will
help a company to understand its ‘state of market’[5],
relative to its competitors, and how that is changing; and, thus, the nature
and extent of the challenge to be mounted.
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| It's not the size of the dog in the fight; but the size of the fight in the dog! |
Uncover weaknesses, target them
Challengers
– particularly those in second place – are in pursuit of an, often dominant,
market leader. Through the application of ongoing competitive intelligence,
this leader should be meticulously watched
and its weaknesses understood, for these are likely to be the target of a
Challenger’s attacks. Gumas asks us to, “know
who you’re challenging, and their weaknesses”[6],
in order to, as Brand Uniq point out, aim, “timely
and calculated attacks” – this all sounds very militaristic, which is no
surprise as the purpose of intelligence in that arena is to achieve precisely that.
Customer intelligence &
segmentation
Next, customer intelligence is key. Customer
segmentation – a well-established marketing principle – is absolutely at the
heart of Challenger marketing, with Challengers seeking to dominate particular
segments, often based on those that have, “the
greatest potential for growth”, according to Dr. Thomas Oosthuizen.[7]
Identification of these segments is a core MI function, and requires analysis
of a company’s existing customer data – to identify which segments are the most
profitable, for example – and of trends in the marketplace. Then, according to
Martino Flynn, once a segment is identified: “how do you get to it? Where do they shop? What do they watch on TV?”[8]
And
Challengers are likely to be closer to their customers, and must know the
intricacies of their segment better than anyone else. An article about Challengers in The Guardian small business section
advises: “make understanding your
customers a priority. Businesses are often awash with data, but have very
little insight.”[9]
And, of course, the great thing about this data is that companies are likely to
already have it, or be able to collect it from existing customers; as Gumas
says, “Your customers: they’re walking
goldmines of information.” But it’s also fundamental to the Challenger
psyche, as Martino Flynn point out: “Consumer
insights are essential, because we need to connect with consumers”, often
in a different manner to that in which the market leader does.
Brand
consultant Ove Haxthausen talks about formal segmentation analysis when
asserting that, “a new way of segmenting
the market”, is the foundation of the challenge. He goes on to say that, “this new segmentation will often be based on
trends that are happening outside of the category or on consumer needs that
have been disregarded by major brands.”[10]
Which leads us on to the next point…
Analyse beyond your markets
…Challengers
need to analyse their markets, of course, but not just their own markets. Morgan, in Eating the Big Fish, makes this point emphatically, stating that
aspiring Challengers should look at number two brands outside of their own
category that are demonstrating rapid growth. The idea is to look for ideas
that can be transposed on to your own category, seeking insights as to how
brands have achieved breakthroughs, and translating the implications for your
own category. It’s worth quoting from Eating
the Big Fish in full, as follows (emphasis added):
“If we are looking to become
genuinely idea-centred and to genuinely maintain momentum, we will need to
practice regularly a kind of
analysis entirely different from the kind we do now. At the moment, our
tendency is to look regularly inward: we seek strategic direction every year
from competitive analysis within our own category. But…while such analysis of
our own category is obviously an important prerequisite for thinking about how
to defend our own business, if we wish to gain a genuine competitive advantage
we should be looking outward.”
Knowledge management for Ideas
That
quote alludes to the final point: idea
generation is another central tenet to the Challenger approach that
intelligence can contribute to. Morgan’s ‘eighth credo’ is to “become idea-centred, not consumer-centred”;
which requires, “the continual
manufacture of ideas.” Market analysis, horizon scanning and monitoring
trends (e.g. demographics) are likely sources of ideas, or of opportunities to
which new ideas enable us to respond. But, often, the best ideas come from
within as a company’s staff are, after all, the experts in a given field; as
Henry Ford is credited with saying (but probably didn’t), “if I’d have asked my customers what they wanted, they’d have said ‘a
faster horse’”. One major contribution that analysts can make here is in
Knowledge Management (KM) – how many Challengers, particularly SMEs,
effectively manage and utilise the knowledge that they already have within? The
end-game of effective KM is new knowledge creation, and the generation of
ideas (a future article).
These are just some of the ways in which market and competitive intelligence can contribute to some of the central tenets of the Challenger approach – there are many more, which will form the basis of future articles. In the meantime, if your company wants to look at competitor analysis, customer segmentation, knowledge management, or anything else mentioned herein, then contact me.
[1]
Adam Morgan (2009), Eating the Big Fish, Second
Edition, p.26
[2]
John Gumas (2010), Marketing Smart,
Section 1, p.9, Are You Underestimating
the Power of a Competitive Analysis?
[3]
Morgan (2009), p.26
[4]
Itself an important concept in Challenger branding!
[5]
Morgan (2009), p.26
[10]
Ove Haxthausen (2004), Secrets of
Challenger Brands, American Marketing Association Publishing, May/June 2004
Issue, p.36
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