Some of today’s most well-known companies arose from the ranks of challenger brands to become brand giants. However, these former challenger brands were once far from being industry leaders—they were startups with visionary leaders whose execution and timing proved pivotal to their company’s exponential growth.
Consider the world’s most widely recognized former challenger brands, Amazon and Alibaba. Amazon is the world’s largest internet retailer by revenue, as well as its largest provider of cloud-computing services, while Alibaba is the world’s largest retailer in terms of overall sales. Amazon was an early challenger brand when it took on the book industry back in 1994, and less than 25 years later the Seattle-based e-commerce company likely will be the first business in the world with a market capitalization in excess of a trillion dollars (its market value was $865 billion in July of 2018). Alibaba, founded in 1999, already is halfway there with a market cap in excess of $500 billion.
These successful challenger brands didn’t become industry titans overnight – they slowly but gradually disrupted traditional industries until they became dominant players. Ironically, these deeply entrenched established brands have become exactly what they sought to disrupt when they were in their infancy. Other examples of highly successful challenger brands include PayPal, Blue Apron, Uber, Jet.com, Slack and Airbnb, as well as the scores of lesser-known companies going head-to-head with well-established businesses making everything from beer to underwear to razor blades.
Let’s look at two of the primary concepts that make challenger brands successful.
The Power of Disruptive Innovation
The business landscape is littered with companies that failed to adapt to the new business models of challenger brands. Blockbuster and Hollywood Video were flattened by the uppercut punch swung by Netflix, and nowadays if you live in Colorado, Washington or Nevada, chances are high that one of those former retail locations in your city houses either a marijuana dispensary or a sushi joint.
Disruption of conventional industry is a core component of challenger businesses. Challengers tackle established brands or industries through a combination of innovation, enhancements or reduced pricing that sends the former out on its ear. The term “disruptive innovation” was coined by Harvard Business School professor Clayton Christensen.
Disruption often involves creating entirely new categories – think dating site Match.com (and its many subsequent imitators), Uber or Airbnb. These game-changing companies not only had the brass to take on industry leaders but eventually transformed the business landscape in their respective categories. They capitalized on the core concept of transforming existing businesses through innovative services and new approaches.
The Power of Brand Identity
Brand identity is a key concept for challenger brands. Chipotle opened its first store in 1993, and in March of 2018 the fast-casual burrito chain had 2,441 locations, including 37 international restaurants. In July Chipotle had a market capitalization of more than 12.5 billion.
Chipotle’s growth stems in large part from its strong brand identity – the restaurant is much more than just another tasty burrito shop. Chipotle’s hook is that it’s a socially conscious place to eat. Raw ingredients are sourced locally and prepared by hand, and it develops long-term partnerships with local farmers, ranchers and suppliers that are invested in sustainable and ethical farming practices.
Chipotle’s “Food with Integrity” brand image helped separate it from countless rivals, as well as from much larger value-oriented fast food chains such as McDonald’s. Its brand positioning created thousands of loyal customers who care about environmental impact, food production practices and food quality – and in the process challenged established many long-held trends and traditions in the fast food industry. Chipotle found a niche and owned it.
Other successful challenger brands that exploded in part because of the power of their brand identity include Vitamin Water, Virgin Atlantic and Red Bull.
Building Your Challenger Brand
Challenger brands often start small – Steve Jobs founded Apple from his garage in Los Altos, Calif. Challengers have an innate desire for their products or services to be different and transformative (Google, Uber), and they also differentiate themselves from industry leaders through powerful brand messaging and identity (Tesla, Patagonia).
Challenger brands create incredible customer loyalty through their value proposition. They engage their customers and speak directly to their target market. They provide a better user experience, and they disrupt traditional industries. Above all, challenger brands are unique.
These are but a few of the many hallmarks of successful challenger brands. Theme Communications can help you establish your challenger brand’s story, identity and market strategy, and in doing so create a passionate, loyal following among your target customers.