KLEBER & ASSOCIATES

HOW TO WIN AS A
CHALLENGER BRAND
MAY 2013

1215 hightower trail building c atlanta, georgia 303050 • 770.519.1000 • kleberandassociates.com

How to Win As a Challenger Brand
Introduction
Say the phrase “challenger brands” and classic marketing stories come to mind: Avis vs. Hertz, Coke vs. Pepsi,
Apple vs. Microsoft. These are usually the stories of David vs. Goliath, with the smaller company boldly nibbling away at the market share of the industry giant, frequently achieving great success. It’s a story for the ages, where the protagonist musters up all of his might to take on the enemy.
Today, the business landscape has changed so dramatically that brands have opportunities to challenge their competitors and attack the market from many different angles. The key to success is committing to a strategy and doggedly pursuing it.
Home and building products companies, no matter what their size, can learn from modern-day challenger success stories and find strategies that will build brands, grow market share and increase profitability.
Challenger Brands vs. the Market Leader
The idea of a challenger brand connotes an exciting duel: the small fighter against a strong giant. In fact, it’s a rivalry that seems to put the underdog at an advantage, because everyone wants to see him succeed. While he might be small, he may also have valuable tools at his disposal, such as creativity, innovation, acumen, and agility. Or, it may be enthusiasm, determination, and a supportive audience that gives him the edge. Perhaps it is the “perceived” weakness or underdog status that actually provides him the intensity to succeed.
To better understand the challenger brand at work, consider the traditional definitions of a market leader and a challenger brand:
What is a Market Leader? Conventional wisdom says that the market leader is the brand that has the largest market share in a specific category. A market leader often has a larger marketing and advertising budget than competitors, and typically leads in market reach and coverage, promotional depth, and new product introductions. A market leader can afford to invest in new technologies, systems and processes that fortify it against onslaughts by competitors. A market leader acts as a reference point for competitors, who may decide to ignore, emulate or confront the leader.
Well-known market leaders include Coca-Cola, The Home Depot and General Electric.
Market share is often identified as one of the most significant variables affecting a firm’s profitability. As a result, gaining market share and striving to be the top player is the business focus of many firms. For example, General Electric decided that if it could not be first or second in each market it served, the company would remove itself rather than participate as a tier three player. As a result, the company sold its air-conditioning and computer businesses.
Over the years, critics have questioned the relentless pursuit for higher and higher market share as the sole strategy for success. A company can be successful and quite profitable without holding the top market share. Consider
Toyota, a company that initially did not pursue market share but sought to make affordable cars that customers liked; or Nintendo, the number three player in the video game market. While Sony and Microsoft were battling it out,
Nintendo introduced the Wii and became the most profitable game console company in Japan. Buckle, a popular retailer of clothing, footwear, and accessories targeted to young men and women, has achieved high profitability by adding only a few stores each year, keeping costs low, and offering personalized service and free alterations to win customer loyalty.

Kleber & Associates, Inc.

White Paper
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What is a Challenger Brand? A challenger brand is one that is not number one in its category -- one that has its own set of challenges apart from the leading brands. A