Tag: Brand Planning

The Challenger Credo

Business is about competition.  It is therefore often compared to sport.

Take the Premier League in football.  You have leaders, teams which year after year compete for the English title.  These are teams like Manchester United, Liverpool, Chelsea and Arsenal.  If they do not win the league, they usually obtain the qualification spots for European competitions.

Also in the league, you have ‘Strivers’.  These are teams who are competing not to get relegated.  Their goal is survival.  Some succeed and stay in the league another year: Others fail and exit the league.

There is a third category of team in the league.  These are teams who look to challenge the established order by becoming one of the league leadership group.  In recent years such teams include Watford, Leicester and Bournemouth.  Often these are teams previously seen as unfashionable but which have received significant financial power through a new billionaire owner.

In business the term challenger is often used to describe businesses ‘in the middle of the league’.  Such a general description is an incorrect definition of the concept of a challenger firm.  There is more to being a challenger than being ‘of the middling sort’. Being a market challenger is as much a state of mind as it is a statement of intent.

I can think of sport’s clubs who are happy to maintain a mid-league position.  Owners want a club which breaks even financially and meets its role as a form of entertainment but who do not want to incur the significant costs associated with being in a leadership position.

Similarly there are businesses who do not want market leadership as being a leader costs in terms of defending that position.  Being a market leader is often not a position in which profits can be maximised. It costs to be a leader.

To be a market challenger, is to have ambitions which exceed your conventional marketing resources.  This means being strategically and tactically bold to overcome the resource gap.

So what are the core challenger characteristics?

  1.  Challengers embrace intelligent naivety.  They do not accept the historical norms of a market or its traditional process models.  The rules written by others aren’t the challenger’s rules.
  2. Challengers build a ‘lighthouse identity’.  They take and communicate their own position and they are clear where they stand on issues affecting the market.  They project that sense to target consumers like the beam of a lighthouse.
  3. Challengers take thought leadership of their category.  Apple isn’t the leader in the mobile phone market; Dyson aren’t the leader in the vacuum cleaner market; but both these companies lead their sectors in terms of design and thought.
  4. Challengers create symbols of re-evaluation.  They seek to continually shake up the consumer’s view of the market or brand category.  So Apple and Dyson continually add functionality and features to their products which alter the consumer’s expectations of the category.
  5. Challengers are willing to sacrifice.  Rejection isn’t the fear of challengers.  They fear indifference.  Be willing to sacrifice that which does not present a strong position to your target audience.
  6. Challengers are willing to over-commit to build a market position.  This over-commitment could be in the form of guerrilla marketing or to go a step further than your competitors to gain a market foothold.
  7. Challengers use PR and social networks to enter social culture.  the use of communications is strategic.
  8. Challengers become ideas-centred.  they need to continually come up with new ideas to keep their presence fresh.  They don’t do the same thing over and over again.

Research has shown ten potential challenger narratives.  These are:

  1.  The Feisty Underdog:  This is the classic challenger narrative.  It’s David versus Goliath.  It is often the position of the initial market disruptor.
  2. The Peoples’ Champion:  Challengers can develop a market position where they are seen as fighting to make the consumer the real winner.  They fight against the market’s ‘cynical fat cats’.  Take the mobile phone network Giff Gaff as an example.
  3. The Missionary:  These challengers want to bring a new way of thinking to a market category.  An example is The Body Shop which promoted natural and environmentally sound cosmetics manufacturer.
  4. The Democratiser:  This is the Robin Hood challenger wanting to take from the few to give to the many.  For example, H & M, the fashion retailer looks to give high fashion looks usually only available to those who can afford designer prices, to the mass market.
  5. The Enlightened Zagger:  These are challengers who divert from the cultural current in a market.  When competitors ‘zig’, they ‘zag’.  This is a brand by opposition to expected norms not matching the propositions of others.
  6. The Real and Human Challenger:  These challengers are clear to show that there are people behind the brand, not just AI and algorithms.  They promote human to human communication.  They aim to make a human and emotional connection.  There is personal commitment to quality and service.
  7. The Visionary:  These challengers aim to transcend the category.  An example is Whole Foods, the American grocery chain which uses the vision statement “Whole Foods, Whole People, Whole Planet”.  This statement reflects the triple bottom line of People, Planet, Profit. That business is more than the aggregation of wealth.
  8. The Next Generation:  These challengers look to get consumers to re-evaluate the market.  Tesla are an example as it gives an image of the future through alternative energy production and electric vehicles.
  9. The Game-Changer: These challengers offer a significantly different proposition that changes the market.  Such challengers have included Airbnb, and budget airlines such as Ryanair.

As challengers often lack the resources to compete against market leaders head on, they have a duty to be flexible, fleet-of-foot and imaginative.  As the  nuclear physicist Sir Ernest Rutherford said or UK scientific research, “We have no money, therefore we are obliged to think”.

 

Tips for managing a portfolio of brands

In previous blog entries I have discussed the concepts of a branded house and a house of brands.

A branded house is where one brand name is spread across a wide product portfolio.  A house of brands is where different brand identities are used in different market segments and for different product categories.

The firm I used use as an example of a branded house was Heinz.  But circumstances have changed.  Last year, Heinz merged with the American food conglomerate, Kraft Foods.  Heinz has gone from a position as a branded house and has become part of a house of brands.  Heinz has become part of a brand family which includes Philadelphia, Oscar Meyer, Cadbury, Planter’s Peanuts and Maxwell House coffee.  Heinz is now part of a multi-brand portfolio.

So what principles must you apply when managing a multi-brand portfolio?

Brand portfolios require strong management above brand level.  You do not want brands within a portfolio to duplicate their product offers.  You can end up competing against yourself.  Each brand may duplicate innovations doubling research and development costs.

To manage a multi-brand portfolio, you need a brand coordinator or a brand committee to avoid the duplication of effort and cost.

In some sectors, such as pharmaceuticals, independent duplication of effort may be necessary.  Scientific peer review may be required so teams independent of each other may have to carry out the same experimental work simultaneously.  There is only a single particle accelerator loop at CERN and the cost of building a second is prohibitive, so two teams of scientists carry out the same work to maximise the efficiency of the accelerator and to provide peer review evidence of each others work.

It is also true that a bit of organised competition may accelerate product development and innovation. But note the word organised.

Innovations should be allocated to brands according to their market position.  Innovation is the lifeblood of brands which grow through extensions and product renewal.   These maintain brand relevance as the market changes and allow brands to differentiate themselves from their competitors.

You must develop clear brand charters which describe the brands identity and which clarify the main lines of development and innovation for the brand.

This allows innovations to be allocated according to a brand’s values and not under pressure from sales departments who want every brand to have the same advantages.

It is important to differentiate between innovations which are to be offered exclusively for one brand and those which are to be phased-in over the whole portfolio.  It is no accident that car firms apply innovations to their luxury models first before applying them in stages down to their base models.  If you are to phase in innovations throughout your brand portfolio, you must clearly establish the order in which innovations are to be allocated

In certain circumstances, innovations may have to be introduced across a portfolio simultaneously.  It may be more cost-effective to spread the cost of an innovation across a brand portfolio, e.g. battery technology for electric cars or for manufacturing innovations.

In managing a brand portfolio, you shouldn’t ‘rob Peter to pay Paul’.  You want a portfolio of strong brands.  You don’t want a few stellar performers and other brands which struggle, sucking up hard-fought income.  Mars recently took steps to streamline its portfolio focusing on those brands which it considered market leaders.

It is standard practice to position brands so that they don’t compete with one another.  Brands must be designed to fit particular market segments.  Thus, each brand in a portfolio should be able to grow strong. Citroen Peugeot has to mass brands and innovation is key to both.  To focus innovation budgets on one brand would destroy the other.  There are no non-innovative brands in the car market.

A brand portfolio should not represent a history of product development and acquisition.  They represent a strategy of global market domination.  Why did Coca Cola pay a billion dollars for the Orangina brand; a geographically local brand.  It wasn’t because Coke lacked an orange soft drink (they own the Fanta brand).  Coke bought Orangina because Pepsi didn’t have an orange soft drink in their brand portfolio and to cover this gap relied upon a distribution deal with………….Orangina.  Coca Cola’s purchase of Orangina denied Pepsi a foothold in the Orange-flavoured soft drink segment.

Your brand portfolio is like pieces on a chessboard and it should be used strategically to defend your market position and to attack your competitors.  Each brand should stick to its defined strategic role.  Fighter brands are like pawns defending your king; your star brand.

Some brands will have a financial role providing income for other marketing activities.  Others will be banner brands which are closely related to, and bear the name of the brand owner.

Flanker brands, your knights and rooks prevent your opponents attacking your star brand indirectly.

Some brands will be attack brands taking on your competitors. On the chessboard of competition these are your Queen and Bishops.

Some firms design their portfolios as parent and child brands.  Each child brand has a specialised role.  Nivea have their traditional face cream but they also have thirteen child brands each with its own strategic intent.  It can be disastrous to purchase a parent brand and not to purchase its children.

All brands have a tendency to duplicate innovations and strategies. This can erode brand identity as effort is applied to create economies of scale.  This tendency must be avoided. Brands are designed to target particular customer segments within a market. If brands become indistinguishable from one another, that targeted appeal may be lost.

For firms such as Volkswagen Group.  Volkswagen, Audi, Skoda and Seat vehicles all come off the same production lines and share the same platforms.  Seat and Skoda have been pushed up market.  To ensure that each of these brands retains its individuality visual attributes have to retain distinct difference.  Design is playing an increasingly important role in brand management.

Managing a brand portfolio is a game of three-dimensional chess.  It takes continuous supervision and strategic control to ensure and maintain success.