How and Why to Build a Challenger Brand
Dollar Shave Club launched in 2011 with a mission to change the way men buy razors.
The $3.5 billion dollar male shaving category had been dominated by the Gillette-Schick duopoly since the early 1900s. Their model was to wholesale razors to retailers who then sold them to customers.
With no pressure from competitors, there was no major motivation to improve their product or customer experience. Very little true innovation had happened for decades.
That was until Dollar Shave Club’s now-infamous “Our Blades Are F*cking Great” campaign put the scrappy disruptor on the map.
The comical video took subtle shots at Gillette and made the new company’s value proposition incredibly clear: Stop going to the store every month to buy expensive razors you don’t need. Buy online with us and we’ll mail them to you for less.
Dollar Shave Club didn’t just challenge the Gillette-Schick duopoly. They challenged the way the razor industry worked. They cut out the middlemen and sold directly to the consumer which at the time had never been done before.
The razor industry incumbents threw everything they had at Dollar Shave Club from patent infringement lawsuits to copycat websites but in the end, the market decided: consumers wanted to buy razors online. Eventually, Unilever acquired the startup for $1 billion in 2016.
Dollar Shave Club successfully broke into a market that had remained unchallenged for nearly a century. Through a convergence of technologies and trends, they were able to break through the noise. This is a path that’s been followed by many of the most successful companies in recent history.
This approach is known as becoming a challenger brand, and in this post, we’ll cover everything you need to know about building a challenger brand so you can decide if it’s an approach that makes sense for you.
Here’s what we’ll cover:
- What exactly a challenger brand is
- 7 different types of challenger brands
- 7 different examples of challenger brands turned unicorn
- 5 keys to building a successful challenger brand
- Why the world needs more challenger brands
What is a challenger brand?
The term challenger brand was coined by Adam Morgan in his 1999 book Eating the Big Fish. Here’s their definition:
“A challenger brand is defined, primarily, by a mindset — it has business ambitions bigger than its conventional resources, and is prepared to do something bold, usually against the existing conventions or codes of the category, to breakthrough.”
When you adopt a challenger brand mindset, you give your company a sense of purpose by positioning your brand as an agent of change.
Previously, challenger brands were famous for challenging another company, such as Pepsi vs. Coca-Cola in the infamous 1980s Cola Wars.
Today’s great challenger brands are different. They don’t just challenge a company, they challenge the status quo, buyer behaviors, and long-held beliefs.
They are not afraid to pick a fight, take a stand, and put themselves out there.
They have ambition, passion, and a willingness to lead the change they want to see. They don’t try to win the game playing by the old rules —they make up their own rules entirely.
Here are a few benefits of adopting a challenger brand mindset:
- Provides a strong media narrative
- Gives your brand a sense of purpose
- Positions your brand in a memorable way
Next, we’ll take a look at different types of challenger brands and a famous company for each that can serve as an example.
What are the different types of challenger brands?
In the book Overthrow II, the authors outline ten different types of challenger brands. (They are brilliant and it’s a great book, so highly recommend buying a copy!)
Here we dive into six of those challenger brand types and one new one that we added (Pioneers). We’ll cover these six because these are the types of challengers we’ve worked with in the past.
The Feisty Underdog
Feisty Underdogs strategically push to align themselves with the market leaders by creating a David vs. Goliath narrative. In a noisy competitive market landscape, they breakthrough by creating the illusion that only two real options exist: their brand and the household names in the industry. This requires a brand to be scrappy and pick a fight, oftentimes in a public forum.
This is what most people think of when they hear the phrase challenger brand because it’s what many of the early great challenger brands did. They challenged a company, unlike the challenger brands of today, who challenge ideas, habits, and business models.
Studies show that our appeal towards underdogs is something that is hardwired into our psychology. Deep down, we think of ourselves as underdogs so this naturally makes us root for them.
SpaceX recently made history with its first successful manned rocket launch. That successful launch was 18 long years in the making. When Musk first launched the company in 2002, no one took him seriously. He wasn’t the first rich tech entrepreneur to make a run at transforming the space industry. Many others had tried and failed.
But Musk went further than others were willing to go. He waged a legal and highly public war challenging Boeing and Lockheed and even sued NASA — his biggest potential customer — in 2006. To say SpaceX has been a success would be an understatement — they’ve done what nations have failed to do and are pioneers in privatizing space exploration. (If you are a Space geek like me— highly recommend reading the book Space Barons).
The Dramatic Disruptor
Dramatic Disruptors are driven by the belief that the product they’ve built is ten times better than their closest competitors. An incredible product is at the core of their communications strategy.
They challenge the status quo and challenge people to rethink why they do what they do.
Before Uber came along, the entire customer experience with traditional taxis was miserable. They were unreliable, their drivers had little incentive to provide quality service, and the rates charged were a mystery. Uber’s core ride offering was far superior — in nearly every way — when compared with the taxi experience.
You may love them or hate them, but there is no denying that Uber dramatically disrupted their way into becoming a company worth $63 billion.
Democratizers are on a mission to bring something to the masses that historically has only been available to a small group. They open up access, break down barriers, and create a more level playing field.
They have a strong belief of the benefits that come from this, are frustrated those benefits are available to such a small group, and have found a new way that will make it possible for others to have access.
Their mission is demystification and to dismantle exclusivity.
Democratizer Example: RobinHood
Stated right on their website, their mission is boldly explained above: to democratize finance for all. This has served them well considering they are now valued at $7.6 billion and have pioneered an entirely new way for retail investors to gain access to investment opportunities normally reserved for the wealthy.
Missionary brands have a deep sense of purpose and set out on a mission to right a wrong that they believe shouldn’t exist in today’s modern world.
They are agents of change that set out to make right something that they think is unfair or wrong in the world. That sense of purpose isn’t buried deep on their “about us” page; it’s something that’s deeply integrated into everything they do — down to their core business model.
Example: Plastic Bank
The mission at Plastic Bank is clear: Empower the world to stop using ocean plastic. To do this, they set up drop off points where people can exchange plastic they’ve picked up from the streets for money. Plastic Bank then takes this collected plastic and sells it to companies like P&G who then use it for their own products. Since launching five years ago, they’ve saved over 11,126,329kgs of plastic from going into the ocean.
They are also one of the few real examples of companies leveraging the power of blockchain in action (they track their plastic on the blockchain).
The Next Generation
Next Generation brands aim to create a narrative that questions the relevance around an established company or industry. It’s creating a “that was then, this is now” conversation. It’s all about getting people thinking and dramatizing the narrative that it’s an end of an era. The brand can then create the illusion of two different generations — the old way and the new way.
When Salesforce came on the scene in the early 2000s, they had a model few had heard of: software delivered via the cloud. The established incumbents (Oracle, SAP, etc.) offered on-premise software that was clunky, expensive, and difficult to use. Salesfoce declared war on the software industry. They believed users should have 24/7 access to software via the cloud. They staged protests for the “anti-software” movement, ran ads showing a Salesforce jet shooting a “software” plan out of the sky, and even considered driving a tank down the street at a competitor’s conference.
They pioneered the category of cloud software and built a $158 billion dollar empire.
Pioneer brands use bleeding-edge technologies to reimagine what’s possible.
They are pioneers on the front lines of a technology that hasn’t been fully adopted by the mainstream and commercialized yet. They are driven by their belief that their technology is truly revolutionary — not just for their potential customer base but for nearly every industry.
Often they are in R&D in order to further develop the product. They seek to create stories based on what their technology does and position themselves to be associated.
Example: Boston Robotics
Spun-off from MIT in 1992— Boston Dynamics has been slowly feeding the public videos of their technology in action for years. Every couple of months, they will release a video that features one of their robots doing something new — like running, opening a door, or standing back up after getting pushed down. This has grown their YouTube following to 1.7 million subscribers and despite having no commercially available product until last year, they’ve owned the conversation about the potential of robotics for years.
Building Your Challenger Brand
The most important part of building a challenger brand is getting clarity on what exactly you will challenge and how you will position yourself in the market.
Are you challenging an established company? Are you challenging the way business is done in your industry? Are you challenging the perceptions your customers have?
This is all about mindset and once you have clarity here, you can begin to integrate this position into everything you do.
Keys to Success:
- Obsess over the end customer. Big brands often lose touch with who exactly the customer is that they serve and what matters most to them. This creates an opening for challenger brands to build their entire business around creating a product or service that serves the customer.
- Prepare to polarize. Being a challenger brand means you will likely attract enemies. In some cases, a lot of them. So it’s important that whatever you set out to challenge, it’s something you truly believe in and are willing to fight for.
- Learn from B2C. The lines of B2B and B2C continue to blur as consumers bring the expectation they have for experiences in their personal lives to work. The future will be all about B2H — business to human. So if you want to get ahead of your competitors, start studying how top B2C challenger brands are approaching their marketing and communications strategies.
- Bake the mindset into your culture. Being a challenger brand is a mindset, so it’s critical that you integrate it into your culture. It needs to be known across your company and your daily actions need to demonstrate your relentless drive to challenge the market and create real change.
- Become the leading advocate. Once you have clarity on the problem you solve, you need to aim to become the most vocal advocate that sounds the alarm and demands that the problem gets fixed. To this, you need to declare war on the problem you solve.
- Take calculated risks. You will never stand out if you are boring. In the early days, you have the luxury of not having a brand to risk damaging because you are new — take advantage of this period of time and take well-calculated risks. We call this On the Line Marketing — finding the fine line between boring…and jail.
The World Needs More Challengers
When industries don’t have any challengers, they become stuck in their ways and have little incentive to innovate or better serve their customers.
But when a challenger brand enters the market, the incumbents are forced to change. Customers are encouraged to rethink their own behavior — like Salesforce customers who were encouraged to rethink why they tolerated the pitfalls of on-premise software or Dollar Shave Club customers who were encouraged to rethink why they tolerated going to the store every month.
Today more than ever, the world needs more brands that challenge the status quo and bring people more options to choose from. People want to engage with brands that stand for something and there is no better way to take a stand than to challenge the way things have been done.
So take action. Decide what you stand for, what you stand against, and what you are ready to fight for. Then declare war on the problem you will solve.