What Are Challenger Brands and Why Do They Matter?

In recent years, the term challenger brand has become more and more popular. Everywhere, challenger brands are popping up, ready to turn their industry upside-down.

But what is a challenger brand really? Why do they matter? And what separates the successful challenger brand from any other small business?


Why challenger brands matter

Attention spans are shorter than ever. Our brains are on automatic pilot half of the day and we automatically zone out when we’re confronted with boring forms of advertising.

In order to grab people’s attention, we need to disrupt people.

That’s where challenger brands come in.

Before ‘disruption’, we had ‘best practices’. As AdAge puts it: Everyone copied the procedures and practices that were deemed to be the most effective, including in marketing.

But that doesn’t work anymore. What was previously a ‘best practice’ now simply means that it’s just like the rest. It’s not different, just more of the same.

And that’s why industry categories get stuck, until someone unsticks them. Until there’s a challenger brand who radically disrupts the industry.


Defining a Challenger Brand

The term ‘challenger brand’ was first coined in 1999 by Adam Morgan, founder of strategic brand consultancy firm Eatbigfish. Every since, Morgan has worked on what he calls ‘The Challenger Project’, studying challenger behavior and figuring out what businesses need to do to become challengers themselves.

Morgan defines a challenger brand as one who changes the way we see and experience the categories around us. They turn our industries upside down; they have to make us question what we thought we knew and liked. And most importantly: they have to do that without the benefits of large budgets or widespread distribution.

These brands don’t try to outspend, they outsmart. They implement different strategies, company positioning and culture to compete with the established leaders.

They’re like the old Biblical tale of David and Goliath: underdogs in a seemingly weaker position are suddenly capable of conquering their adversaries.


Examples of Challenger Brands

Previously, I wrote about Virgin who became a tremendously successful record company by doing things in an entirely different way than what people were used to. They challenged the industry they were in.

Virgin was founded by Richard Branson in February 1970. Virgin started as a record company and Branson and his partner actually came up with the brand name ‘Virgin’ because they considered themselves virgins in business.

Branson turned Virgin into a successful record company because he started selling records via post, while every other brand in the business was still selling records in-store.

Virgin was challenging the record industry. It was a small brand that wanted to do things differently. Today, it’s a billion dollar company.

But Virgin is not the only one. Think AirBnB, Innocent, Spotify, Uber, Netflix – they all started as challenger brands and they are now the market leaders of the new categories they created. These brands prove that it’s not the most important thing to be first in the industry; the most important thing is to be different.

So outsmart, disrupt and fight to do things differently and your brand will become a challenger brand as well. And that’s a great position to be in.




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Inspiration and Insights

On advertising and marketing