The strategies deployed by Challenger Brands are an increasingly hot topic. Red Bull’s recent Stratos event was enviously watched by brand marketers the world over. Marketers wondering why their particular brand wasn’t able to ignite the same fervor and passion. Marketers perhaps looking for lessons they could take to their brands.
There are lessons aplenty. We’ve all witnessed brands that have attempted to become Challenger brands and failed. Sadder than that though, there are several once-proud Challenger brands that lost their Challenger edge completely.
When Saturn advertising proclaimed “A Different Kind of Car Company” they weren’t blowing smoke. Saturn owner’s picnics and off-the-chart customer satisfaction marks suggested the GM off-shoot really was entirely different. Launched to block the rise of Japanese imports, and then Japanese cars built in America, Saturn’s growth began cannibalizing sales from the GM mother ship. It also drained billions of dollars from GM’s coffers. Billions that the flagging corporate brands were desperately crying out for.
Lesson: Challenger brands require absolute corporate commitment. Challenger brands can’t survive if they’re not advocated for at the highest levels. Saturn was, sadly, a victim of its own success. A success that put it in direct competition from larger, more vocal stakeholders.
In 1888 Sears turned the retail business on its head by launching its famed catalog business. Seeing an opportunity to appeal to customers without access to reasonably-priced goods, Sears became the forefather of companies like Amazon who have ‘democraticized” commerce. Almost 125 years later, Sears is seen as an organization mired in the past, struggling with a Kmart merger that further weakened their retail decline. Most recently their executive board have been cited as being more interested in being a fund company not a retail company. A sad fall for a brand that once (upon a time) defined the category.
Lesson: Sears created a schism in the retail space but seemed unwilling to continue to innovate. The boldness of the catalog become a (very lucrative) crutch they were unwilling to keep revolutionizing.
Wherefore art thou my “Choice of a New Generation”? Pepsi has had a proud history of Challenger Brand marketing from being the first to start a sales team focused on selling to minority black audiences (we’d call that niche today), the Pepsi Challenge which provided the impetus for Coca-Cola’s “New Coke” debacle (talk about the definitive Challenger success) to iconic Challenger Brand advertising. Where is all this gone? Here in Canada, Pepsi was once the preferred soft-drink of the French province of Quebec – no longer, Coke is back on top. While Coke was doubling-down on beverages, Pepsi expanded into food (via Quaker/Frito-Lay) and began fighting the new consumer wave of healthier snacks on two fronts. Where their beverage group may once of set the Challenger Brand tone for the organization, Pepsi are now mired in underperforming beverage business.
I do love this little ad gem from their Challenger heyday though.
Lesson: No way I’m going to try boil 25 years of the Cola wars down to 4 pithy sentences. Pepsi certainly captured a cultural shift in the 80’s, capturing the trends just on the edge of becoming mainstream. But they seemed unable to mirror their advertising efforts with similar product and business insight and innovation. The Frito-Lay acquisition “distracted” them from their core beverage business allowing the Coca-Cola folks to redefine vending and set the new standard for social business.
Once the poster-child for affordable PC’s, Dell has recently slipped to number 4 in the global PC market. Ironically citing the fact that they’re unable to produce machines as cheaply as competitors Acer and Lenovo. From the heady days when Dell’s expertise in JIT management, supply-chain management and customized builds made them the darlings of college students and start-ups worldwide, Dell has lost their way. A mis-timed, or misguided, jump into electronics retailing saw them fighting for even lower margins versus well-entrenched giants like Sony, Hitachi, Panasonic. In recent months, Dell executives have suggested their future now lies further upstream – with corporate enterprise clients. A battleground that already has significant players like IBM, Accenture and HP poised and ready.
Lesson: Dell’s credentials were based on two key components – high customer service and low(er) cost PC’s – that became unsustainable. As the bottom fell out of the PC market, Dell couldn’t afford to service their customers to the same level. In recent years, the lack of a retail presence and the acceleration of smartphones, often in lieu of buying a PC, have also left Dell stymied. Simplistically if you willingly erode a core differentiator of your brand – service – then you can’t be surprised when your remaining “value” pillar makes you a commodity. Perhaps taking a lesson from Zappos’ business would be key for Dell executives. – it is still possible to over-service customers in a low margin business.
The biggest lesson? Challenger brands are not something created overnight by a zealous Brand Manager. No amount of wishful thinking will transform your current business into a Challenger Brand. The brutal reality is that Challenger brands require a tremendous amount of attention and an almost pathological obsession to remain true Challengers. Yet for every Saturn, there remains an Audi. An Amazon for every Sears. A Red Bull picking up where Pepsi left off. An Acer (or Samsung) carving out former Dell territory.
Are there other “former” Challengers I missed? Are there lessons from those stories we should be paying attention to?