Challenger brands are changing the world, but these cutting-edge companies still have challenges to overcome in their path towards category domination.
Ahead of Brandweek’s Challenger Brands event, Adweek surveyed over 200 brand marketers—half of whom work for a challenger brand; the other half, a legacy or “establishment” brand—on challenger brands’ place in business today, the difficulties they’ll face in the years to come and the distinguishing characteristics that have allowed them to rise up against their bigger, more established counterparts.
(You can download the study, sponsored by Dataxu, here. Registration is required.)
Below, we’ve rounded up four of the most compelling insights from the survey’s results.
Storytelling and category disruption are strengths for challenger brands
Nearly 60 percent of respondents who worked for a challenger brand view the “ability to craft a brand narrative” as one of the most defining characteristics of challengers. That was closely followed by category disruption, community creation, a direct-to-consumer business model and a strong emphasis on ecommerce and customer service.
Jim Cooper, Adweek’s editorial director, said that for challenger brands, storytelling has become an effective substitute for traditional marketing—and more closely aligns with the desires of the modern customer. “Challenger brands have pivoted away from interrupted marketing because they’ve been smart enough to see that the digitally empowered consumer just doesn’t want to be interrupted on their personal journeys through things like retail and commerce,” he said. “There’s an intention and affection that’s built with storytelling as opposed to traditional marketing forms.”
Building community is an important tool
That intention and affection helps build one of the biggest boons for a challenger: community. Many of these companies are rooted in the idea of a brand as a community, which has helped them foster deeper relationships with their customers. “They’re so much more accessible than legacy brands,” said Adam Simone, co-founder of Leaf Shave. “It’s easier to create a personal connection with customers when you’re this size and when you have a little bit more freedom to react quickly to feedback.”
The typically younger age and smaller size of many of these challenger brands allows them to truly be a part of the communities their brands are building. “By virtue of the fact that you’re a new company, you’re probably a lot closer to what’s happening right now,” said Courtney Nichols Gould, co-founder and CEO of Smarty Pants Vitamins. “We have a much closer touch on what people are really looking for. When you’re very big, it’s hard to stay close to that.”
Long-term solutions pose challenges
That said, challengers have their share of challenges—most of which boil down to building brand equity and consumer awareness that will last for years to come. Nichols Gould said investing in the elements that aren’t quite as flashy is key.
“For us, it was about building a review base on Amazon,” she said. “That is the biggest product search engine, so regardless of whether that’s where most of your sales come from, I do think it’s a really important way for people to discover your product.”
And as these brands continue to grow, they’ll have to stay focused on staving off competition from fellow challengers as well as legacy brands. Nearly half the respondents said that market saturation is the biggest obstacle challengers face over the next few years, while just over 40 percent cited new innovations from establishment brands.
Simone said that’s best done when a brand’s products possess a unique, compelling factor that sets them apart. “Product differentiation … will help defend against saturation in the marketplace,” he said.
Few see challenger brands as bubble as set to burst
Just a tiny sliver of respondents predict that challenger brands are the modern equivalent of the dot-com boom. Over half think that challenger brands will stand the test of time.
“People see this as a real phenomenon,” Cooper said of the view respondents had of challenger brands’s longevity. “It’s based in sound business practices. It’s not a burn rate dot-com thing. This trend is here to stay and has really riveted the marketing ecosystem.”
However, just because these brands aren’t going away doesn’t mean they won’t change. According to the survey, many believe acquisitions are likely on the horizon, and they’ll have future challenges to face brought on by outside factors. “None of these companies have really seen a sour economy yet, so we don’t really know how they’d weather it,” said Cooper. “A lot of this is building passion around things that are sort of mundane—razors, mattresses, luggage. If the economy softens, will people revert to seeing these things as products, not passion points?”