Say the phrase “challenger brand” and classic marketing stories come to mind: Avis vs. Hertz, Coke vs. Pepsi, Apple vs. Microsoft. These are typically David and Goliath stories, where smaller companies nibble away at the market share of industry giants, frequently achieving great success.

The home and building products industry has its fair share of these stories as well—like any industry, it’s dominated by a handful of market leaders, with countless other brands vying for attention (and sales).

Gerber LogoOne example: Gerber Plumbing Fixtures. Founded in 1932, Gerber manufactures a comprehensive line of high performance, high efficiency and eco-friendly plumbing products, including toilets, sinks, and faucets, all marketed and sold exclusively through wholesale distribution channels. But when they hired Kleber & Associates to help them challenge much larger brands, Gerber was far from a market leader; they were competing against multiple tier-one plumbing suppliers, each with distinct advantages such as better reach, superior coverage and vastly larger marketing budgets.

One David against multiple Goliaths

Challenger-Brand_Boxing2While it’s true that smaller marketers like Gerber may face disadvantages, they can also have valuable tools at their disposal, such as creativity, innovation, acumen, agility, and enthusiasm.

In Gerber’s case, they were armed with a superior strategy; they focused their marketing efforts (with help from K&A) on the audience with the most influence on the brand buying decision for vitreous china and brass products—the remodeling and replacement plumber.

But more about that in a moment.

What is a Challenger Brand?

By definition, challenger brands are not number one in their category; they typically leverage new product innovations or use their smaller size and agility to take market share and sales away from the market leader.

Challenger-Brand_Arm-WrestlersMarket leaders, on the other hand, are the companies with the largest market share. They usually have larger marketing and advertising budgets than their competitors, and lead in market reach, coverage, promotional depth, and new product introductions. A market leader can afford to invest in new technologies, systems and processes that fortify it against onslaughts by competitors.

So how can challenger brands compete?

For one thing, competing doesn’t necessarily mean winning. Challenger brands don’t have to become the market leader in order to make money. While gaining market share and striving to be the top player is the focus of many firms, companies can be hugely successful and profitable without holding the top market share position.

Consider Toyota, a company that initially didn’t pursue market share but sought to make affordable cars that customers liked, or Nintendo, the number three player in the video game market. While Sony and Microsoft were battling it out, Nintendo introduced the Wii and became the most profitable game console company in Japan. Buckle, a popular retailer of clothing, footwear, and accessories targeted to young men and women, has achieved high profitability by adding only a few stores each year, keeping costs low, and offering personalized service and free alterations to win customer loyalty.

According to brand thought leader Adam Morgan, author of Eating the Big Fish: How Challenger Brands Can Compete Against Market Leaders, “Challenger brands share a common mindset. They have ambitions that outstrip their available resources and are looking for ways to do more with less.”  This determination drives creativity and innovation, and helps challenger companies find new ways to compete.

Top Challenger Strategies

There are multiple marketing tactics challenger brands can employ to steal customers and sales away from market leaders. Looking at it from a broader perspective, however, successful challenger brands typically deploy one of three strategies:

  • Attack the market leader by offering a superior product or service
  • Target a company that offers outdated products and/or unrealistic prices
  • Draw customers away by offering a better overall customer experience

Given these options, market challengers can utilize several initiatives, such as providing cheaper products and lower prices (Walmart), offering a larger, better selection of   products (Baskin-Robbins), or reaching customers through an innovative distribution channel (Avon).

Gerber#4forwebIn the case of Gerber Plumbing Fixtures, K&A positioned the company as the manufacturer most dedicated to helping plumbers build their business. Sales tools, promotions and training programs were built around making the plumber’s job easier, while offering loyalty incentives for using or recommending the Gerber brand. A consistent visual identity was implemented across all product literature, catalogs, sales promotion materials, trade print advertising and online destinations. At the same time, public relations efforts focused on building strong relationships with plumbing professionals, and social media helped further those relationships through one-on-one communications.

Results of a Successful Challenge

Gerber#8forwebAs a result of these efforts, perceptions of Gerber changed over time. They built a solid reputation for product performance and style, and for great margins and trade exclusivity. Ultimately, Gerber became known within the industry as “the plumber’s brand.”

Gerber grew from a company with low brand awareness to the third leading vitreous china brand in the market. They became the Tier 2 industry leader, making strong inroads into Tier 1 territory. Wholesalers promoting Gerber as their largest product line jumped 48 percent, brand preference for Gerber toilets increased 30 percent, and preference for their faucets increased 20 percent.

Gerber#1forwebTo celebrate the 80th anniversary of Gerber Plumbing Fixtures and their new brand leadership position, Kleber & Associates developed a nationwide promotional campaign targeting plumbers, contractors and wholesalers. The Gerber sales team hosted over 200 events that included prizes, training and a raffle for a fully loaded Chevy Avalanche truck (chosen in honor of the brand’s award winning Avalanche toilet).

Entries to the sweepstakes far exceeded expectations. When the winner was announced, the event received coverage in leading plumbing trade publications, as well as regional newspapers and Chicago television news.

Ten Types of Challenger Brands

Adam Morgan and Mark Holden recently examined challenger brands from the last ten years and identified ten common challenger types and the strategies behind their success. Here is their list:

  1. The People’s Champion
    This brand stands up for the people, delivering a message of unity against the market leader. Together we can succeed and overcome; the market leader has profited from you long enough. Charles Schwab has championed Main Street, not Wall Street, famously putting an “every man” face on its investment business.
  2. The Irreverent Maverick
    This challenger brings attitude by the truckload to the marketplace, using wit, humor, and unconventional tactics to attract and engage a specific audience with its brand. Red Bull or Newcastle Brown Ale are good examples are brands that have distinguished themselves by demonstrating a degree of irreverence and attitude.
  3. The Missionary
    The missionary comes into the market with a message, ready to put something right in a category where it thinks the existing philosophy is wrong. This challenger wants to use a product, service or brand experience to convert the   customer to a better way of thinking. Al-Jazeera is looking the address the balance of media coverage of the Middle East; Lululemon offers free yoga classes to the public in the hopes of attracting  people to a healthy, fit lifestyle centered around personal goals.
  4. The Next Generation
    This challenger questions the validity of the market leader by positioning the market leader as perfect for times gone by, but not right for the present. Now that times have changed, isn’t a new brand more appropriate? Audi is positioning itself as the progression of luxury, going up against traditional luxury brands such as Mercedes.
  5. The Democratizer
    This type of challenger is something of a modern day Robin Hood, taking from the few and giving to the many, equalizing the marketplace. The challenger takes something exclusive, such as good design, fine clothing, or the ability to produce a movie, and brings it to the masses. IKEA brings modern, eco-friendly furniture and home goods to the market at affordable prices that are suitable to smaller apartments and homes, as well as large houses. YouTube has given anyone with a video camera the opportunity to produce and share entertainment.
  6. The Enlightened Zagger
    This challenger swims against the current, not only in the category, but in the culture as well. Camper shoes encourages people to walk, not run, taking on the conventional wisdom that running is the best way to pursue fitness.
  7. The Visionary
    The Visionary changes the way the category thinks about itself and what it offers. The brand offers a benefit that is much greater than the category and the consumer has an opportunity to join in something that supports the greater good. Whole Foods Market is not just a grocery store; it is an exemplar for natural foods and healthy lifestyle that is good for people and the environment.
  8. The Real and Human Challenger
    This challenger type focuses on the personalities behind the brand. By featuring people instead of products, these brands become compelling and relatable. Samuel Adams is one example of a brand that has done this successfully; and in the case of challengers like Aflac and Geico, the face behind the brand isn’t even human.
  9. The Game Changer
    A game changer offers a totally new and unique customer experience, successfully redefining what was thought of as the category. Hulu.com has changed the way people watch TV; it’s not necessary to block out the same time every week to watch a network program when you can watch it whenever it is convenient on Hulu.com. And SodaStream offers a totally new way to enjoy a canned soda.
  10. The Feisty Underdog
    The traditional challenger position pits David vs. Goliath, the mighty market leader. Succeeding in this approach requires commitment, boldness, and toughness. It’s a method that has been proven to work since Avis declared “We try harder.”

No matter which of these challenger strategies you choose, in order to be successful, you must maintain that strategy, but also keep changing and evolving tactics in order to continue achieving success. As one goal is reached, another must be set, and the activities put into place in order to reach that goal.

Pepsi discovered this the hard way—while it successfully competed with market leader Coca-Cola for years based on price and promotional tactics, the market leader steadily expanded its product family and market reach. Eventually, Pepsi changed strategies, diversifying into health and snack foods, while Coca-Cola has continued to focus on developing its core product lines.

Challenger Opportunities

Sometimes, knowing when and where to attack a market leader is just as important as knowing how. Even the best run companies cannot do everything right, so challenger brands must be ready to capitalize on any weakness or strategic blunder that market leaders may occasionally make.

The best opportunities for stealing market share include:

  • When the leader is distracted
    If the leader is going through a time of management or staff changes, downsizing, negative media coverage or times of regulatory pressure and other trigger events, the timing may be ripe for a challenger attack. Their distraction could easily work to the challenger’s advantage.
  • Where the leader is least likely to respond
    Instead of attacking a market leader’s core business, try picking off a smaller, secondary business unit. If the targeted segment isn’t an area of focus, they may not attach too much importance to the loss. Targeting and winning niche segments may help avoid drawing the market leader’s full response.
  • When the leader is least likely to respond
    Like a guerrilla strategy, stealthily creep up on the market leader when they least expect it. Smaller, agile companies that move quickly are more likely to catch the market leader napping. Potential strategies include promotional ideas and shock pricing, unconventional distribution, and a strong online presence.
  • When there is chaos in the market
    In times of economic stress, such as a recession, or when competition builds rapidly from many quarters, bloated market leaders need time to think and respond. Don’t give it to them—strike quickly the moment opportunities arise.

Lessons Learned

Home and building products companies can learn a great deal from these challenger brand stories. Deciding when, where and how to compete can help narrow the field and set the stage for success.

How can a home and building products company succeed as a challenger brand? After learning about the different types of challengers, observing their performance in the marketplace, and looking inward at the company mindset, consider these recommendations:

  1. Know your competition
    Know who the competition is and learn all about them. Consider a company that manufactures powder-coated aluminum deck railing. The competition is not only other companies selling products made of aluminum, but also manufacturers of wood, wood composites and even cable rail. Where does the opportunity exist to compete most effectively? Altmans offers stylish faucets, fixtures, and accessories for the bath, and pursues a strategy of focusing on the upper end of the market, appealing to the architectural, design, and hospitality community with distribution through kitchen and bath showrooms.
  2. Think and act like a challenger
    In the home and building products market, competitors come and go, design trends ebb and flow, and economic conditions greatly influence buying behavior. Companies in this arena must always think like challengers. Look for ways to follow the direction of the market, such as green and sustainable building trends. If research shows that homeowners are remodeling instead of moving up, find ways to appeal to that market, or if young professionals are moving into urban centers and lofts, tailor products appropriate for that lifestyle. Masonite, a market leader in interior and entry doors, acts like a challenger by constantly introducing  products that address new market trends—from traditional doors and environmentally friendly choices to streamlined, contemporary designs.
  3. Find a niche
    Know the markets that can be served most effectively and concentrate efforts.  Danver Stainless Outdoor Kitchens knows that their products are best suited for high end customers, and focuses their marketing and distribution efforts on that market.
  4. Differentiate your product
    If the leader totally dominates a market niche, look for ways to expand the market and position your product differently. While James Hardie offers fiber cement siding with a wood-like appearance to the residential market, Nichiha offers fiber cement products that look like stone, stacked stone, blocks, solid color options and more, all suited for commercial as well as residential applications.
  5. Compete where winning is possible
    This goes hand-in-hand with finding a niche—know where you can lead the market and do not try to be something you are not. Gerber did not have the name recognition to compete head-to-head with Kohler and American Standard in the consumer plumbing market, so they focused their marketing efforts on building relationships with plumbing professionals seeking value and partnership.
  6. Communications must be memorable, consistent, and creative
    Many of the most successful challenger brands are known for creating an outstanding image, whether through advertising, promotions, packaging, or social media. Owens Corning uses the color Pink and their mascot, The Pink Panther, to deliver their brand message effectively in all advertising, collateral, Facebook promotions, truck wraps, special events and more—even on the insulation product itself.

About Kleber & Associates

As an integrated advertising and PR agency with nearly three decades of experience marketing home and building products, K&A realizes that home and building product manufacturers can learn a great deal from companies both inside and outside of their industry. We can learn meaningful truths by reading about successful companies and studying challenger brand strategies. Although a story may be about energy drinks, it just might spark an idea for winning in the cabinet hardware market.

 

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